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					                                                                 Cummings
                                                                 Appraisals
                       SAMPLE OFFICE APPRAISAL

                          COMPLETE APPRAISAL
                      SUMMARY APPRAISAL REPORT OF

                            An Existing Office Building
                                    Located At
                                Subject Address
                                 City, State ZIP
                               Client Job Number


                                DATE OF VALUE

                                   Date of Value


                               DATE OF REPORT

                                   Date of Report


                                PREPARED FOR

                                   Client Name
                                    Client Title
                                   Client Title 2
                               CLIENT COMPANY
                                  Client Address
                                  City, State ZIP
                               Client Phone Number


                                 PREPARED BY

                               Calvin Cummings, MAI
                       Certified General Real Estate Appraiser
                           CUMMINGS APPRAISALS
                         99 South Lake Avenue, Suite 021
                                 Pasadena, CA 91101
                                 Phone 626-744-0428
                                  Fax 626-744-0922




Cummings Appraisals
Subject Address, City, State ZIP


Date of Report

Client Name
Client Title
Client Title 2
CLIENT COMPANY
Client Address
City, State ZIP

RE:     Complete Appraisal, Summary Appraisal Report of
        Subject Address, City, State ZIP
        Client Job Number

Dear Client Name:

In accordance with your request, we have prepared a complete appraisal of the market value as is of the
leased fee interest in the above referenced real property, presented in a summary appraisal report. The
following appraisal report summarizes the most pertinent data gathered, the techniques employed, and the
reasoning leading to the opinion of value.

The analyses, opinions and conclusions were developed based on, and this report has been prepared in
conformance with our interpretation of the requirements of the Financial Institutions Reform, Recovery,
and Enforcement Act (FIRREA); the Interagency Appraisal and Evaluation Guidelines; the Uniform
Standards of Professional Appraisal Practice (USPAP); the Code of Professional Ethics and Standards of
Professional Appraisal Practice of the Appraisal Institute; and Client Company appraisal requirements.

Based upon the results of the investigation and analyses contained in the following report, it is our
opinion that the market value as is of the leased fee interest in the subject property, as of Date of Value,
the date of inspection, is:

                    SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS
                                       ($7,900,000)

The value conclusion reported above is based on estimated marketing and exposure times of 2 to 4
months and is contingent upon the certification and limiting conditions attached.

Respectfully submitted,
CUMMINGS APPRAISALS




Calvin Cummings, MAI
Certified General Real Estate Appraiser
California License # AG005293
Expiration: October 9, 2006




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Subject Address, City, State ZIP


                                                         TABLE OF CONTENTS


SUMMARY OF SALIENT FACTS............................................................................................................. 4

CERTIFICATION ........................................................................................................................................ 5

PURPOSE/FUNCTION................................................................................................................................ 6

SCOPE, APPRAISAL DEVELOPMENT AND REPORTING PROCESS................................................. 6

INTENDED USE/USERS OF APPRAISAL ............................................................................................... 7

LEGAL DESCRIPTION .............................................................................................................................. 7

OWNERSHIP ............................................................................................................................................... 7

EXPOSURE TIME AND MARKETING TIME.......................................................................................... 7

LOCATION ANALYSIS ............................................................................................................................. 8

MARKET ANALYSIS ............................................................................................................................... 10

SITE DESCRIPTION ................................................................................................................................. 12

IMPROVEMENTS DESCRIPTION ......................................................................................................... 14

PROPERTY HISTORY.............................................................................................................................. 16

ASSESSORS INFORMATION.................................................................................................................. 16

OCCUPANCY AND USE OF SUBJECT.................................................................................................. 16

HIGHEST AND BEST USE ...................................................................................................................... 16

VALUATION ............................................................................................................................................. 17

SALES COMPARISON APPROACH....................................................................................................... 17

INCOME CAPITALIZATION APPROACH ............................................................................................ 26

RECONCILIATION................................................................................................................................... 39

INSURABLE VALUE ESTIMATE........................................................................................................... 40

ADDENDA................................................................................................................................................. 41




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Subject Address, City, State ZIP


SUMMARY OF SALIENT FACTS


General Information:

Client:                             Client Company
Client Appraisal File No.:          2004-5552
Internal Job No.:                   0105
Prospective Purchaser/Borrower:     Borrower Name
Appraisal/Report Type:              Complete Appraisal, Summary Appraisal Report
Date of Value:                      Date of Value
Date of Report:                     Date of Report
Interest Appraised:                 LeasedFee
Valuation Premises:                 Market Value As Is and Insurable Value

Property Information:

Property Type:                      Existing Office Building
Property Address:                   Subject Address, City, State ZIP
Owner of Record:                    See Ownership section
Map Reference:                      TG 671-E2
Assessor Parcel No.:                APN
Site Area:                          xx,xxx square feet (SF), or approximately 0.34 acres (Ac.)
Zoning:                             C3, Downtown Commercial
Flood Zone Code:                    X
Flood Zone Panel:                   0601590000
Census Tract / Block:               7019.00 / 1
Gross Building Area (GBA):          xx,xxx SF
Rentable Area:                      xx,xxx SF
Usable Area:                        21,974 SF
Year Built / Renovated:             1983 / 1999
Effective Age:                      15 years
Remaining Economic Life:            40 years
Stories:                            4
Current Occupancy:                  100%
Parking Spaces:                     78, or 3.09/1,000 SF
Personal Property:                  None

Valuation Parameters:

Cost Approach:                      N/A
Sales Comparison Approach:          $8,070,000
Income Capitalization Approach:
  Overall Capitalization Rate:      $7,860,000
  Gross Income Multiplier:          $7,920,000
Market Value Conclusion:            $7,900,000
Estimated Exposure Time:            2 to 4 months
Estiamted Marketing Time:           2 to 4 months
Estimated Potential Gross Income:   $754,477
Estimated Net Operating Income:     $471,432
Insurable Value Estimate:           $4,930,000


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Subject Address, City, State ZIP


CERTIFICATION

I certify that, to the best of my knowledge and belief:
    •   The statements of fact contained in this report are true and correct.
    •   The reported analyses, opinions, and conclusions are limited only by the reported assumptions
        and limiting conditions and are my personal, impartial and unbiased professional analyses,
        opinions, and conclusions.
    •   I have no present or prospective interest in the property that is the subject of this report and no
        personal interest with respect to the parties involved.
    •   I have no bias with respect to the property that is the subject of this report or to the parties
        involved with this assignment.
    •   My engagement in this assignment was not contingent upon developing or reporting
        predetermined results.
    •   My compensation for completing this assignment is not contingent upon the development or
        reporting of a predetermined value or direction in value that favors the cause of the client, the
        amount of the value opinion, the attainment of a stipulated result, or the occurrence of a
        subsequent event directly related to the intended use of this appraisal.
    •   This appraisal assignment was not based upon a requested minimum valuation, a specific
        valuation, or the approval of a loan.
    •   My analyses, opinions, and conclusions were developed, and this report has been prepared, in
        conformity with the Uniform Standards of Professional Appraisal Practice.
    •   The reported analyses, opinions and conclusions were developed, and this report has been
        prepared, in conformity with the requirements of the Appraisal Institute's Code of Professional
        Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of
        Professional Appraisal Practice.
    •   The use of this report is subject to the requirements of the Appraisal Institute relating to review
        by its duly authorized representatives.
    •   As of the date of this report, I have completed the continuing education program of the Appraisal
        Institute.
    •   I have made a personal inspection of the property that is the subject of this report.
    •   No one provided significant real property appraisal assistance to the person signing this
        certification.




Calvin Cummings, MAI
Certified General Real Estate Appraiser
California License #AG005293
Expiration: October 9, 2006




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Subject Address, City, State ZIP


PURPOSE/FUNCTION

The purpose of the appraisal is to estimate market value as defined by the Board of Governors of the
Federal Reserve System, in accordance with Title XI of FIRREA (1989).

“Market Value means the most probable price which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeable, and assuming the price is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions
whereby: (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 interests; (3) a reasonable time is allowed for exposure in
the open market; (4) payment is made in terms of cash in US dollars or in terms of financial arrangements
compatible thereto; and (5) the price represents the normal consideration for the property sold unaffected
by special or creative financing or sales concessions granted by anyone associates with the sale.”

(Source: Title 12, Banks and Banking; Chapter II, Federal Reserve System; Subchapter A, Board of Governors of the Federal
Reserve System; Part 225, Bank Holding Company and Change in Bank Control (Regulation Y), Subpart G, Appraisals; 225.62
Definitions (g).)

The appraisal will be utilized by Client Company as an aid in proper underwriting for a potential real
estate loan / refinance involving the asset.


SCOPE, APPRAISAL DEVELOPMENT AND REPORTING PROCESS

The scope of this appraisal included the following:

    •    reading of the request for appraisal services and related attachments;
    •    physical inspection of the subject, neighborhood, and submarket;
    •    research public records, or other sources deemed reliable, relative to the subject;
    •    research public records, or other sources deemed reliable, for comparable properties;
    •    present the results in this Summary Appraisal Report.

In developing an opinion of market value for the subject property, both the sales comparison and income
capitalization approaches are applicable, and the appraiser has performed the analysis necessary under
each of these two approaches to indicate a value conclusion. The subject property is improved with a
smaller four-story office building which was originally built in 1983 and was renovated in 1999. It is
currently 100% leased and occupied by four tenants. The sales comparison and income capitalization
approaches are both utilized by purchasers of smaller office building properties such as the subject.
However, in the final analysis, the sales comparison approach is of secondary importance as most
purchasers of multi-tenant leased investments such as the subject rely more heavily on the income
capitalization approach to value. Due to the older age of the subject improvements and the fact that
buyers, sellers and brokers do not typically utilize this approach in their pricing decisions for a property
such as the subject, the cost approach is not considered applicable or necessary to develop a reliable value
indication and, therefore, has not been performed.

This is a Complete Appraisal, Summary Appraisal Report which is intended to comply with the reporting
requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal
Practice (USPAP) for a Summary Appraisal Report. As such, it presents only summary discussions of the
data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of
value. Supporting documentation concerning the data, reasoning, and analyses is retained in the



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Subject Address, City, State ZIP


appraiser’s file. The depth of discussion contained in this report is specific to the needs of the client and
for the intended use stated above.


INTENDED USE/USERS OF APPRAISAL

The intended use of this appraisal is to assist Client Company, the client, in proper underwriting for a
potential real estate loan / refinance involving the asset. The intended users of this appraisal are Client
Company and/or its designated representatives. The appraiser is not responsible for unauthorized use of
this report.


LEGAL DESCRIPTION

According to the Preliminary Report (Fidelity National Title Company, 601 S. Figueroa St. #2130, Los
Angeles, CA 90017; Order No. xxxxxxx; Dated xxxxxxxx xx, 20xx) provided and reviewed, the subject's
Legal Description and Assessor Parcel Number are as follows:

        xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
        xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
        xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx., of Miscellaneous Records, in the
        office of the County Recorder of said County.

        Assessor's Parcel No.: APN


OWNERSHIP

According to the Preliminary Report, title is vested in:

        Borrower Name, a California Limited Liability Company, as to an undivided 73.84%
        interest and xxxxx xxxxxx, Successor Trustee of the xxxxx Family Trust "x" dtd x/xx/xx
        as to an undivided 25.8984% interest and xxxxx xxxxxx, a married woman as her sole
        and separate property as to an undivided .2616% interest.


EXPOSURE TIME AND MARKETING TIME

Exposure time is the estimated length of time the property interest being appraised would have been
offered on the market prior to the hypothetical consummation of a sale at market value on the effective
date of appraisal, and is always presumed to precede the effective date of the appraisal. Exposure times
for seven sales of similar office properties located in the subject's market area were analyzed, with
exposure times of 25, 30, 45, 90, 100, 126 and 210 days (average of 89 days). Based on our findings, an
exposure time of 2 to 4 months for the subject property is considered reasonable and appropriate.

The reasonable marketing time is an opinion of the amount of time it might take to sell a real property
interest at the concluded market value level during the period immediately after the effective date of an
appraisal. According to brokers interviewed with brokerage firms active in the subject's market area
(Charles Dunn Company, Coldwell Banker Commercial, Equis Corporation, Grubb & Ellis, and Lee &
Associates) market conditions for office properties remain strong – especially for good-quality, well-
located properties such as the subject – and reasonable marketing times for office properties like the


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Subject Address, City, State ZIP


subject would be approximately 2 to 4 months, if properly priced and marketed. Based on our analysis, a
marketing time of 2 to 4 months would also be reasonable for the subject.


LOCATION ANALYSIS

City of Santa Monica

The subject property is located in city of Santa Monica's downtown area, xxxxx blocks northwest of the
Santa Monica (I-10) Freeway and xxxx blocks northeast of the Third Street Promenade.

Santa Monica is situated on the west side of Los Angeles County, 16 miles west of downtown Los
Angeles, where Pacific Coast Highway and the Santa Monica (I-10) Freeway meet. The city
encompasses 8.3 square miles and is bordered by the City of Los Angeles on three sides and the Pacific
Ocean on the west.

Santa Monica offers convenient access to major freeways, bus lines and airports. It is served by two
freeways, the Santa Monica (I-10) and San Diego (I-405); and by four major east-west thoroughfares –
Santa Monica (Route 66), Wilshire, Olympic and Pico Boulevards. It is located approximately six miles
from Los Angeles International Airport. The city also has its own state-of-the-art aviation operations at
Santa Monica Airport, offering a wide variety of business charters and general aviation services.

Climate

Santa Monica's coastal Mediterranean climate provides an ideal atmosphere for taking advantage of the
famous California lifestyle. Centered on three miles of wide, sandy beaches, the city enjoys a mild
climate averaging 68 degrees Farenheit year-round. Air quality is consistently good in the coastal district
that surrounds Santa Monica.

Population

According to the 2000 Census, Santa Monica's population is 84,084, or about 10,100 persons per square
mile. Based on the net addition of 1,202 housing units to the City's housing supply, it is estimated that as
of June 30, 2003, the City's population had increased to 85,991.

Although it is home to a signficant number of older people, Santa Monica is a city whose age distribution
shows a significant concentration in the 22-44 age group, and has fewer youth under 19 years of age
(16%) than the county average. The average age for residents in the city is 39 years of age. The city also
has an educated population: 91% had twelve years or more of schooling; and 54% have a BA Degree or
higher.

Households, Housing & Employment

Santa Monica has an average of 2.8 persons per family, and 1.8 persons per household. The 49,065
housing units in the City as of 2003 are primarily (70%) occupied by renters as opposed to homeowners.
The median household income in Santa Monica is $50,714 as of the 2000 Census. The number of
households earning over $150,000 doubled between 1990 and 2000 when it reached 12% of total
households. Management, professional and related occupations represent 60% of the City's employed
population. The most popular employment industries for City residents were educational, health & social
service (18.8%), followed closely by professional, scientific & management industries (18.6%).
Information services provided employment for 14.6% of residents.


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Subject Address, City, State ZIP



Real Estate

The total assessed value of property in Santa Monica in Fiscal Year 2001/2002 was approximately $13.5
billion. There are over 4,000 acres of developed land in the City, not including streets and roadways.
There are almost 10 million square feet of space in the City devoted to commercial use, including retail,
office, hotels, and restaurants. The median price of a home is $631,000.

Industry, Employment & Labor Force

Santa Monica is an economically successful city with about 16,000 businesses which collectively
generate almost $8.4 billion in gross annual income. About $2.3 billion of these sales are in the retail
sector. There are an estimated 71,000 jobs in Santa Monica, generating a combined payroll of around $3
billion. The Westside, including Santa Monica, also has a large resident workforce of skilled "knowledge
workers." Over 60% of the 47,059 employed Santa Monica residents work in managerial, professional,
and related occupations.

Tourism

Tourism is a key component of the economy and lifestyle of this beachfront community. Over 3.8 million
people visit the city each year from outside Los Angeles County for pleasure, vacation, or business.
These visitors spend $788 million annually, and bring in hotel tax revenues of $20 million to the city.
Approximately 11,500 jobs are supported by the tourist industry. Even with the recent slowdown in the
tourism industry, the City's hotel occupancy rate in its 3,500 room remains good, at 73%. The city is an
international destination, as well as the destination for millions of day-trippers, particularly on weekends,
as they throng to the city's clean beaches, the Santa Monica Pier, and special retail destinations such as
the Third Street Promenade, Main Street, Montana Avenue, and Santa Monica Place.

Shopping Districts

There are five shopping areas in Santa Monica – Downtown, Ocean Avenue & Pier, Main Street,
Montana Avenue, and Sunset Pico – each each with its own style and pace.

The subject property is located in the Downtown area, home of the popular Third Street Promenade, an
open-air pedestrian promenade with cafés, bookstores, kiosks, cinemas, fashion boutiques and novelty
shops; Santa Monica Place, an ocean-view shopping mall, designed by world-renowned architect Frank
O. Gehry, with 140 unique shops; and a myriad of galleries, shops and restaurants along the surrounding
streets. The Third Street Promenade and its six parking structures are bounded by Wilshire Boulevard,
Broadway, Second and Fourth Streets and located three blocks southwest of the subject property, as is
Santa Monica Place.

Santa Monica Place is a 570,000-square-foot regional mall with 120 shops, services and eateries plus
Robinsons-May and Macy's department stores. Originally designed by renowned architect, Frank Gehry,
Santa Monica Place was built in 1980 and renovated in 1990. This tri-level skylit galleria is the site of
many Hollywood shoots including scenes from the blockbuster film Terminator II and hit TV series
Beverly Hills 90210. Santa Monica Place is located at the intersection of Fourth and Broadway in
downtown Santa Monica at the south end of the popular Third Street Promenade and just two blocks from
the historic Santa Monica Pier and beach. There are 2,000 parking spaces in the lots adjacent to the mall
and over 3,000 additional spaces available within three blocks of the shopping center.




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Subject Address, City, State ZIP


The Ocean Avenue and Pier district is located seven blocks west of the subject and includes Ocean Front
Walk and the Santa Monica Pier, a year-round shore-side carnival with ocean side and ocean view
eateries, souvenir shops, bike and surfboard rentals, an historic carousel and a brand-new by-the-sea
amusement park.

High-Tech, Post-Production & Dot-Commers

No discussion of the Westside would be complete without mentioning the tremendous influx in recent
years from the entertainment, high-tech and software industries. The overall business base, with 71,000
jobs, remains strong. The diversity of the economy, and desirable quality of life in Santa Monica, with its
clean air, excellent retail, restaurant and entertainment venues, and plentiful amenities, continue to make
Santa Monica a highly-desired business location.

Santa Monica College

The city is home to Santa Monica College, with 31,000 full-time and part-time students on several
campuses. The college consistently leads the state's 107 community college in placements of transfer
students at the University of California. Its Academy of Entertainment & Technology provides training in
key technical entertainment industry fields. It has an extensive Workforce Development Center which
provides specialized training for important business sectors.

Conclusion

The subject property is well located in the established downtown commercial district of Santa Monica,
with quick, convenient access to nearby freeways and surface arterial routes. The subject office tenants
benefit from several nearby amenities including the Third Street Promenade, Santa Monica Place, Santa
Monica Pier, Ocean Avenue, Main Street, Santa Monica College, Santa Monica Airport, the Pacific
Ocean and Santa Monica State Beach. Office rents and property values in the downtown district are some
of the highest in the city.


MARKET ANALYSIS

Los Angeles Office Market

Mid-Year 2004

According to NAI Capital Commercial's Mid-Year 2004 Southern California Market Report, the Los
Angeles Basin Office Market, with approximately 320 million SF of multi-tenant space, is the nation's
fourth largest office market. The market bottomed in 2002, and began to recover in 2003. The pace of
recovery escalated in the first half of 2004. Net absorption in the first half of 2004 totaled 3.2 million SF,
slightly exceeding the total figure for 2003 (+3.1 million SF) and matching the long-term average for the
Los Angeles Basis (+3.2 million SF per six months, 1985 to present).

Construction completions finally slowed significantly, and only 717,700 SF came on line in the first half
of 2004. The combination of strong net absorption and minimal completions enabled the vacancy rate to
drop to 15.2%. This is still a moderately high rate, but is down signficantly from 16.7% as of year-end
2003 and from 16.8% as of mid-year 2003. Asking rental rates, which had been dropping, stabilized in
most areas.




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Subject Address, City, State ZIP


Vacancy rates today are highest in high-rise buildings (17%), followed by mid-rise buildings (15.4%) and
low-rise buildings (12.7%). They also are highest in Class A buildings (16.4%), followed by Class B
buildings (13.3%) and Class C buildings (7%).

Construction activity has picked up, and 2.9 million SF is underway (up from 1.8 million SF as of year-
end 2003). However, when complete, this new space will expand the base by only 0.9%, or 4.5 months
worth of demand under normal economic conditions. Market conditions are projected to continue to
tighten into 2005.

From a tenant's perspective, the window of opportunity to expand or to lock in low rental rates will soon
be closing. These are also excellent times for firms to take advantage of low mortgage rates to purchase
office buildings that meet their long-term needs. However, prices are now quite high.

Within the Los Angeles Basin, demand has been strongest in West Los Angeles, the San Fernando Valley
and South Orange County. These are high-rent areas, where cutting-edge firms were generally hit the
hardest during the recent downturn. These firms now are leading the way in recovery. Vacancy rates are
now lowest in the San Fernando Valley (10.7%), Ventury County (11.3%) and North Orange County
(11.5%), and highest in the South Bay (20.7%).

2005 Forecast

According to the Grubb & Ellis 2005 Real Esatate Forecast for the Los Angeles Office market, the much
inproved Los Angeles County office leasing market in 2004 is anticipated to carry forward through 2005.
Through each quarter during the year, the leasing market got stronger, posting lower vacancies across all
submarkets and enough absorption for landlords to consider asking rent increases. These rent increases
should become more evident and pronounced across the LA Metro region in 2005.

Rents in the county saw very little change throughout 2004, floating at an average of a little over $2.40
per SF per month on a full service gross basis. Although rents in the most expensive submarket of West
Los Angeles dropped over the last 12 months, other markets like Tri-Cities and Downtown Los Angeles
have had increased rents from one year ago. Most submarkets experienced a flattening of rents
suggesting that the bottom was hit. The market should not experience any flucuations through the first
half of 2005.

Investment activity in Los Angeles County remains strong. Two signficant transactions in 2004 put an
exclamation point on the multitude of deals and the soaring prices. One deal involved TIAA-CREF in a
joint venture with Equity Office Properties purchasing the Colorado Center in Santa Monica from
Tishman Speyer Properties for $445 million. The partnership outbid 15 other competitors for the
property. The other major deal in 2004 was in Downtown Los Angeles where Trizec Properties
purchased the Bank of America Plaza at 333 South Hope Street from Beacon Capital for $435 million.

West Los Angeles Office Market

West Los Angeles commands the highest rental rates in the Los Angeles Basin. It has a large
concentration of high-profile firms (including those in entertainment, computer programming and
finance), and is in the midst of some of the most exclusive residential neighborhoods in the nation. It has
a large office base, with 48.7 million SF of space. It is a moderately mature market, with 62% of its space
built before 1985. It also is moderately dense, with 61% of its space in mid-rise or high-rise buildings.

Net absorption was a very strong one million SF in the first half of 2004. This was up sharply from a
total of 350,800 SF in 2003. It also was more than double the average of 440,000 SF per six months 1985


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Subject Address, City, State ZIP


to present. There was strong growth in demand from the entertainment industry (reversing a three-year
downturn), as well as from professional services.

No new space came on line due to construction in the first half of 2004. This enabled the vacancy rate to
drop very sharply to 15.5%, down from 17.7% as of year-end 2003. Asking rental rates remained firm at
an average of $2.72 per SF per month, full service gross (FSG) for Class A space.

Construction activity has picked up, and 899,200 SF is currently underway. However, 790,000 SF of this
space is in one building, 2000 Avenue of the Stars in Century City, and this project is not projected to
come on line until late 2006. The market is projected to continue to tighten in the remainder of 2004 and
in 2005.

Santa Monica Office Market

According to a July 26, 2004 article in the Los Angeles Business Journal entitled "Los Angeles County
Office Market, Second Quarter 2004," for the second quater of 2004 the Santa Monica submarket had
7,882,943 SF of office space, including 1,288,718 SF of vacant space. The Santa Monica submarket
vacancy rate increased from 15.0% for 2nd Qtr. 2003 to 17.3% for 1st Qtr. 2004, and then declined to
16.3% for 2nd Qtr. 2004. There was only 42,500 SF of office space under construction in Santa Monica
for 2nd Qtr. 2004 with 71,555 SF of net absorption. According to a knowledgable broker in the market,
Yahoo! is reportedly days away from signing a lease for 270,000 SF at Colorado Center and WPP is,
likewise, about ready to sign a lease for 100,000 SF at the Water Garden project. These prospective lease
deals are very signficant in that, if they are ultimately consumated, they could be responsible for lowering
the vacancy in this submarket by 4.5% to 5.0% to around 12% sometime in the first part of 2005.

Conclusion

The subject is located in Los Angeles, the nation's fourth largest office market. The local office market
has continued its recovery since bottoming out in 2002 and prospects look good for 2005. Strong net
absorption coupled with minimal construction completions has resulted in declining vacancy rates and
expectations are for continued firming of rental rates. With positive market trends and historically low
interest rates, the investment market continues to be strong with relatively low yield expectations as
investors continue to vie for available for-sale product.


SITE DESCRIPTION

Location:                                Subject Address, Santa Monica, Los Angeles County, CA 90401

Assessor Parcel Number:                  APN

Census Tract/Block:                      7019.00 / 1

Site Area:                               xx,xxx SF (per Assessor Map), or approximately 0.34 Ac.

Shape:                                   Rectangular, interior parcel; 100 feet wide by 150 feet deep

Topography:                              Flat and level

Streets:                                 The subject is located on the xxxx side of xxx Street, between
                                         xxxxxxxx to the south and xxxxxxxxxxxx Boulevard to the


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Subject Address, City, State ZIP


                                       north. xxx Street is improved with asphalt paving, concrete
                                       curbs, gutters, storm drains and street lighting. xxx Street is a
                                       minor, two-way, commercial arterial that runs southeast to
                                       northwest through the western portion of Santa Monica. Santa
                                       Monica Boulevard, the Historic Route 66, is located xxx block to
                                       the north. There is a 20-foot-wide alley running from xxxxxxxx
                                       to xxxxxxxxxxxx Boulevard serving the subject property.

Street Access/Exposure:                Vehicular access is good via one commercial-width curb
                                       cut/driveway off of xxx Street accessing the 1st Floor parking
                                       garage and a commercial-width driveway off of the rear alley
                                       with ramp down to the Basement Level parking garage. Street
                                       exposure to xxx Street is good with partial southern exposure to
                                       xxxxxxxx due to a neighboring open parking lot on the south
                                       side of the sujbect builidng.

Existing Use:                          A four-story, Class-C office building.

Zoning:                                C3, Downtown Commercial zoning district. Permitted uses
                                       include general offices (subject use). Development standards
                                       include: 1) Maximum Building Height of 4 stories, not to exceed
                                       50 feet; 2) Maximum Floor Area Ratio (FAR) of 1.5; 3)
                                       Minimum Lot Size of 7,500 SF, with minimum width of 50 feet
                                       and minimum depth of 150 feet; 4) Development Review
                                       required for any development of more than 30,000 SF of floor
                                       area.

Flood Zone:                            Located in Flood Zone X; Flood Panel 0601590000; City of
                                       Santa Monica Community; Panel Date not listed; located outside
                                       Special Flood Hazard Area (SFHA); not located within 250 feet
                                       of multiple flood zones. Zones B, C, and X are the flood
                                       insurance rate zones that correspond to areas outside the 1-
                                       percent annual chance floodplain, areas of 1-percent annual
                                       chance sheet flow flooding where average depths are less than 1
                                       foot, areas of 1-percent annual chance stream flooding where the
                                       contributing drainage area is less than 1 square mile, or areas
                                       protected from the 1-percent annual chance flood by levees. No
                                       Base Flood Elevations or depths are shown within this zone.
                                       Insurance purchase is not required in these zones.

Alquist-Priolo Earthquake Fault Zone: According to the most recent maps listed on the State of
                                      California / Department of Conservation / California Geological
                                      Survey / Alquist-Priolo Earthquake Fault Zones website
                                      (http://www.consrv.ca.gov/CGS/rghm/ap/index.htm), the subject
                                      does not appear to be located in an Alquist-Priolo Earthquake
                                      Fault Zone. Although the subject does not appear to be located
                                      within a designated Alquist-Priolo Special Study Zone, the entire
                                      Los Angeles area has been described as an area of potential high
                                      risk earthquake damage. This earthquake damage risk became
                                      apparent during the January 17, 1994 Northridge earthquake.
                                      Property owners in Southern California are strongly advised to


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Subject Address, City, State ZIP


                                       evaluate obtaining Earthquake insurance for their properties, if
                                       available.

Soils/Subsurface Conditions:           We have not reviewed a soil report in connection with this
                                       assignment. In the absence of a soil report, we assume soil
                                       conditions to be free of toxins and to be adequate to support the
                                       existing improvements into the future. We observed no evidence
                                       of any soil problems during our physical inspection of the site.

Easements/Encroachments:               Typical street, utility and right-of-way easements assumed. No
                                       apparent adverse easements or encroachments were observed
                                       during our inspection of the site. However, a premise of this
                                       appraisal is that no adverse title conditions exist that would
                                       affect the marketability of the property.

Conclusion:                            The subject site reflects appropriate zoning, size, shape,
                                       topography, access and utilties for the subject office property.


IMPROVEMENTS DESCRIPTION

The subject improvements description is based on our physical inspection of the site and improvements
on Date of Value; Assessor information; partial floor plan drawings; building area summaries; and other
information provided for this assignment by the ownership and their agents.

Property Type:                         Low-rise office building

Use:                                   Multi-tenant, professional office

Year Built / Renovated:                1983 / 1999

No. of Buildings:                      1

No. of Stories:                        4 above grade, including one grade-level parking level, plus one
                                       basement level parking level

Effective Age:                         15 years

Remaining Economic Life:               40 years

Building Area:                         According to Assessor information obtained from First
                                       Amercian Real Estate Solution's RealQuest Property Detail
                                       Report, the building area for the subject improvements is listed
                                       as xx,xxx SF, which corresponds closely to the xx,xxx SF of
                                       rentable area shown on the current rent roll. The building areas
                                       summarized below are based on our review and analysis of
                                       RealQuest property data, the rent roll and architect's building
                                       area calculations provided (see Addendum attached), and
                                       assume multi-tenant occupancy of the second floor and single-
                                       tenant occupancy of the third and fourth floors as presently
                                       leased. Since rental rates and building prices for office buildings


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Subject Address, City, State ZIP


                                   are typically calculated and analyzed on a rentable area basis, we
                                   have utilized the subject's rentable area as the main unit of
                                   comparison in this appraisal. We have reviewed architectural
                                   plans for the subject, and we have spot-checked various
                                   dimensions to verify they are the same as the plans.

                                   Gross Building Area (GBA):       xx,xxx SF
                                   Rentable Area (RSF):             xx,xxx SF
                                   Usable Area:                     21,974 SF

General Construction:              We were not provided with detailed architectural drawings or a
                                   detailed improvement description.         Based on our on-site
                                   inspection, the subject improvements are assumed to be a Class-
                                   C, Type-III, four-story, low-rise office building.

Electrical Service:                Assumed to be heavy-amp, 3-phase, 4-wire, 120/208-volt and
                                   adequate for current use.

Fire Sprinklers:                   Yes; fire panel in lobby and monitored alarm.

HVAC:                              Three package units on roof.

Parking:                           78 spaces, or 3.09/1,000 SF of rentable area, on two levels

Office Interior:                   Carpet, tile and wood floors; paint, vinyl, wood and tile covered
                                   walls; open and suspended exposed-spline acoustic ceilings;
                                   recessed fluorescent and spot lighting.

Restrooms:                         One men's and one women's restroom on each office floor.

Amenities:                         Creative build-out with private balconies and outdoor patios,
                                   nice landscaping, floor-to-ceiling glass, and upper-floor views.

Deferred Maintenance:              Nominal. The improvements were remodelled / renovated in
                                   1999 and are in good condition for their age.

Construction Quality:              Good

Overall Condition:                 Good

Conclusion:                        The subject improvements reflect good-quality, Class-C
                                   construction, are in good condition for their age, and reflect very
                                   good building identity. Overall, the improvements represent a
                                   very functional multi-tenant, low-rise office building with very
                                   good tenant and investor appeal. The subject is fire sprinklered
                                   and benefits from its favorable downtown Santa Monica
                                   location, creative buildout, convenient security-gated parking
                                   garage, and very good building identity.




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Subject Address, City, State ZIP


PROPERTY HISTORY

To the best of our knowledge, the subject property has not been offered for sale or transferred in the past
three years, nor is it currently listed or under contract for sale. According to the RealQuest Property
Detail Report, the last sale appears to have occurred in xxxx 19xx (Document # xxxxxx, recorded xxxx
xx, 19xx) between xxxxxxx xxxxx xxxxx, as seller, and the current ownership, as buyer, for a sale price
of $x,xxx,xxx, or $xxx.xx/SF based on xx,xxx RSF.

ASSESSORS INFORMATION

The subject property is located in Tax Rate Area xxxx with 2004 assessed values and taxes as follows:


                         SUMMARY OF ASSESSED VALUES AND PROPERTY TAXES

                 Assessor Parcel No.                Land           Improvements                Total                 Taxes
                           APN                  $2,205,282            $3,307,923            $5,513,205         $60,957.30



The total taxes above is based on a total tax rate for the general tax levy and voted indebtedness of
1.076508% and $1,607.21 in direct assessments.


OCCUPANCY AND USE OF SUBJECT

The property is currently 100% leased and occupied as a multi-tenant professional office building.


HIGHEST AND BEST USE

The term "highest and best use" is defined as "That reasonably probable use and legal use of vacant land
or an improved property that is physically possible, appropriately supported, financially feasible, and that
results in the highest value."1

As Though Vacant

The appraised property is currently zoned C3 (Downtown Commercial District). The C3 District is
intended to maintain and enhance the downtown area and to provide a concentration and variety of
commercial, residential, cultural, and recreational opportunities including comparison and general retail,
office, cultural uses, and complementary uses such as hotels, housing, and visitor serving uses. Permitted
uses include art galleries, artist studios above the first floor, auditoriums, bakeries, banks and savings and
loan institutions, barber or beauty shops, business colleges, cleaners, child day care centers, congregate
housing, dance studios, domestic violence shelters, electrical distribution substations, exercise facilities,
general offices, general retail and specialized retail uses, homeless shelters with less than 55 beds, hotels


1   The Appraisal of Real Estate, 12th edition, The Appraisal Institute, Chicago, Illinois, (U.S. 2001), page 305.




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Subject Address, City, State ZIP


and motels, laundromats, medical, dental and optometrist clinics and laboratories, medical equipment
rentals, multifamily dwelling units, museums, outdoor newsstands, party equipment rentals, photocopy
shops, places of worship, restaurants, senior group housing, senior housing, single-family dwelling units,
single-room occupancy housing, tailors, theaters, trade schools, transitional housing, variety stores, and
approved accessory uses. A full highest and best use and feasibility analysis for the subject property as
though vacant is beyond the scope of this assignment. However, based on recent and nearby downtown
developments in the subject's immediate neighborhood, it would appear that the highest and best use of
the subject, if vacant and available for development, would likely be achieved with the construction of a
modern professional office building or a mixed-use development with ground-floor retail and office
and/or residential uses on upper floors, built to the maximum allowable density.

As Improved

Several options are available regarding existing improvements: renovation, addition, a change in use, and
demolition are among the most obvious. The subject office building was recently remodelled (1999), has
been well maintained and does not require renovation at this time. Although the existing use is
"grandfathered" under current zoning, signficant addition to the existing improvements would most likely
not be allowed due to density and parking requirements. A change in use from the current office use is
not considered likely given the surrounding development and neighborhood trends. Demolition of the
existing improvements is not financially prudent at this time. Therefore, the highest and best use as
improved is continued use as a multi-tenant, professional office building property.


VALUATION

The subject property involves a 1983-built/1999-remodelled, xx,xxx-rentable-square-foot, low-rise
professional office building – a type and size of property purchased by both investors and owner-users.
The sales comparison and income capitalization approaches are both utilized by purchasers of smaller
office building properties such as the subject. However, the most typical purchasers for buildings like this
are investors who typical place the most weight on the income capitalization approach. Due to the older
age of the subject improvements and the fact that buyers, sellers and brokers do not typically utilize this
approach in their pricing decisions for a property such as the subject, the cost approach is not considered
applicable or necessary to develop a reliable value indication and, therefore, has not been performed.


SALES COMPARISON APPROACH

Methodology

The Sales Comparison Approach to value consists of an analysis of sales of similar properties, utilizing a
unit method of comparison. A typical unit method of comparison for office properties is sales price per
square foot of rentable area. The sales are analyzed to refect differences in location, date of sale, physical
characteristics, and economic factors. The unit value is adjusted based on these characteristics and then
applied to the subject property.

The steps involved include 1) research the market to obtain information on sales transactions, listing and
offerings to purchase properties similar to the subject property; 2) verify the information by confirming
that the data obtained are factually accurate and that the transactions reflect arm's-length market
consideration; 3) select relevant units of comparison, and develop a comparative analysis for each unit; 4)
compare the subject and comparable sale properties using the elements of comparison and adjust the sale
price of each comparable appropriately or eliminate the property as a comparable; 5) reconcile the various


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Subject Address, City, State ZIP


value indications produced from the analysis of comparables into a single value indication or a range of
values.

Units of comparison

The units of comparison selected depend on the appraisal problem. Smaller, low-rise office properties
such as the subject are often analyzed on the basis of price per square foot, with adjustments made for
appropriate elements of comparison. Where applicable, comparable sales were analyzed to extract overall
capitalization rates and gross income multipliers which are then used for purposes of direct capitalization
in the income capitalization approach.

Comparable Sales Data

A field survey, search of public records, and interviews with knowledgable real estate brokers, appraisers
and principals were conducted to obtain and verify sales of Santa Monica office properties comparable to
the subject property which yielded five comparable sale properties. Presented below and on the following
pages are a comparable sales map, a comparable sales summary, comparable sale photographs, a
description and comparative analysis of the comparable sales, and a reconciliation of the adjusted units of
comparison into an indicated value for the subject property via the sales comparison approach.




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Subject Address, City, State ZIP


                                   COMPARABLE SALES MAP




                                   Subject




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Subject Address, City, State ZIP


                                 COMPARABLE SALES SUMMARY



 Comparable No.             SUBJECT            Sale #1         Sale #2         Sale #3         Sale #4          Sale #5

                              1437 7th       1101-1111       2210 Main                       1901 Main        1221 2nd
 Address                        Street        Broadway           Street 520 Broadway             Street          Street

 City                     Santa Monica Santa Monica Santa Monica Santa Monica Santa Monica Santa Monica

 Sale Date                        n.a.       9/23/2004       8/17/2004       5/21/2004        7/1/2003        5/13/2003

 Sale Price                      n.a.    $ 4,250,000     $ 3,000,000     $ 31,600,000    $ 6,100,000      $ 9,500,000

 Rentable Area (SF)           25,212           13,639           9,600         108,093          16,925          24,000

 Land Area (SF)               15,000           15,000           5,200          30,000          10,440            7,500

Land-to-Building Ratio           59%             110%             54%            28%              62%             31%

 Year Built                      1983            1980            1977            1981             1990            2003

 Stories                           4                3               3               6               3                4

 Parking Spaces                    78               86             15             359               60              72

 Parking Ratio/1,000 SF          3.09            6.31            1.56            3.32            3.55             3.00

 Sale Price/SF                   n.a.    $     311.61    $     312.50    $     292.34    $     360.41     $    395.83

 Cap Rate                        n.a.             n.a.          5.95%           5.61%           6.34%             n.a.

 GIM                             n.a.             n.a.          12.23           11.60           10.89             n.a.




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Subject Address, City, State ZIP



                            COMPARABLE SALE PHOTOGRAPHS




   Sale #1: 1101 Broadway, Santa Monica               Sale #2: 2210 Main Street, Santa Monica




   Sale #3: 520 Broadway, Santa Monica                Sale #4: 1901 Main Street, Santa Monica




                             Sale #5: 1221 2nd Street, Santa Monica


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Comparable Sales Discussion

Comparable Sale #1

Sale #1 (APN 4282-024-016, 017 & 029) is located at 1101 Broadway in Santa Monica (Map 671-F1),
approximately 0.3 miles northeast of the subject. The improvements reflect a three-story, 1980-built,
average-quality, structural-brick office building in good condition. The property contains 13,639 SF of
rentable area and xx,xxx SF of land area, for a 1.10:1 land-to-building ratio. There are 86 parking spaces,
for a 6.31:1 parking ratio. The property was on the market for 210 days, and sold on September 10, 2004
for $4,250,000 (Document #2447972, recorded September 23, 2004), or $311.613SF. The buyer was an
owner-user who preferred to keep financing and operating data confidential.

Comparable Sale #2

Sale #2 (APN 4289-022-018) is located at 2210 Main Street in Santa Monica (Map 671-F4),
approximately 0.9 miles south of the subject near the intersection of Main Street and Pacific Street. The
improvements reflect a slightly older, 1977-built, three-story, good-quality, mixed-use office building of
frame-and-stucco construction in good condition. There is one retail space and covered parking on the
ground floor, several office suites on the second floor plus one studio unit, and three additional
apartments on the third floor. The property contains 9,600 SF of rentable area and 5,200 SF of land area,
for a 0.54:1 land-to-building ratio. The property was on the market for 100 days, and sold on August 13,
2004 for $3,000,000 (Document #2111930, recorded August 17, 2004), or $312.50/SF. Terms of the
transaction included a $1,350,000 (45%) down payment and a first mortgage of $1,650,000 with Preferred
Bank for the balance. Unit 206 and the penthouse were vacant at time of sale and income for those units
was projected based on rental rates obtained from the listing broker. Based on gross scheduled income of
$245,219, a 5% vacancy and credit loss allowance, $54,574 of expenses, and a net operating income of
$178,384, the sale indicated a gross income multiplier (GIM) of 12.23 and an overall capitalization rate
(Cap Rate) of 5.95%.


Comparable Sale #3

Sale #3 (APN 4291-024-001, 002, 003, 026) is located at 520 Broadway in Santa Monica (Map 671-E2),
two blocks south of the subject. The improvements reflect a six-story, 1981-built, average-quality office
building of steel-frame-and-glass construction in average-to-good condition. The property contains
108,093 SF of rentable area and 30,000 SF of land area, for a 0.28:1 land-to-building ratio. There are 359
parking spaces, for a 3.32:1 parking ratio. The property sold on May 18, 2004 for $31,600,000
(Document #1297217, recorded May 21, 2004), or $292.34/SF. Terms of the transaction included a
$7,000,000 (22%) down payment and a first mortgage of $24,600,000 with Merrill Lynch Mortgage
Investors for the balance. Based on gross scheduled income of $2,724,000, a 5% vacancy and credit loss
allowance, $813,800 of expenses, and a net operating income of $1,774,000, the sale indicated a GIM of
11.60 and a Cap Rate of 5.61%.

Comparable Sale #4

Sale #4 (APN 4289-019-024) is located at 1901 Main Street in Santa Monica (Map 671-E3),
approximately 0.7 miles south of the subject. The improvements reflect a multi-tenant, three-story, 1990-
built, good-quality, concrete-and-steel office building in good condition. The property contains 16,925 SF
of rentable area and 10,440 SF of land area, for a 0.62:1 land-to-building ratio. There are 60 parking
spaces, for a 3.55:1 parking ratio. The property sold on April 28, 2003 for $6,100,000 (Document
#1888703, recorded July 1, 2003), or $360.41/SF. Terms of the transaction included a $2,135,000 (35%)


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Subject Address, City, State ZIP


down payment and a first mortgage of $3,965,500 with First Bank of Beverly Hills for the balance.
Based on gross scheduled income of $560,000, a 5% vacancy and credit loss allowance, $145,000 of
expenses, and a net operating income of $387,000, the sale indicated a GIM of 10.89 and a Cap Rate of
6.34%.

Comparable Sale #5

Sale #5 (APN 4291-002-018) is located at 1221 2nd Street in Santa Monica (Map 671-D2),
approximately 0.5 miles west of the subject. The improvements reflect a multi-tenant, four-story, 2003-
built, good-quality, steel-frame office building in good condition. The property contains 24,000 SF of
rentable area and 7,500 SF of land area, for a 0.31:1 land-to-building ratio. There are 72 parking spaces,
for a 3.00:1 parking ratio. The property sold on May 8, 2003 for $9,500,000 (Document #1352096), or
$395.83/SF. Terms of the transaction included $4,840,000 down (51%), with an all-inclusive trust deed
carried back by the seller for $4,660,000 which wraps an existing loan dated January 24, 2003 for
$4,390,000 with Marchants Bank of Long Beach. The property is a multi-tenant office building and was
purchased by an investor who preferred to keep the operating data confidential.

Sales Comparison Analysis

Elements of comparison are the characteristics of properties and transactions that cause the prices to vary.
The appraiser has considered and compared all of the relevant differences between the comparable
properties and the subject property that could affect their values. Adjustments for them have been made to
the price of each comparable property, as detailed in the comparable sale adjustment grid. The common
elements of comparison considered in this sales comparison analysis are summarized below.

Property Rights Conveyed

The initial step in the valuation process is to determine the real property interest to be appraised. Once
this is established, the appraiser can relate the market data to the subject property. In the case of the
subject property, the leased fee interest is being appraised. Sales 2, 3, 4, 5, and 6 all reflected transfers of
similar interests; therefore, no adjustments were required. Sale 1 involved a fee simple transfer, which
has been reflected in our economic characteristics adjustments.

Financing Terms

The transaction price of one property may differ from that of an identical property due to different
financial arrangements. In some cases buyers pay higher prices for properties to obtain below-market
financing. Conversely, interest rates at above-market levels often result in lower sales prices. All of the
sales involved typical market terms by which the sellers received cash or its equivalent and the buyers
paid all cash or tendered typical down payments and obtained conventional financing at market terms for
the balance; therefore, no adjustments were required.

Conditions of Sale

When the conditions of sale are atypical, the result may be a price that is higher or lower than that of a
normal transaction. Adjustments for conditions of sale usually reflect the motivations of the buyer and
seller. When nonmarket conditions of sale are detected in a transaction, the sale should be be thoroughly
researched and related to the subject property only with great care. If possible, the sale should not be used
in an appraisal. None of the sales involved atypical conditions of sale and, therefore, no adjustments were
required.



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Market Conditions

Market conditions may change between the time of sale of a comparable property and the date of the
appraisal of the subject property. Changes in market conditions may be caused by inflation, deflation,
fluctuations in supply and demand, or other factors. Although the adjustment for market conditions is
often referred to as a "time adjustment," time is not the cause of the adjustment. Market conditions may
shift over time, but the cause of the adjustment is not time. If market conditions have not changed, no
adjustment is required even though considerable time may have elapsed. Our analysis of the subject office
sales market indicated no demonstrable change in market conditions during the 12 to 18 months,
therefore, no adjustments for price appreciation have been made.

Locational Characteristics

Location adjustments may be required when the locational characteristics of a comparable property are
different from those of the subject property. Location adjustments are usually expressed as percentages
that reflect the increase or decrease in value attributable to the property's location or neighborhood. Sales
1, 2, 3 and 4 all reflect relatively similar locational characteristics and require no adjustments for
comparison. Sale 5 reflects a slightly superior location on 2nd Street, one block east of Ocean Avenue,
and requires a small downward adjustment for comparison.

Physical Characteristics

If the physical characteristics of a comparable property and the subject property differ in many ways, each
of these differences may require comparison and adjustment to the comparable. Physical differences for
office properties may include building size, age, quality of construction, condition, architectural appeal,
identity, and amenities.

Sale #1 is slightly older than the subject, having been built in 1980. However, it has not been remodelled
to the degree that the subject has and, therefore lacks the architectural appeal and identity enjoyed by the
subject. This is offset, somewhat, by its superior land-to-building and parking ratios. Overall, it is
considered slightly inferior to the subject and would require a small upward adjustment for comparison.

Sale #2 is slightly older than the subject and has an inferior parking ratio, but reflects similar architectrual
appeal, identity and land-to-building ratio. It is the smallest of the five sales and is also a mixed-use
project, with ground-floor retail and upper-floor apartments. Overall, it is considered slightly inferior to
the subject and would require a slight upward adjustment for physical characteristics.

Sale #3 is similar in age to the subject, having been built in 1981. Its six-story glass-veneer design and
corner location reflects superior building identity to the subject's, but this early-1980's black-box design is
also becoming somewhat dated and lacks the architectural appeal of more modern, contemporary designs.
However, this property is substantially larger than the subject, at over 100,000 SF of rentable area, and
would require a moderate upward size adjustment for comparison.

Sale #4 is newer than the subject and was remodelled by the same architect design team that renovated the
subject. It reflects a superior corner location and superior architectural appeal and identity. Overall, it is
felt to be somewhat superior to the subject and would a small to moderate downward adjustment for
comparison.

Sale #5 is much newer than the subject, built in 2003, and reflects superior amenities including 15-foot
exposed ceilings, polished concrete, operable windows, and fiber-optic readiness. Overall, it is felt to be
superior and would require a small to moderate downward adjustment for comparison with the subject.


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Economic Characteristics

When appraisers analyze income-producing properties by the sales comparison approach, they make
comparisons and adjustments on the basis of the property's income characteristics, which can affect
desirability and sales prices. Characteristics that can affect the income a property can produce include
management, tenant composition, rent concessions, lease terms and expiration dates, renewal options, and
other lease provisions. Sale 1 involved a sale to an owner-user which would require a slight downward
adjustment for economic characteristics. Sales 2, 3, and 4 are all relatively similar in age to the subject
and were purchased as leased fee investments. Due to their ages, they are all assumed to have somewhat
similar leasing profiles and, therefore, no adjustment is indicated. Sale 5 is a new building with at-market
leases and, therefore, a small downward adjustment in indicated.

Please refer to the following adjustment grid for specific adjustments to the comparables.


                             COMPARABLE SALES ADJUSTMENT GRID


                                          Sale #1         Sale #2         Sale #3        Sale #4         Sale #5

Sale Date                              9/23/2004        8/17/2004       5/21/2004       7/1/2003       5/13/2003

    Transaction Price/SF               $ 311.61     $     312.50    $     292.34    $    360.41    $     395.83

       Property Rights                      0.0%            0.0%            0.0%           0.0%            0.0%
       Financing Terms                      0.0%            0.0%            0.0%           0.0%            0.0%
       Conditions of Sale                   0.0%            0.0%            0.0%           0.0%            0.0%
       Subtotal                             0.0%            0.0%            0.0%           0.0%            0.0%

    Normal Sale Price/SF               $ 311.61     $     312.50    $     292.34    $    360.41    $     395.83

       Market Conditions                    0.0%            0.0%            0.0%           0.0%            0.0%

    Time-Adjusted Normal Price/SF      $ 311.61     $     312.50    $     292.34    $    360.41    $     395.83

       Location Characteristics             0.0%            0.0%            0.0%           0.0%           -5.0%
       Physical Characteristics             5.0%            2.5%           10.0%         -10.0%          -10.0%
       Economic Characteristics            -2.5%            0.0%            0.0%           0.0%           -5.0%
       Subtotal                             2.5%            2.5%           10.0%         -10.0%          -20.0%

    Adjusted Sale Price/SF             $ 319.40     $     320.31    $     321.57    $    324.37    $     316.66




Reconciliation

From the market data available, five office properties were selected as most comparable to the subject.
The unadjusted sale prices for the comparable sales ranged from $292.34 to $395.83 per square foot, with
an average unadjusted sales price of $334.54 per square foot. We have adjusted the five comparable sales
based on pertinent elements of comparison as discussed and summarized in the preceding adjustment
grid. The final adjusted sale prices ranged from $316.66 to $324.37 per square foot, and averaged $320.46
per square foot. Based on this analysis, we have concluded a final per-unit value indicator for the subject


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Subject Address, City, State ZIP


of $320.00 per square foot. Based on the subject's xx,xxx square feet of rentable area, this yields a final
value indication for the subject via the sale comparison approach of $8,067,840, rounded to $8,070,000.
This equates to $320.09/SF of rentable area.


INCOME CAPITALIZATION APPROACH

Methodology

The income capitalization approach is widely applied in appraising income-producing properties such as
the subject. Anticipated future income is converted to a value estimate through the capitalization process.
The steps involved are as follows:

    •   Estimate the potential gross income.
    •   Estimate and deduct a vacancy and collection loss to derive effective gross income.
    •   Estimate and deduct expenses of operation to derive net operating income.
    •   Estimate economic life or the duration and pattern of the income stream.
    •   Select an appropriate capitalization method and technique.
    •   Complete the necessary computations to derive an economic valuation.
    •   Reconcile a value indication via the income capitalization approach.


The generally accepted techniques used in this approach are direct capitalization and discounted cash flow
(yield) analyses. Direct capitalization is used to convert an estimate of a single year's income expectancy
into an indication of value in one step. Yield capitalization uses the discounting procedure to convert
future benefits to present value on the premised of a required level of profit or rate of return on invested
capital. In this analysis, we have used direct capitalization, based on the limited number of tenants (four)
and the fact that most investors for smaller office properties like the subject rely upon the direct
capitalization in their pricing decisions.

Potential Gross Income

Potential gross income is the total income attributable to the real property at 100% occupancy before
deducting vacancy and collection loss and operating expenses. In the case of a multi-tenant property such
as the subject, potential gross income is comprised of market rent for vacant space or leases expiring
within 6 to 12 months, contract rent for leased space, expense reimbursement income, and parking
income. Unless stated otherwise, all rental rates are quoted on a monthly, per-square-foot basis. The four
tenant spaces are all leased with the earliest lease expirations being September 30, 2007 for Suites 300
and 400, two years and nine months from the date of value. Therefore, for purposes of this analysis, we
have estimated potential gross income based on current contract rents. However, in order to analyze the
subject's upside income potential or downside risk in terms of its income stream, we have conducted a
rental survey and analysis in order to determine market rent for the subject lease spaces.

Market Rent

In order to estimate the market rent applicable for the subject lease spaces, if vacant, a field survey and
interviews with leasing agents, landlords and tenants were conducted to obtain and verify asking and
achieved rental rates for similar-size office space in the subject market. Presented below and on the
following pages are a comparable rentals map, comparable rental summary, comparable rental
photographs, a discussion of the comparable rentals, and a reconciliation of the rental data into indicated


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Subject Address, City, State ZIP


fair market rental rates for the subject property's location, suite sizes, expense provisions, and overall
comparability to the comparable rentals. All rental rates are quoted on a monthly, per-square-foot basis.

                                   COMPARABLE RENTALS MAP




                                                           Subject




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Subject Address, City, State ZIP


                             COMPARABLE RENTALS SUMMARY


 No.        Address       Yr. Blt. Stories Bldg SF     Suite SF     Parking       Rent       Basis Notes

 R-1 1221 2nd Street       2003      4       24,000     5,701         3.00:1     $2.15       MG     (1)

 R-2 520 Broadway          1981      6      108,093     5,765         3.00:1     $2.20       FSG    (1)

 R-3 1321 7th Street       1980      3        8,500     1,450         4.00:1     $2.45       MG     (1)

 R-4 501 Colorado Ave.     1983      3       22,100     1,862         2.85:1     $2.50       FSG    (1)

 R-5 1447 2nd Street       2001      4       24,400     3,400         3.00:1     $2.50       MG     (1)

 R-6 429 Santa Monica      1982      7       83,000 1,952-3,333 3.00:1           $2.60       FSG    (1)

 R-7 1250 6th Street       1986      4       28,300     1,928         3.00:1     $2.65       FSG    (1)

 R-8 1546 7th Street       1990      3       14,000     8,000         3.00:1     $2.70       MG     (2)

 R-9 325 Wilshire Blvd.    1970      2       23,400     4,500         3.00:1     $2.85       MG     (3)

 R-10 1453 3rd Street      1981      4       92,300   745-7,054       2.50:1   $2.50-$3.00   FSG    (1)

Notes:

(1) Asking rates

(2) Ascent Media, 8,000 SF, 60 mos., 3% annual increases, no TI's

(3) Avenue Editing, 4,500 SF, 60 mos., 3% annual increases, no TI's




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Subject Address, City, State ZIP



                          COMPARABLE RENTAL PHOTOGRAPHS




 Rental #1: 1221 2nd Street, Santa Monica        Rental #2: 520 Broadway, Santa Monica




  Rental #3: 1321 7th Street, Santa Monica    Rental #4: 501 Colorado Avenue, Santa Monica




 Rental #5: 1447 2nd Street, Santa Monica    Rental #6: 429 Santa Monica Blvd., Santa Monica




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Subject Address, City, State ZIP



                       COMPARABLE RENTAL PHOTOGRAPHS, CONT'D.




  Rental #7: 1250 6th Street, Santa Monica                   Rental #8: 1546 7th Street, Santa Monica




Rental #9: 325 Wilshire Blvd., Santa Monica                 Rental #10: 1453 3rd Street, Santa Monica


Comparable Rentals Discussion and Analysis

Comparable Rental #1

Rental #1 is a 2003-built, 4-story, 24,000 SF office building located six blocks west of the subject at 1221
2nd Street. The building currently has Suite 400 (5,701 SF) available for lease for $2.15, modified gross
(MG). This high-tech space one block west of the Third Street Promenade has partial ocean views and
one exterior sign available.

Comparable Rental #2

Rental #2 is a 1981-built, 6-story, 108,093 SF office building located two blocks southwest of the subject
at 520 Broadway. There is a 5,765 SF space available on a sublease basis through February 28, 2007 for
$2.20, full-service gross (FSG). The landlord is about to complete a major renovation of the common
areas.


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Comparable Rental #3

Rental #3 is a 1980-built, 3-story, 8,500 SF office building located one block northwest of the subject at
1321 7th Street. The building currently has Suite 205 (1,450 SF) available for lease for $2.45, MG. This
Tudor-style building has a central garden patio, operable windows and doors, and a 4.00:1 parking ratio.

Comparable Rental #4

Rental #4 is a 1983-built, 3-story, 22,100 SF office building located two blocks south of the subject at 501
Colorado Avenue. The building has Suite 170 (1,862 SF) available for lease for $2.50, FSG. This
building has been remodeled and has a black-tinted window facade and hardwood floors.

Comparable Rental #5

Rental #5 is a 2001-built, 4-story, 24,400 SF office building located five blocks southwest of the subject
at 1447 2nd Street. The building has a 3,400 SF suite on the 3rd floor available for lease for $2.50, MG.
This recently constructed building has high ceilings, exposed steel beams, tubular metal railings and is
complete with balconies, patios and large floor-to-ceiling, operable windows. This unique and
contemporary property is located between Ocean Avenue and the Third Street Promenade.

Comparable Rental #6

Rental #6 is a 1982-built, 7-story, 83,000 SF office building located three blocks west of the subject at
429 Santa Monica Boulevard. This building has two suites (#230 with 3,333 SF and #270 with 1,952 SF)
available for lease for $2.60, FSG, subject to 3% annual increases (typical in this market) and a five-year
term.

Comparable Rental #7

Rental #7 is a 1986-built, 4-story, 28,300 SF office building located two blocks northwest of the subject
at 1250 6th Street. This building had Suite 305 (1,928 SF) available on a sublease basis for 11 months at
$2.65, FSG. This is a very well maintained building with operable windows and French doors and
outdoor patio areas. This suite includes four large office, a large conference room, and a kitchen.

Comparable Rental #8

Rental #8 is a 1990-built, 3-story, 14,000 SF office building located one block southeast of the subject at
1546 7th Street. Ascent Media recently leased 8,000 SF for 60 months at $2.70, MG, with 3% annual
increases and no tenant improvement (TI) allowance.

Comparable Rental #9

Rental #9 is a 1970-built, 2-story, 23,400 SF building with ground-floor retail and second-floor office
located four blocks northwest of the subject at 325 Wilshire Boulevard. Avenue Editing recently leased
approximately 4,500 SF for 60 months at $2.85, MG, with 3% annual increases and no TI allowance.

Comparable Rental #10

Rental #10 is a 1981-built, 4-story, 92,300 SF building located four blocks southwest of the subject on the
Third Street Promenade at 1453 3rd Street. This property has Third Street Promenade exposure, large


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exterior patios, on-site parking and valet, multiple city parking structures directly adjacent to the building,
and Broadway Deli as the ground-floor tenant. This recently renovated building has several suites
available for lease as office or medical use on a full-service gross basis: 2,000 SF #250 at $2.50, 3,443 SF
#319 at $2.75, 2,166 SF #350 at $2.50, 1,497 SF #370 at $2.75, 2,500 SF #430 at $2.25, 7,054 SF #400 at
$3.00, and 745 SF #490 at $3.00.

Recent Subject Leasing

The subject recently leased the 8,533 SF third floor (Suite 300) on October 1, 2004 for 3 years with one 3-
year option at market, an initial rate of $2.20, MG (net of electric), and a rent increase to $2.27 at the
beginning of year 2. The space became available on May 16, 2004 and the asking rate had been $2.35,
MG (net of electric) for a 3- to 10-year term. Please refer to the "Contract Rent" section below for a
detailed summary of the four subject leases.

Fair Market Rent Conclusion

Based on our analysis of the ten comparable rentals surveyed, recent leasing activity in the subject
property, and discussions with knowledgable Santa Monica office leasing agents, we have concluded with
market rent estimates for the subject lease spaces of $2.20, MG, for the 2nd and 3rd floor suites, and
$2.35, MG, for the 4th floor suite.

Contract Rent

We have reviewed a current rent roll (see Addendum attached) which has been corroborated by our
review of the leases (see discussion below) for the subject property.

Subject Leases

        xxxxxxx xxxx xxxxxxxxxxx, Inc.

        Original Lease/Addendum Date:              08/26/xx
        Premises:                                  Suite 202
        Rentable Area:                             2,459 SF
        Term:                                      5 years, 11/15/xx-11/14/xx
        Base Rent:                                 11/15/xx - $4,549.15, or $1.85/SF
        Base Rent Increase:                        11/15/xx - $4,672.10, or $1.90/SF
                                                   11/15/xx - $4,795.05, or $1.95/SF
                                                   11/15/xx - $4,918.00, or $2.00/SF
                                                   11/15/xx - $5,040.95, or $2.05/SF
        Share of Operating Expense Increase:       10.8%
        Operating & Tax Expense Base Year:         1998, FSG
        TI Allowance:                              $5,000, or $2.03/SF for paint & carpet

        1st Lease Extension Date:                  9/20/xx
        Term:                                      5-year extension, 11/15/xx-11/14/xx
        Base Rent:                                 11/15/xx - $5,164.00, or $2.10/SF
        Base Rent Increases:                       11/15/xx - $5,287.00, or $2.15/SF
                                                   11/15/xx - $5,410.00, or $2.20/SF
                                                   11/15/xx - $5,533.00, or $2.25/SF
                                                   11/15/xx - $5,656.00, or $2.30/SF



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       1st Lease Amendment Date:              1/21/xx
       Premises:                              Suite 200 added, 01/17/xx-11/14/xx
       Rentable Area:                         Increased to 3,359 SF
       Base Rent:                             02/01/xx - $6,664.00, or $1.98/SF
       Base Rent Increases:                   11/15/xx - $6,862.00, or $2.04/SF
                                              11/15/xx - $7,064.00, or $2.10/SF
                                              11/15/xx - $7,269.00, or $2.16/SF
                                              11/15/xx - $7,479.00, or $2.23/SF

       xxxxxx xxx, xxxx

       Original Lease/Addendum Date:          02/08/xx
       Premises:                              Suite 203
       Rentable Area:                         2,823 SF
       Term:                                  4 years, commences 60 days from date Lessor and
                                              Lessee mutually sign the Lease (02/18/xx) and shall
                                              expire 48 months thereafter
       Option to Extend:                      One period of four years; base rent to be greater of base
                                              rent for last month of term or prevailing market rent
       Base Rent:                             Mos. 01-12 - $2.75/SF
       Base Rent Increase:                    Mos. 13-24 - $2.83/SF
                                              Mos. 25-36 - $2.92/SF
                                              Mos. 37-48 - $3.00/SF
       Share of Operating Expense Increase:   Proportionate share
       Operating & Tax Expense Base Year:     2000, FSG
       TI Allowance:                          $25,000, or $8.86/SF

       1st Amendment Date:                    10/06/xx
       Premises:                              Suite 205 added (2,488 RSF)
       Rentable Area:                         Increased to 5,311 SF
       Base Rent:                             Additional monthly base rent for Suite 205 of $8,210.40.
                                              Initial combined rent for both suites shall be $15,973.65,
                                              commencing 10/30/xx
       Base Rent Increases:                   Base rent for Suite 205 shall be increased by 4%
                                              effective April 17th each year.
       Share of Operating Expense Increase:   An additional 10%; total combined share for both suites
                                              shall be 22%

       1st Lease Extension Date:              11/10/xx
       Term:                                  4-year extension ending 03/01/xx
       Base Rent:                             $10,356.00, or $1.95/SF, effective 03/01/xx
       Base Rent Increases:                   3% effective 03/01/xx and each year thereafter
       Share of Operating Expense Increase:   Effective 03/01/xx, Lessee no longer required to pay its
                                              share of Operating Expense Increases (i.e. 0% share)

       xxxxxx xx, xxx.

       Original Lease/Addendum Date:          06/23/xx
       Premises:                              Suite 300
       Rentable Area:                         8,553 SF
       Term:                                  3 years, 10/01/xx-09,31/xx


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Subject Address, City, State ZIP


       Option to Extend:                       One period of three years; base rent adjusted to 100% of
                                               prevailing market rent
       Base Rent:                              Mos. 01-12 - $18,816.60, or $2.20/SF
       Base Rent Increases:                    Mos. 13-24 - $19,381.10, or $2.27/SF
                                               Mos. 25-36 - $19,962.53, or $2.33/SF
       Share of Operating Expense Increase:    34%
       Operating & Tax Expense Base Year:      20xx, MG (net of electric)
       TI Allowance:                           $53,459, or $6.25/SF, plus $0.12 per usable square foot
                                               for preliminary space plan

       xxxxxxxxxxx xxxxxxxx, xxxx

       Original Lease/Addendum Date:           07/09/xx
       Premises:                               Suite 400
       Rentable Area:                          7,989 SF
       Term:                                   5 years, 10/01/xx-09/30/xx
       Option to Extend:                       One period of five years; base rent adjusted to greater of
                                               base rent for last month of term or prevailing market rent
       Base Rent:                              10/01/xx - $18,000, or $2.25/SF
       Base Rent Increases:                    Cost of Living Adjustments (COLA) Oct. 1st each year
       Share of Operating Expense Increase:    32%
       Operating & Tax Expense Base Year:      20xx, FSG
       TI Allowance:                           $50,000, or $6.26/SF


Based on the rent roll provided, current contract office rent for the four tenants totals $55,220.60 per
month, or $662,647 annually. This equates to an average current monthly rent of $2.19/SF which is
approximately 2.6% below the estimated average market rent for the building of $2.25/SF.

Expense Reimbursement Income

Based on the rent roll provided, 2004 monthly estimated operating and tax expense reimbursements are
$680 for xxxxxxx xxxx and $84 for xxxxxxxxxxx, for a total of $764.00 per month, or $9,168 annually.
However, based on our review of the Common Area Maintenance Costs worksheets provided, it appears
that the actual monthly operating and tax expense reimbursements are $733 for xxxxxxx xxxx and $200
for xxxxxxxxxxx, for a total of $933 per month, or $11,196 annually.

xxxxxx xxx no longer pays their prorata share of operating and tax expense increases, and xxxxxx xx
pays their prorata share over a 20xx base year amount.

For purposes of this analysis, we have recalculated expense reimbursements based on our forecasted
expenses, as shown on the following page.




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Subject Address, City, State ZIP


                  FORECAST EXPENSE REIMBURSEMENT CALCULCATION

                                                 Cent. West     Renaissance
                                                   14.4%          32.0%          Total
                 Estimated Taxes                     86,651
                 Less 1998 BY Taxes                  27,673
                 Difference                          58,978
                 25% of Increase                     14,744
                 14.4% Share                           2,123

                 Total Reimb Exps                    158,670         245,321
                 1998 Base Year                      116,335         221,188
                 Difference                           42,335          24,133
                 Prorate Share                         6,096           7,722

                 Total Reimbursement                   8,219           7,722     15,942

Parking Income

In addition to the four office lease tenants, there are two month-to-month parking rental agreements with
parties not leasing office premises in the building. According to the rent roll provided, current contract
parking rent for the four office tenants and two outside parking agreements is $6,324 per month, or
$75,888 annually.

Total Potential Gross Income

Based on contract office rent of $662,647, expense reimbursement income of $15,942, and parking
income of $75,888, total potential gross income (PGI) for the subject is estimated at $754,477.

Vacancy and Collection Loss

Based on our Market Analysis presented earlier, vacancy rates in Santa Monica are currently hovering
around 15% to 16%, but could drop as low as 12% if two large and significant leases are executed early in
2005 as planned. Prospects for 2005 are for a continued tightening in the market. Most investors apply
vacancy and collection loss allowances of 5% to 10% in their proformas for smaller office properties such
as the subject. Based on favorable demand trends and noting the subject's current 100% occupancy and
lease exipirations 33 to 38 months in the future, we have estimated a stabilized vacancy and collection
loss factor of 5.0%. Based on a total PGI of $754,477, the forecast vacancy and collection loss allowance
is $37,724.

Effective Gross Income

Deducting the estimated vacancy and collection loss allowance from estimated total PGI yields an
estimated effective gross income (EGI) of $716,753.

Operating Expenses

Our expense estimates are based on our analysis of subject property income and expense data for 2002,
2003 and Jan.-Nov. 2004 YTD (see Addendum attached); comparative expense data and statistics




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obtained from the Building Owners and Managers Association (BOMA); and comparable expense data on
other office properties of this size and age retained in our files.

Property Tax

Property Tax expense has been estimated based on our concluded value times the total tax rate of
1.0765% plus $1,607 for direct assessments. The total estimated property tax expense is $86,651, or
$3.44/SF.

Insurance

Insurance expense includes fire, casualty and liability insurance and has been estimated at $4,500, or
$0.18/SF.

Cleaning

Cleaning expense includes janitorial & supplies, and trash service. Cleaning expense has been estimated
at $28,000, or $1.11/SF.

Utilities

Utilities expense includes gas, electricity, water and sewer, and has been estimated at $68,000, or
$2.70/SF.

Roads/Grounds

Roads/Grounds expense includes gardening and parking maintenance. Roads/Grounds expense has been
estimated at $4,000, or $0.16/SF.

Security

Security expense includes alarm, intercom services, intercom repair, remotes, security gate, and security
system. Security expense has been estimated at $3,000, or $0.12/SF.

Management Fees

Property management expense has been estimated at 4.0% of EGI, or $28,670 ($1.14/SF).

Other Aministrative

Other administrative expenses include accounting, office expense, legal/lease review, and tax & licenses.
Other Administrative expense has been estimated at $2,500, or $0.10/SF.

Repairs/Maintenance

Repairs/Maintenance expense includes elevator service, pest control, electrical repair, elevator repair, fire
systems, HVAC service & repair, locksmith (locks & keys), maintenance labor & materials, painting,
plumbing, roof repair, repairs & maintenance, tenant expense, and carpets & floors. Repairs/Maintenance
expense has been estimated at $20,000, or $0.79/SF




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Total Operating Expenses

Total operating expenses have been estimated at $245,321. This equates to $9.73/SF or 34.2% of EGI.

Net Operating Income

After deducting estimated operating expenses of $245,321 from estimated EGI of $716,752, the stabilized
net operating income (NOI) estimate for the subject property is $471,432, or $18.70/SF. Please refer to
the following Income and Expense Summary.



                              INCOME AND EXPENSE SUMMARY
                                     Item                   Annual       PSF
                       Rental Income                        $662,647     $26.28
                       Expense Reimbursements                $15,942      $0.63
                       Parking Income                        $75,888      $3.01
                       Potential Gross Income (PGI)         $754,477     $29.93
                       Vacancy & Collection Loss (5%)      ($37,724)    ($1.50)
                       Effective Gross Income (EGI)         $716,752     $28.43
                       Operating Expenses:
                         Property Tax                        $86,651      $3.44
                         Insurance                            $4,500      $0.18
                         Cleaning                            $28,000      $1.11
                         Utilities                           $68,000      $2.70
                         Roads/Grounds                        $4,000      $0.16
                         Security                             $3,000      $0.12
                         Management Fees (4% of EGI)         $28,670      $1.14
                         Other Administrative                 $2,500      $0.10
                         Repairs/Maintenance                 $20,000      $0.79
                       Total Operating Expenses             $245,321      $9.73
                       Net Operating Income                 $471,432     $18.70




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Subject Address, City, State ZIP


Direct Capitalization

The overall capitalization rate selected for capitalizing the net operating income of the subject property
was derived from an economic analysis of three of the five comparable office building sales analyzed in
the sales comparison approach, summarized in the following table.



           GROSS INCOME MULTIPLIER & CAPITALIZATION RATE SUMMARY

   Sale                           Sale      Sale Price      PGI                     NOI
               Address                                                  GIM                   Cap Rate
   No.                            Date         PSF          PSF                     PSF
          2210 Main Street
    S-2                         08/17/04     $312.50       $25.54      12.23       $18.58       5.95%
          Santa Monica
          520 Broadway
    S-3                         05/21/04     $292.34       $25.20      11.60       $16.41       5.61%
          Santa Monica
          1901 Main Street
    S-4                         07/01/03     $360.41       $33.09      10.89       $22.87       6.34%
          Santa Monica
          Subject Address
   Subj                                                    $29.92                  $18.71
          Santa Monica


Overall Capitalization Rate Technique

The three improved sales analyzed reflect a relatively narrow range of Cap Rates from 5.61% to 6.34%.
In addition to the three cap rate sales, opinions as to applicable cap rates werer obtained from office
investment brokers interviewed during the course of this appraisal. The office brokers we spoke to at
Charles Dunn Company, Coldwell Banker Commercial, Equis Corporation, Grubb & Ellis, and Lee &
Associates indicated a limited availability of well-located, good-quality, smaller office buildings in Santa
Monica such as the subject. This has reportedly kept upward pressure on prices per square foot and
downward pressure on capitalization rates. The brokers we spoke to indicated that applicable
capitalization rates for a smaller, well-located, high-identity building in the downtown core such as the
subject, if available, would be in the 5.5% to 6.5% range – depending on the credit worthiness of the
tenants and lease terms.

Based on our broker interviews and our analysis of the comparable cap rate sales, including their upside
rental income potentials and overall comparability to the subject, we have selected a 6.00% overall
capitalization rate by which to capitalize the forecasted net operating income into a value indication for
the subject property via the overall capitalization rate technique. Based on an estimated net operating
income of $471,432 and an overall capitalization rate of 6.00%, the indicated value for the subject
property via the income capitalization appraoch is $7,857,200, rounded to $7,860,000. This equates to
$311.76/SF of rentable area.

Gross Income Multiplier Technique

The three improved sales analyzed also reflected a relatively narrow range of GIMs, from 10.89 to 12.23.
In addition to Cap Rate opinions, we also interviewed investment brokers for their opinions of an
appropriate GIM for the subject property. The brokers we spoke to indicated that applicable GIMs for




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Subject Address, City, State ZIP


similar buildings in the downtown core would be in the 10.00 to 11.00 range, which is somewhat lower
than the GIMs indicated from the sales analyzed.

Based on our broker interviews and our analysis of the GIMs from the sales, including their upside rental
income potentials, expense ratios, and overall comparability to the subject, we have selected a 10.50 GIM
by which to capitalize the potential gross income into a value indication for the subject property via the
gross income multiplier technique. Based on the forecasted potential gross income of $754,477 and a
GIM of 10.50, the indicated value for the subject property via the gross income multiplier technique is
$7,922,009, rounded to $7,920,000. This equates to $314.14/SF of rentable area.


RECONCILIATION

The value indications from the approaches to value are summarized as follows:



                              SUMMARY OF VALUE CONCLUSIONS
          Cost Approach                                     N/A                     N/A
          Sales Comparison Approach                      $8,070,000               $320/SF
          Income Capitalization Approach:
            Overall Capitalization Rate                  $7,860,000               $312/SF
            Gross Income Multiplier                      $7,920,000               $314/SF
          Final Concluded Value                          $7,900,000               $313/SF



In the final analysis, the sale comparison approach is of secondary importance in estimating market value
as most purchasers of multi-tenant leased investments such as the subject rely more heavily on the income
capitalization approach to value. The income capitalization approach is most pertinent of the two
approaches employed and should be weighted most heavily in the final reconciliation.

In the income capitalization approach, we utilized two widely recognized techniques, the overall
capitalization rate and the gross income multiplier, which yielded value indications with one percent of
each other.

In the final analysis, and placing the most weight on the values indicated via the income capitalization
approach, we have concluded with a market value as is of the leased fee interest in the subject property, as
of Date of Value of $7,900,000.

                      MARKET VALUE AS IS, AS OF DATE OF VALUE
                   SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS
                                      ($7,900,000)




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INSURABLE VALUE ESTIMATE

Insurable Value

The definition of insurable value may vary from state to state and from insurance to insurance company;
therefore, we have attempted to use a very basic approach to this estimate. We have first estimated the
replacement cost of the improvements and then subtracted non-insurable items such as architect's fees and
indestructible items such as excavation costs, foundations, site work, site improvements, and underground
piping. These items are generally referred to as insurance exclusions. This approach excludes
depreciation, since most parties requesting insurable value want to know the cost of replacing the
improvements.

Replacement Cost and Insurance Exclusions

The replacement cost for the improvements has been estimated using the Marshall Valuation Service. We
have developed the replacement cost estimate on a per-square-foot basis, which includes "soft costs" such
as architect's fees, contractor's overhead and profit, construction loan interest and fees. Section 15, Pages
17 and 19 of Marshall Valuation Service, adjusted by current and local cost multipliers from Section 99
Pages 3 and 6, and insurance exclusions from Section 96, Page 1, estimated to be approximately 4% of
replacement costs new, provided the weighted average adjusted base cost per square foot of gross
building area of approximately $78.93 for the subject office building and parking levels.

Based on this analysis, we have estimated insurable value to be $4,930,349, rounded to $4,930,000.

                      INSURABLE VALUE AS OF DATE OF VALUE
              FOUR MILLION NINE HUNDRED THIRTY THOUSAND DOLLARS
                                   ($4,930,000)




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                                   ADDENDA




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                          CONTINGENT AND LIMITING CONDITIONS

The market value set forth in this appraisal report is subject to the following contingent and limiting
conditions.
   1. The Appraiser assumes no responsibility for matters of a legal nature affecting the property
      appraised or the title hereto, nor does the Appraiser render any opinion as to the title, which 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 various sketches, maps, plats, and exhibits in this report are included for illustration purposes
      only, to assist the reader in visualizing the property and are not necessarily drawn to scale. The
      Appraiser has made no survey of the property.
   5. The Appraiser, by reason of this report, is not required to give further consultation or testimony or
      attendance in court, with reference to the property in question, unless arrangements have been
      previously made a reasonable time in advance.
   6. Any distribution of the valuation in the report between land and improvements applies only under
      the existing program of utilization. The separate valuations for land and building must not be
      used in conjunction with any other appraisal and are invalid if so used.
   7. The Appraiser assumes that there are no hidden or un-apparent conditions of the property,
      subsoil, or structure, which would render it more or less valuable. The Appraisers assume no
      responsibility for such conditions, or for obtaining engineering studies that may be required to
      discover such factors.
   8. Information, estimates, and opinions furnished to the Appraiser, and contained in the report, were
      obtained from sources considered reliable and believed to be true and correct. However, the
      Appraiser gives no responsibility for accuracy or warranty of such items.
   9. Possession of this report, or a copy thereof, does not carry with it the right of publication.
   10. Neither all, nor any part of the content of the report, or copy thereof (including conclusions as to
       the property value, the identity of the Appraiser, professional designations, reference to any
       professional appraisal organizations, or the firm with which the Appraiser are connected), shall be
       disseminated to the public through advertising, public relations, news, sales, or other media
       without the prior written consent and approval of the appraiser.
   11. That the date of value to which the opinions expressed in this report apply is set forth in this
       report. The Appraiser assumes no responsibility for economic or physical factors occurring at
       some later date, which may affect the opinions herein stated. The forecast, projections, or
       operating estimates contained herein are based on current market conditions, anticipated short-
       term supply and demand factors, and a continued stable economy. These forecasts are, therefore,
       subject to changes with future conditions.
   12. That no claim is intended to be expressed for matters of expertise, which would require
       specialized investigation or knowledge beyond that ordinarily employed by real estate appraisers.
       The Appraiser claims no expertise in areas such as, (but not limited to), legal, structural, pest
       control, mechanical, etc.
   13. That the Appraiser has personally inspected the subject property, and finds no obvious evidence
       of structural deficiencies except as stated in this report; however, no responsibility for hidden
       defects or conformity to specific governmental requirements, such as fire, building and safety,


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Subject Address, City, State ZIP


       earthquake or occupancy codes, can be assumed without provision of specific professional or
       governmental inspections.
   14. Unless otherwise stated in the report, the existence of hazardous materials, which may or may not
       be present on the property, was not observed by the appraiser. The appraiser has no knowledge of
       the existence of such materials on or in the property. The appraiser, however, is not qualified to
       detect such substances such as asbestos, urea-formaldehyde foam insulation, and other potentially
       hazardous materials may affect the value of the property. The value estimated is predicated on the
       assumption that there is no such material on or in the property that would cause a loss in value.
       No responsibility is assumed for such conditions or for any expertise or engineering knowledge
       required to discover them. The intended user of this report is urged to retain an expert in this
       field, if desired.
   15. The Americans with Disabilities Act (ADA) became effective January 26, 1992. The appraiser
       has not made a specific compliance survey or analysis of the property to determine whether or not
       it is in conformity with the various detailed requirements of ADA. It is possible that a conformity
       survey of the property and a detailed a detailed analysis of the requirements the ADA would
       reveal that the property is not in compliance with one or more of the requirements of the act. If
       so, this fact could have a negative impact upon the value of the property. Since the appraiser has
       no direct evidence relating to this issue, possible noncompliance with the requirements of ADA
       was not considered in estimating the value of the property.
Acceptance of and/or use of this appraisal report constitute acceptance of the foregoing general
assumptions and limiting conditions.




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Subject Address, City, State ZIP


                               ENGAGEMENT LETTER (1 OF 6)




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Subject Address, City, State ZIP


                               ENGAGEMENT LETTER (2 OF 6)




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Subject Address, City, State ZIP


                               ENGAGEMENT LETTER (3 OF 6)




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Subject Address, City, State ZIP


                               ENGAGEMENT LETTER (4 OF 6)




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Subject Address, City, State ZIP


                               ENGAGEMENT LETTER (5 OF 6)




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Subject Address, City, State ZIP


                               ENGAGEMENT LETTER (6 OF 6)




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Subject Address, City, State ZIP


                                        REGIONAL MAP




                              Subject




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Subject Address, City, State ZIP


                                     CITY MAP




                           Subject




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Subject Address, City, State ZIP


                                   NEIGHBORHOOD MAP




                                   Subject




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Subject Address, City, State ZIP


                                   PLAT MAP




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Subject Address, City, State ZIP


                                   PROPERTY DETAIL REPORT




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Subject Address, City, State ZIP


                              BUILDING AREA CALCULATIONS




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Subject Address, City, State ZIP


                             BASEMENT LEVEL PARKING PLAN




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Subject Address, City, State ZIP


                                   1ST FLOOR PARKING PLAN




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Subject Address, City, State ZIP


                                   2ND FLOOR OFFICE PLAN




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Subject Address, City, State ZIP


                                   3RD FLOOR OFFICE PLAN




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Subject Address, City, State ZIP


                                   4TH FLOOR OFFICE PLAN




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Subject Address, City, State ZIP


                                   DUE DILIGENCE CHECKLIST




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Subject Address, City, State ZIP



                                     Subject Photographs




             Front, West Elevation                          Front, West Elevation




       Front and South Side Elevations                      Side, South Elevation




             Side, South Elevation             Cantilevered Office Floors / Architectural Detail




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Subject Address, City, State ZIP



                                     Subject Photographs




             South Side Elevation                             Rear Elevation




 Enlosed Trash Receptacle Area off Rear Alley     Ramp Down to Basement Parking off Alley




                Rear Elevation                         Rear and North Side Elevations




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Subject Address, City, State ZIP



                                      Subject Photographs




   North View of xxx Street, Subject at Right       South View of xxx Street, Subject at Left




   North View of Rear Alley, Subject at Left       South View of Rear Alley, Subject at Right




           Main Building Entrance                           1st Floor Parking Entrance




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Subject Address, City, State ZIP



                                      Subject Photographs




             Main Building Lobby                             Main Building Lobby




                 Elevator Cab                               1st Floor Parking Level




            1st Floor Parking Level                         Basement Level Parking




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Subject Address, City, State ZIP



                                     Subject Photographs




  2nd Level Courtyard and Elevator Landings                xxxxxxx xxxx Office Photos




                    Lobby                                       Exterior Office




              Interior Office Area                            Interior Office Area




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Subject Address, City, State ZIP



                                      Subject Photographs




           xxxxxx xxx Office Photos                         Interior Office




               Conference Room                              Interior Office




        Open Area with Billiard Table                        Dining Area




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Subject Address, City, State ZIP



                                    Subject Photographs




          xxxxxx xx Office Photos                           Lobby Area




              Open Office Area                            Conference Room




               Interior Office                             Kitchen Area




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Subject Address, City, State ZIP



                                     Subject Photographs




         xxxxxxxxxxx Office Photos                         Open Office Area




             Conference Room                               Open Office Area




               Exterior Office                               Filing Area




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Subject Address, City, State ZIP



                                     Subject Photographs




          4th Level Patio/Walkway                            2nd Level Courtyard




          Typical Elevator Landing                         Rooftop HVAC Equipment




         Rooftop HVAC Equipment                            Rooftop HVAC Equipment




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Subject Address, City, State ZIP



                                     Subject Photographs




     Property One Lot North of Subject                Property Adjacent North of Subject




     Property Adjacent South of Subject             Property Diagonal Southwest of Subject




      Fire Station Across from Subject              Property Diagonal Northwest of Subject




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Subject Address, City, State ZIP


                                   RENT ROLL




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Subject Address, City, State ZIP



              OWNER'S CAM COSTS AND INCOME STATEMENT SUMMARY

                                                      CAM Costs                Income Statement
                                                   2002       2003      2003       1/04-11/04 Annualized
               INCOME
                  Scheduled Rent                                        678,818     589,297      642,869
                  Vacancy/Delinquency                                   (57,653)    (79,298)     (86,507)
                  Rental Income - Collected                             621,165     509,999      556,363
                  Parking Income                                         60,677      61,963       67,596
                  CAM Reimb.                                              6,694      13,634       14,873
                  Interest Income                                         2,390       1,752        1,911
                  Rent Concessions                                         (702)        -            -
               TOTAL INCOME                                             690,224     587,348      640,743
                                                                                                     -
               OPERATING EXPENSES                                                                    -
               GENERAL                                                                               -
                  Accounting                           -          -       1,543       2,600        2,836
                  Alarm                                873      1,067     1,067         763          832
                  Office Expense                       -          -           17         29            32
                  Elevator Service                   2,306      2,496     2,496       2,222        2,424
                  Gardening                          4,600      6,308     4,304       3,390        3,698
                  Insurance / Ins-Fire/Liability     5,932      5,213     3,175       4,901        5,347
                  Intercom Services                    510        566       566         433          472
                  Janitorial & Supplies             26,498     25,607    25,607      29,588       32,278
                  Legal/Lease Review                   -          -         -         1,885        2,056
                  Management Fees                   32,975     33,424    33,424      28,598       31,198
                  Pest Control                           75       517       517         330          360
                  Property Tax                      56,889     59,143    59,143      55,065       60,071
                  Tax & Licenses                       -          -         813         899          981
                  Trash Service                      2,383      1,823     1,823       1,612        1,759
               TOTAL GENERAL EXPENSES                                   134,495     132,315      144,344
                                                                                                     -
               REPAIRS                                                                               -
                  Electrical Repair                  2,016      2,238     2,238        1,733       1,891
                  Elevator Repair                      -        1,172     1,172          117         128
                  Fire Systems                         711        231       231          365         398
                  HVAC Service & Repair              6,186      5,231     2,891        4,908       5,354
                  Intercom Repair                      -          275       275          785         856
                  Locksmith / Locks and Keys             60       805       805          993       1,083
                  Maint-Labor & Materials              756      3,802     3,902        2,188       2,387
                  Painting                             875        226       226        1,923       2,098
                  Parking Maintenance                2,688        -         -            -           -
                  Plumbing                           3,194      2,706     2,706        9,957      10,862
                  Roof Repair                          -          424       424        1,347       1,469
                  Repairs & Maintenance                261        -         -            -           -
                  Security Gate                        592      5,181     1,249          582         635
                  Security System                      270        274       274            80          87
                  Tenant Expense                       -          -         554         (191)       (208)
                  Carpets & Floors                     -        2,142       -            -           -
                  Remotes                              125        -         -            -           -
               TOTAL REPAIRS                                             16,947       24,787      27,040
                                                                                                     -
               UTILITIES                                                                             -
                  Gas                                2,625      3,743     3,743        2,893       3,156
                  Electrical/Water/Sewer            67,786     64,087    64,087       62,040      67,680
               TOTAL UTILITIES                      70,411     67,830    67,830       64,933      70,836
                                                                                                     -
               TOTAL EXPENSES                          -          -     219,272     222,035      242,220
                                                                                                     -
               NET OPERATING INCOME                    -          -     470,952     365,313      398,523
                                                                                                     -
               CAPITAL IMPROV & OTHER                                                                -
                  Impr - Carpet                        -          -       2,042          -           -
                  Impr - Roof &/or Gutters             -          -         -          3,328       3,631
                  Impr - Security Fencing/Gates        -          -       3,932        5,500       6,000
                  Impr - HVAC                          -          -       3,902        2,936       3,203
                  Impr - Landscaping                   -          -       2,004          -           -
                  Impr - Signs                         -          -         923          -           -
               TOTAL CAP IMPROVEMENTS                  -          -      12,803       11,764      12,833
                                                                                                     -
               TOTAL EXPENSES & CAP IMPR                                232,075     233,799      255,053

                   Total Reimbursable C.A. Exps.   221,188    228,698




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Subject Address, City, State ZIP


                         APPRAISER'S EXPENSE ANALYSIS AND FORECAST

                                       CAM Costs                 Income Statement             Forecast
                                   2002        2003       2003     1/04-11/04 2004 Annlzd     $       PSF
Rental Income                                                                               662,647 26.28
Expense Reimbursements                                                                       15,942    0.63
Parking Income                                                                               75,888    3.01
Potential Gross Income (PGI)                                                                754,477 29.93
Less: V&CL (5%)                                                                              37,724    1.50
Effective Gross Income (EGI)                                                                716,753 28.43
Operating Expenses:
  Property Tax                      56,889      59,143    59,143     55,065       60,071     86,651    3.44
  Insurance / Ins-Fire/Liability     5,932       5,213     3,175      4,901        5,347      4,500    0.18
    Janitorial & Supplies           26,498      25,607    25,607     29,588       32,278
    Trash Service                    2,383       1,823     1,823      1,612        1,759
  Cleaning                          28,881      27,430    27,430     31,200       34,036     28,000    1.11
    Gas                              2,625       3,743     3,743      2,893        3,156
    Electrical/Water/Sewer          67,786      64,087    64,087     62,040       67,680
  Utilities:                        70,411      67,830    67,830     64,933       70,836     68,000    2.70
    Gardening                        4,600       6,308     4,304      3,390        3,698
    Parking Maintenance              2,688         -         -          -            -
  Roads/Grounds:                     7,288       6,308     4,304      3,390        3,698      4,000    0.16
    Alarm                              873       1,067     1,067        763          832
    Intercom Services                  510         566       566        433          472
    Intercom Repair                    -           275       275        785          856
    Remotes                            125         -         -          -            -
    Security Gate                      592       5,181     1,249        582          635
    Security System                    270         274       274         80            87
  Security:                          2,370       7,363     3,431      2,643        2,883      3,000    0.12
  Management Fees                   32,975      33,424    33,424     28,598       31,198     28,670    1.14
       Accounting                      -           -       1,543      2,600        2,836
       Office Expense                  -           -           17         29           32
       Legal/Lease Review              -           -         -        1,885        2,056
       Tax & Licenses                  -           -         813        899          981
  Other Administrative:                -           -       2,373      5,413        5,905      2,500    0.10
    Elevator Service                 2,306       2,496     2,496      2,222        2,424
    Pest Control                         75        517       517        330          360
    Electrical Repair                2,016       2,238     2,238      1,733        1,891
    Elevator Repair                    -         1,172     1,172        117          128
    Fire Systems                       711         231       231        365          398
    HVAC Service & Repair            6,186       5,231     2,891      4,908        5,354
    Locksmith / Locks and Keys           60        805       805        993        1,083
    Maint-Labor & Materials            756       3,802     3,902      2,188        2,387
    Painting                           875         226       226      1,923        2,098
    Plumbing                         3,194       2,706     2,706      9,957       10,862
    Roof Repair                        -           424       424      1,347        1,469
    Repairs & Maintenance              261         -         -          -            -
    Tenant Expense                     -           -         554       (191)        (208)
    Carpets & Floors                   -         2,142       -          -            -
  Repairs/Maintenance:              16,441      21,987    18,162     25,892       28,246     20,000    0.79
Total Expenses                     221,188     228,698   219,272    222,035      242,220    245,321    9.73
Net Operating Income                                                                        471,432   18.70




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Subject Address, City, State ZIP


                                   QUALIFICATIONS




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Subject Address, City, State ZIP


                      CERTIFIED GENERAL REAL ESTATE LICENSE




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