Appraisal: Basilica of the Holy Apostles

BENNETT FRANKLIN REAL ESTATE SERVICES

____________________________________________________________________________________________________________ SUITE 203 MEADOW PLACE, 200 NORTH MAIN STREET, EAST LONGMEADOW, MA 01028

(413) 526-0800 FAX (413) 526-0822 www.bennettfranklin.com

SUMMARY APPRAISAL REPORT 339 STATE STREET

SPRINGFIELD, MASSACHUSETTS

PREPARED FOR

ATTORNEY STEVEN WEISS SHATZ, SCHWARTZ AND FENTIN, P.C.

1441 MAIN STREET, SUITE 1100 SPRINGFIELD, MASSACHUSETTS 01103

EFFECTIVE DATE OF “MARKET CONDITIONS” VALUATION DECEMBER 22, 2011

EFFECTIVE DATE OF “AS IS” VALUATION

DECEMBER 22, 2011




December 30, 2011 Atty. Steven Weiss Shatz, Schwartz and Fentin, P.C. 1441 Main Street, Suite 1100 Springfield, MA 01103 Re: Summary Appraisal Report 339 State Street, Springfield, Massachusetts Bennett Franklin Appraisal Report #4591 Dear Atty. Weiss: At your request, for your clients benefit we have inspected the property located at 339 State Street in Springfield, Massachusetts (the subject property). The subject property contains approximately 0.78 acres of land that is improved with a multi story building that contains approximately 80,000 square feet. The subject property was constructed for use as the Springfield Masonic Temple and is now utilized as the Basilica of the Holy Apostle. The subject property was inspected and photographed on December 22, 2011. The purpose of our inspection and the accompanying analysis is to provide our opinion of the “as is” market value of the fee simple interest in the subject property as of December 22, 2011. The intended use of the appraisal is to enable the client to appropriately analyze the property for internal business purposes loan underwriting and/or credit decisions. The intended users of the report are Steven Weiss and his client. The analysis and conclusions within this Summary Appraisal Report are based upon field research, data collected from market participants and public records. The scope of this assignment includes all applicable methods of valuation. It is our determination that this appraisal does not result in a misleading or confusing report. It is understood that the client is aware of the scope of this appraisal and is familiar with the subject property and/or the subject property type. The accompanying report has been made in accordance with the minimum standards set forth in Title XI of the Financial Institutions Reform, Recovery Act (FIRREA) as amended and the Uniform Standards of Professional Appraisal Practice (USPAP). Included in the report is a summary description and analysis of the real estate, all pertinent data, valuation methodology, supporting relevant exhibits, and addenda to the report.

As indicated we have inspected the subject property and we have conducted market research respective to similar properties in the market area. In accordance with the definitions, certifications and limiting conditions as set forth in this Summary Appraisal Report, it is our opinion that the "as is" market value of the fee simple interest in the subject property as of December 22, 2011 is:

EIGHT HUNDRED THOUSAND DOLLARS $800,000

Thank you for contacting us for this assignment. If you have any questions concerning our valuation and analysis we may be reached at (413) 526-0800. Sincerely,

Jerome C. Franklin MA Cert. Gen. R.E. Appraiser Lic#5219 (Expires November 9, 2013)

Robert E. Bennett

Bennett Franklin Appraisal # 4591 / Page 4

SUMMARY OF PROPERTY DETAILS

Location: 339 State Street, Springfield, MA. The property is further identified on the Springfield Assessor’s Map ID 111100591.

Ownership: Prais and glory Church of God in Christ, Inc.

Type of Report: Summary Appraisal Report

Property Rights Appraised: Fee Simple Interest

Value Appraised: Market Value

Date of Market Conditions: December 22, 2011

Date of “As Is” Valuation: December 22, 2011

Date of Report December 30, 2011

Land Area: Approximately 0.78 acres

Zoning: Commercial A

Existing Improvements: The property is improved with a multi-story building that contains approximately 80,000 square feet of gross building area that was constructed as the Springfield Masonic Temple and is now utilized as the Basilica of the Holy Apostle.

Highest and Best Use: For use in a municipal, institutional or commercial related capacity.

“As Is” Value: Income Approach Sales Comparison Approach Cost Approach

$ 615,000 $1,000,000 N/A

“As Is” Market Value Conclusion: $800,000

Exposure / Marketing Time: 12 to 24 Months


Description of the Summary Appraisal Report Process This valuation is an appraisal presented in a summary report, which can be used by financial institutions and individuals subject to Title XI of FIRREA and USPAP. The scope of this assignment includes the most applicable methods of valuation. It is our determination that these approaches to value do not result in a misleading or confusing report. It is understood that the client is familiar with the specific property or the type of property being appraised and the client is aware of the scope of this Summary Appraisal Report. Purpose of the Appraisal The purpose of our inspection and the accompanying analysis is to provide our opinion of the “as is” market value of the fee simple interest in the subject property as of December 22, 2011. Intended Use and Intended User The intended use of the appraisal is to enable the client to appropriately analyze the property for internal business purposes, loan underwriting and/or credit decisions. The intended users of the report are Steven Weiss and his client. Competency Statement Based on our knowledge of the real estate market and our training and education, we have the knowledge and experience to complete this assignment in accordance with the competency provision in the Uniform Standards of Professional Appraisal Practice (USPAP). Contingent and Limiting Conditions We assume no responsibility for matters legal in nature, nor do we render any opinion as to the title which is assumed to be marketable. Any sketches, plats, maps, or other exhibits in this report are included to assist the reader in visualizing the property and we assume no responsibility for their accuracy. We have made no survey of the property. We are not required to give testimony or appear in court because of having made this appraisal report, with reference to the property in question, unless arrangements have been previously made thereof in writing. We assume that there are no hidden or unapparent conditions of the property, subsoil or structures which would render it more or less valuable. We assume no responsibility for such conditions or for engineering which might be required to discover such factors. We have assumed that the subject site will or has met all acceptable standards with regard to any existing Federal or State hazardous waste material laws.


Information, estimates and opinions furnished to us and contained in this report were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy can be assumed by us. The distribution of the total valuation of this report between land and improvements applies only under the existing program of utilization. The separate valuation for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The Americans With Disabilities Act of 1990 requires, in some instances, retrofitting of buildings to maximize accessibility by persons with disabilities. Assumptions regarding cost of compliance by the owner (s) with this civil rights act, which became effective on January 26, 1992, have not been made in arriving at the opinion of value set forth herein. Please contact the undersigned in this regard if such additional work will be required for present purposes. Neither all nor any part of the contents of this report, or copy thereof, shall be used for any purpose by anyone but the client without the previous written consent of the appraiser and the client; nor shall it be conveyed by anyone including the client, to the public through advertising, public relations, news, sales, or other media without the written consent and approval of the author, particularly as to valuation conclusions, the identity of the appraiser, or a firm with which he is connected. We have complied with the appraisal standards as promulgated by the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board of the Appraisal Foundation. We who were involved in this assignment worked in tandem and have experience in the valuation of property similar to the subject and are competent in the valuation of such property. We certify that we are appropriately licensed or certified to appraise the subject property in the State in which it is located.


Certification I hereby certify that 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. My analysis, opinion, and conclusion were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. I have made a personal inspection of the property that is the subject of this report. No one provided significant professional assistance to the persons signing this appraisal report. I have not provided any services regarding the subject property within the prior three years. I have complied with the clients instructions, standards and specifications in conducting the research, analysis and formulation of the value conclusion.

Robert E. Bennett


Qualification of Robert E. Bennett Education Syracuse University - BS Appraisal courses attended and successfully completed: American Institute of Real Estate Appraisers Course 1A, American Institute of Real Estate Appraisers Course 1B, American Institute of Real Estate Appraisers Course 2, American Institute of Real Estate Appraisers Course 6, Appraisal Institute Standards of Professional Practice Part A Business Experience Bennett Franklin Real Estate Services, Partner, East Longmeadow, MA MFC Systems, Vice President/Consultant/Broker/Appraiser, Springfield, MA BayBank, Springfield, MA, Senior Vice President Massachusetts Mutual Life Insurance Company, Springfield MA, Director of Real Estate Investment Licenses Massachusetts Licensed Real Estate Broker # 75765 Massachusetts Certified General Real Estate Appraiser License # 744 (Pending Renewal) Current and Past Memberships Boy Scouts of America, Pioneer Valley Council, Director Anti-Displacement Project, Director Brightwood Development Corporation, Director, Member of Finance Committee Greater Springfield Inc., Mortgage Pool Member 32 Byers Street SRO, Springfield, Massachusetts, Director Springfield Mortgage Finance Pool, Executive Committee Client List Available Upon Request


Certification I hereby certify that 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. My analysis, opinion, and conclusion were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. I have made an inspection of the property that is the subject of this report. No one provided significant professional assistance to me. I certify that, to the best of my knowledge and belief, the reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. I certify that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I have not provided any services regarding the subject property within the prior three years. complied with the clients’ instructions, standards and specifications in conducting the research, analysis and formulation of the value conclusion.

Jerome C. Franklin MA Cert. Gen. R.E. Appraiser Lic. #5219 (Expires 11/9/2013)


Qualifications of Jerome C. Franklin Education Bentley College - MBA, 1992 Western New England College - BSBA, 1989 Appraisal Institute courses attended and successfully completed Real Estate Appraisal Principles – 110, Real Estate Appraisal Procedures - 120 Basic Income Capitalization - 310 Standards of Professional Practice, Part A - 410, Part B – 420, Part C - 430 Advanced Income Capitalization - 510 Highest & Best Use and Market Analysis - 520 Advanced Sales Comparison and Cost Approaches – 530 Report Writing and Valuation Analysis – 540 Advanced Applications - 550 Passed Appraisal Institute General Comprehensive Examination Business Experience Bennett Franklin Real Estate Services, Partner, East Longmeadow, MA Independent Real Estate Appraiser / Consultant / Broker, Springfield, MA Crowley Real Estate Appraisers, Inc. Springfield, MA, Real Estate Appraiser United States Navy, Electrical Technician Licenses Massachusetts Certified General Real Estate Appraiser License #5219 Connecticut Certified General Real Estate Appraiser License #894 Massachusetts Licensed Real Estate Broker #9018019 New York Certified General Real Estate Appraiser License #46000046409 Current and Past Memberships General Associate Member of the Appraisal Institute; Candidate for MAI designation Member of the Greater Springfield Board of Realtors Member of the Massachusetts Board of Realtors and National Association of Realtors Springfield Planning Board (Chairman) Springfield Taxicab Commission Better Homes of Springfield, Board of Directors Client List Available Upon Request


Scope of the Appraisal We have inspected the property and have spoken with representatives of the owner of the property. We have reviewed plans regarding the improvements at the subject property and we inspected pertinent public documents including the deed to the property, assessment and tax records of the property and other public data respective to similar properties within the subject market area. We have conducted research to determine the existence of adverse conditions. We have conducted an investigation of economic conditions and trends in various real estate markets to discover matters that influence the value of the subject property. The market information contained in this report includes a review of applicable sales reported by the Hampden County Registry of Deeds, local commercial real estate brokers and data sources such as The Warren Group. We have spoken with / reviewed information provided by representatives of the City of Springfield Assessor’s Office, Planning Board, Conservation Commission, Building Department, Tax Collectors Office, etc. We have also spoken with a number of individuals within municipal offices of communities neighboring Springfield, MA. Included in the appraisal process is an analysis of the site to first determine the highest and best use of the property “as vacant”. After highest and best use is determined, the sales comparison, income and cost approaches are then considered with one or more approaches being utilized to determine our opinion of market value for the property. For this assignment two of the three approaches (sales comparison and income approaches) were employed to value the property. This Summary Appraisal Report has been made in accordance with the assumptions and limiting conditions set forth herein and is subject to the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board of the Appraisal Foundation. There are no additional extraordinary assumptions or limiting conditions. Personal Property The opinion of value provided in this report concerns the real estate only and does not include the valuation of any other personal property such as furniture, licenses or goodwill. "As Is" Value The "as is" value is considered to represent the value of the property in its current condition as of the effective date of the appraisal. It represents the most probable price that a proposed purchaser would pay for the subject considering all of the costs and risks inherent in its future ownership. Effective Date of the Summary Appraisal Report The subject property was physically inspected on December 22, 2011 and photographs of the property were taken on this date. At the direction of the client we are appraising the “as is” market value of the fee simple interest in the subject property. As such, the effective date of our “as is” valuation is December 22, 2011.


Definition of Market Value "the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and acting in what they consider their own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."1 Property Rights Appraised The subject property is currently owner occupied. As there are no long term arm’s length lease agreements encumbering the subject property, we have appraised the fee simple interest in the subject property, which is defined as follows. "absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed

by the governmental powers of taxation, eminent domain, police power and escheat."2 Identification of the Real Estate The property being appraised is known as 339 State Street in Springfield, Massachusetts. The property is further identified in the City of Springfield Assessor’s Office on Map ID 111100591. The land area of the subject property is approximately 0.78 acres. The subject property is improved with a multi story masonry structure that contains approximately 80,000 square feet of gross building area. The property was constructed for use as the Springfield Masonic Temple and is now utilized as the Basilica of the Holy Apostle. Ownership of the Property and Sales History The subject property is owned by Praise and glory Church of God in Christ, Inc., who purchased the property from Springfield Masonic Temple, Inc. on June 22, 2007 for consideration of $1,700,000. The deed is recorded in the Hampden County Registry of Deeds in Book 16761 on Page 135.

1 Interagency Appraisal and Evaluation Guidelines, Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (FRB); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); and National Credit Union Administration (NCUA), Federal Register / Vol. 75, No. 237 / Friday, December 10, 2010 2 The Appraisal of Real Estate, Appraisal Institute, 10th Edition, 1992, p. 122


Prior to the most recent sale the subject had been listed for sale with an original asking price of $3,500,000 beginning in April 2005 and with a subsequent sale more than 24 months after the initial listing agreement. The subject is currently listed for sale with Difranco Realty with an asking price of $1,500,000. The subject is not subject to any purchase and sale agreements. To our knowledge there have been no transfers of the subject property within the past three years. Our research unveiled the legal reference mentioned above which is considered adequate for the purposes of this appraisal report. Further title analysis is beyond the scope of this appraisal and we recommend that a complete title-search be conducted by a qualified individual. The property is subject to typical utility easements and these easements were not considered to be adverse. We did not identify any other easements, encroachments or restrictions on the property. A copy of the above noted deed is in the Addendum section of this report. City of Springfield Analysis Springfield is located in Western Massachusetts on the eastern bank of the Connecticut River and is the hub of Hampden County. The city is bordered to the north by the communities of Chicopee and Ludlow, to the east by Wilbraham, to the south by East Longmeadow and Longmeadow and by Agawam and West Springfield to the west across the Connecticut River. Springfield is the largest city in Western Massachusetts and is accessed via I-91, I-291, I-391, U.S. Route 20, and State Routes 20A, 21, 83, 116 and 141. In addition, I-90 (Massachusetts Turnpike) has exits in Chicopee that provide access to I-291. Bradley International Airport, one of the most convenient and efficient airports in the nation, is located in Connecticut a short drive south on I-91. Bus service is available to all points in the nation, and Amtrak trains, both north/south and east/west stop here. Springfield is part of Hampden County that has a total population of 463,490 according to the 2010 U.S. Census, which is an increase from the 2000 Census estimate of 456,228. According to Census estimates from 2010, Springfield is listed as having a population of 153,060, which is a 0.64% increase from the 2000 U.S. Census population estimate of 152,080. Springfield is the largest community in Hampden County and this is anticipated to remain the case into the foreseeable future. Employment in the Springfield SMSA has indicated relatively stable levels in the recent past; however, more recently, as is the case in many areas in the region and throughout the nation, the unemployment levels have begun to increase. As of October 2011, the Massachusetts Department of Employment and Training lists Springfield as having an unadjusted unemployment rate of 11%. This figure is higher than the 7.8% unadjusted unemployment rate for the Springfield, MA NECTA and the Massachusetts unadjusted statewide rate of 6.8%.


Map of Springfield and Surrounding Communities

Overall, the potential for future new construction in Springfield is tempered by the fact that there is little available vacant land that can support such development. Therefore, it is likely that the any developments in Springfield will likely be limited to the remodeling/expansion of existing facilities similar to the recent past or through demolition of existing buildings to create sites that can be redeveloped. The retail market throughout Springfield had indicated some signs of growth prior to the onset of the recession with some new developments along East Columbus Avenue, and in other high volume commercial areas such as along Boston Road, Wilbraham Road and Sumner Avenue. However, with the negative shift in the economy, some projects that were planned prior to the onset of the recession have been put on hold or entirely abandoned. Nonetheless some recently completed retail projects in Springfield include an Aldi’s Mart on Boston Road, an expansion project of an existing Wal-Mart on Boston Road, a new CVS at Parker Street / Wilbraham Road, a new Golden Corral restaurant on Parker Street and some other smaller developments. There is new Kohl’s retail store under construction at a former Big Y location on Boston Road. The medical office market in Springfield has remained relatively strong despite the economic challenges facing most other real estate sectors. Baystate Medical Center has a new wing under construction that has a cost of $259 million and will include a 559,100 square foot, seven story building which contains 48 beds and eight operating rooms.


Also, an approximately 100,000+/- square foot medical office use building has been constructed on Wasson Avenue in the Bay State Medical Center extended campus. Reportedly, the majority of this building was pre-leased. The residential markets have shown a considerable drop in activity compared to the 2007-2008 market which experienced heavy sales volumes and high pricing. Today, many properties which sold in 2007+ are back on the market, either pending foreclosure or at much lower pricing levels. There are a number of municipal projects on-going in the City such as the Memorial Industrial Park, which is an 85 acre industrial park located off of Roosevelt Avenue. One parcel was purchased and improved with a food distribution building (Performance Food Group) and another parcel is being purchased and there are plans to improve this site with a F.W. Webb showroom / warehouse. A new $110 million State data center is being constructed within the former Springfield Tech High School. In addition, the City of Springfield is attempting to assemble 54 acres of land in the Indian Orchard Section of the City, the former Chapman Valve site, and to create multiple lots that will be marketed for development with industrial / office park use properties. The site was designated as the “Indian Orchard Business Park” in 2009; the redevelopment of this area has proved somewhat cumbersome due to extensive environmental issues left behind at the site by the former owners. Through State grants and local aid, some of the remediation has been completed on some portions of the site while other portions still require attention. In addition, some of the parcels remain under private ownership and the City will need to acquire these parcels prior to being able to consummate the master plan. The location and accessibility characteristics of the community will likely cause the City of Springfield to remain a desirable location for all types of users, however this is somewhat tempered by limited availability of land and therefore, we feel that the real estate development segment of the economy will continue to perform without significant swings in supply and demand. Furthermore, due to the current economic conditions impacting the region and the nation, we anticipate that Springfield will continue to experience a lagging real estate economy into the foreseeable future. Neighborhood of Subject The subject property is situated on State Street outside the Central Business District (CBD) of the City of Springfield. State Street, which runs in an east / west direction through the City of Springfield, is a heavily traveled and heavily developed roadway that provides good access throughout the CBD and to various points of Springfield. The subject neighborhood is dominated by the commercial use properties along State Street with residential uses on side streets. Users within the immediate area of the subject include the Federal District Court of Springfield, Springfield Armory National Park, Springfield Technical Community College, Wesson Memorial Hospital, Verizon offices, Office of the Commonwealth of Massachusetts along with many others.


There are a few multi-story apartment properties in the extended neighborhood and greater neighborhood as well as numerous local retail users along State Street.

Map of neighborhood of subject.

The properties in the neighborhood of the subject are generally in average to good condition. The neighborhood has good accessibility and average/good visibility, which can accommodate a variety of office or commercial uses. Based on all information we uncovered through our research we anticipate continued commercial uses in the neighborhood in the foreseeable future.


Site Analysis The subject land area is 0.78 acres; the site is slightly irregular in shape. The property has approximately 134 feet of frontage along State Street. The subject property is primarily level at street grade. The subject property is improved with asphalt paving that can accommodate parking of approximately 10 cars and minimal landscaping. All streets in this neighborhood are paved public roadways. Utilities provided to the subject site include water, sewer, electricity, gas and telephone. There are typical utility easements on the subject property. We did not identify any adverse easements, right-of-ways and we did not identify any encroachments on the property. The subject site is considered to have average utility for a municipal or commercial user due to its configuration, available utilities, generally level topography, adequate accessibility, ample parking and zoning.

Assessors map of the subject property.


Aerial views of subject site

Subject Property

Subject Property


Views of State Street

Flood Plain and Wetlands Information The subject property is found on Flood Insurance Rate Map number 2501500004B, dated June 17, 1991. A copy of the appropriate portion of the noted flood map is as follows. We have determined that the subject property is located in a Flood Zone X. The Zone X area is noted to fall outside of the 500 year flood plain. There appears to be adequate drainage for the existing improvements on the subject site.

Flood map which shows the subject property.


Environmental Issues There are underground oil storage tanks with a reported capacity of 12,500 gallons. There is asbestos insulation on various heating pipes and other insulation in the building. Due to the water leaks at the property there is mold occurring in various locations of the building. On our visit to the property we did not observe any other suspicious conditions, abandoned oil tanks or evidence of recent hazardous waste conditions. We did not perform a soil test and have not been provided with a copy of an environmental study of the property. We have assumed that the subject property meets all acceptable standards with regard to State and Federal Laws. An inability to meet acceptable environmental standards will likely impact the value and marketability of the subject property. Zoning According to the Zoning Map of the City of Springfield the subject property is located in the Commercial A zoning district. The uses allowed in the Commercial A district include multi family properties, retail, office, bank, hospitals, libraries, municipal uses, religious and educational uses, day care uses, cemeteries, and others by right and others by special permit.

Springfield Zoning Map is shown below.

The dimensional requirements of the Commercial A district are outlined in the following table.

Lot Area Lot Frontage

Front Yard Setback

Rear Yard Setback

Side Yard Setback

Maximum Coverage

Building Height

None None 20 Feet 10 Feet 10 Feet 55% 2 Stories / 30 feet

The subject property is considered a non-conforming use as the site does not conform to the building height, front yard or side yard requirements although is considered a legal pre-existing, grandfathered use.


Improvements The subject property is improved with a multi-story building that was constructed in 1926, according to the City of Springfield Assessor’s Office. The building has a gross building area of approximately 80,000 square feet. The building is of masonry (limestone) construction on a masonry foundation with a pitched roof. The main roof over the structure is reportedly covered with asphalt shingles with side portions of the building having copper covered roofs. Numerous portions of the roof are in immediate need of repair as we identified many areas which evidenced water seepage and standing water on floors. Some ceilings and walls evidenced severe damage with portions of ceilings missing, having been damaged and fallen to the floors below. There are steel frame windows, and various glass and metal doors on the exterior of the structure. The lay out of the building includes a reception area, various office areas, reading rooms, lodge rooms, lounge rooms, banquet halls, theater hall, restrooms, mechanical rooms and several other rooms that are used as administration rooms. The interior walls of the structure are constructed of masonry (limestone) plaster, drywall and wood frame. The interior buildout of these areas have tile covered floors with some carpeted flooring, plaster and acoustic tile ceilings, and incandescent and fluorescent lighting. The bathrooms have tile flooring and walls, plaster and drywall ceilings, and fluorescent lighting. There is a large commercial kitchen with various gas fired cooking equipment, range hoods with fire suppression systems and numerous sinks and counter areas. The upper floors are accessed via two elevators which are old, outdated, manually controlled with only one functioning at the time of our inspection. We were shown a letter from the Massachusetts elevator inspector which noted that the functioning elevator would be out of compliance as of January 1, 2012 unless numerous conditions within the elevator shaft and the elevator mechanicals were repaired and/or replaced. The building is heated via forced hot air which is provided from two oil fired furnaces which feed enormous air exchangers. The air exchanger systems are original to the building and are outdated requiring service, parts, and mechanicals from a bygone era. Although the heat systems are functional at the present time they are extremely inefficient. There are a few water heaters. Electrical service to the building is provided by a dated service with undetermined electrical capacity. Many of the electrical service switching components albeit currently functioning are obsolete and would likely require complete system wide replacement to be up to current electrical code. The building is not sprinklered. The subject building has problems that limit public services. Problems include deficiencies in the heating/cooling/ventilation distribution, electrical and communications cabling and lighting. The age of the structure causes increased maintenance costs much of which are not cost effective or energy effective. The facility does not have modern technology. The facility is in not in compliance with the American Disabilities Act. The roof of the structure has had constant issues many of which still require repairs. Some of the water issues have migrated to various areas of the building. Rooms have been removed from service due to water and mold. The existence of underground oil storage tanks and asbestos also reduces the desirability and cost of maintenance of the property.


As the subject was originally constructed for use by an exclusively mens organization none of the restrooms were designated or designed for women with nearly all restooms having urinals. Overall the property is considered to be in fair condition requiring significant repairs and renovations. Due to the large common areas and limited number of alternative uses of the subject property, it is our opinion that the subject property has poor utility for use as a modern institutional use property.

Exterior front, side and rear.


Exterior, sides and rear


Common areas, large function room


Numerous large function rooms.


Numerous large function rooms


Office and common areas, outdated restooms, water leaks.


Water, mold in various locations and outdated kitchen


Obsolete theater, electrical and heating systems.


Obsolete heating and hot water systems.


Site Improvements: There is paving of the site that can accommodate parking of approximately 10+/- vehicles. There is limited landscaping of the site. Real Estate Taxes and Assessment Analysis The FY 2011 commercial tax rate in Springfield is $38.97 per $1,000 of assessed value. According to the Springfield, MA Assessor's Office, the subject property is assessed at $257,100, however as the subject is exempt from taxes the assessment is not at market. Highest and Best Use as Vacant Considering the land as vacant, its size, configuration, location and zoning there are a number of development options for the site. The neighborhood of the subject includes a mix of commercial, residential and institutional users; this area is considered to have average accessibility and visibility. However, due to the high cost of constructing a new office or commercial use properties and the amount of revenue that would most likely be generated by one of these types of uses, construction of such a facility is in our opinion economically infeasible. Our opinion is supported by the fact that there has been no construction of this type of property in the subject neighborhood in the recent past as the demand for this type of space does not necessitate new construction. There has been limited new residential construction in the market area in Springfield and these types of projects do not appear to be economically feasible at this time. In some cases properties in urban areas have been developed with new municipal facilities, schools, libraries, fire and police stations, etc. This is the case as it is often difficult obtaining a site large enough to accommodate these types of facilities. Considering the current market conditions, it is our opinion that if the subject property were vacant that the highest and best use of the property would be to sell to an abutter or hold the property for potential future development in a mixed use capacity when the market conditions improve to a point at which this type of development would prove economically feasible. If the property were to be sold to an abutter there is likely only one user that being the office user to the east (Verizon) as the two other users (apartment property and Wesson Memorial Hospital) have adequate land areas for their current uses with no additional land required. Highest and Best Use as Improved The subject property is improved with a multi story building that has historically been used as an institutional use property. Our highest and best use “as vacant” scenario determined that the best use of the land as vacant would be for the property to be held for future development most likely in a mixed use or municipal/institutional capacity. Considering the subject property “as is” the property is less than adequately suited for use as an institutional use property due to the limited amount of land, large building area, poor condition of the property and the poor utility of the property.


The costs to renovate the subject, update the mechanicals, repair the roofs, repair/update the elevators, conform to the handicap accessible requirements, etc would be estimated at $15+ per square foot (in excess of $1,300,000) and would be in excess of any increase in value to the property. There have been a number of institutional use properties in the Springfield area which have been demolished and removed from the site to allow for other developments. However in each of these cases abutting parcels were also required to be obtained such that the necessary land for access and parking was available. The cost to demolish the subject site to allow for another use of the land would be approximately $25 to $40 per square foot considering the materials used at the property and the asbestos on site with total costs in excess of $2,000,000 which far exceeds the value of the land as vacant. Based on our research, there does not appear to be any economically viable alternative use of the existing improvements other than the existing institutional use. The cost to renovate the subject is high and there is no corresponding increase in value following the renovations. However, the subject could have potential of a reduced use of the property. If the roofs were repaired we feel the lower two levels could be used while moth balling the upper levels for a continued institutional related use. Market Analysis Clearly in the last 30+/- months the market for commercial real estate has under gone changes in reaction to national and world economic conditions. Based on our due diligence and conversations with area real estate professionals we have observed that debt markets have tightened, buyers seem to be looking for larger equity returns on real estate investments, overall marketing times have increased and there is an obvious decrease in the number of sales. In addition, there has been an increase in commercial and institutional vacancies and in some instances rental rates being sought by owners have been decreased or abated as some tenants have incurred difficulties in the current economy. There has also been an overall decrease in the amount of new development in the market area and in most instances marketing times have increased. There has been some new construction and renovation/conversion of properties for institutional, educational and municipal users, although most of these are new school buildings. There have been some sales of somewhat similar properties that have sold at per square foot values ranging from $10 to $30 per square foot. As with the rental range, this range is dependant on the location, condition and utility of the property. In most instances properties offered for sale or sold in the current market are priced / valued below what they were in prior years. However, based on our research, there have been some sales that evidence per square foot and overall values similar to those indicated 6 to 18+ months ago. Nonetheless, the real estate markets have slowed in regard to the number of transfers and the values indicated by the transfers that do occur are typically lower than they have been in the prior few years.


Based upon our research and the provided information it is our opinion that there is fair demand for the subject property “as is”. As such, it is our opinion that the subject property would be able to be marketed successfully if made available for sale at a price in line with our appraisal. Exposure Period and Marketing Time We have considered the supply of similar properties in the region and we have discussed marketing times for similar properties with real estate brokers and investors. Additionally, we have investigated the marketing times for specific comparable properties that we are familiar with. In summary, we estimate that the subject has fair marketability due to the location, condition and utility of the property along with our determination that there are limited alternative uses of the subject property than its current use, which likely exists / relies on government funding. We are also aware of the fact that properties are offered at unreasonable pricing levels will most likely remain on the market for extended periods of time. Based on our understanding of the market and our due diligence effort, it is our opinion that if the subject property were offered for sale at a price near to our appraised value, the marketing period would be approximately 12 to 24 months. Our opinion of value for the subject property is based on a number of factors that include its location and utility. Our opinion of value assumes that the subject property would have been exposed to the market for an approximately 12 to 24 month period and is based upon market conditions and sales data which occurred prior to the effective date of appraisal. Valuation Analysis “As Is” The sales comparison approach is an appropriate approach to use to provide an opinion of value for the subject property. A prospective purchaser of a property such as the subject would likely compare the subject property to alternative properties in determining an opinion of value for the subject property. As such, we have completed a sales comparison approach to determine our opinion of value for the property. The subject property is currently owner occupied. However, the property could potentially be leased to an arm’s length or arm’s length tenants and operated as an income producing property. As an income producing property, the income approach to value is relevant for some purchasers who would look at the subject for its investment characteristics. The income approach allows investors to assess the potential profit from ownership as well as the investment risk and this approach is considered appropriate in determining an opinion of value for the subject property. As such, we have developed an income approach to assist us in providing our opinion of value for the subject property. In the recent past there have been few properties similar to the subject property constructed in the Springfield region. Purchasers of older properties similar to the subject in few cases place emphasis on the cost to reproduce buildings similar to the subject’s due to the limited information pertaining to depreciation and obsolescence. Due to the actual age of the improvements and their condition any estimates are subject to error and could potentially result in a misleading opinion of value. As such, the cost approach to value has not been developed to value the subject property.


Sales Comparison Approach For all types of real estate valued via the sales comparison approach, it is necessary to determine the most correct element of comparison. In the valuation of this type of property, the regional market dictates that the value of a property such as the subject is determined based on the cost/value per square foot of the gross building area. This typically includes all usable interior building area excepting unimproved loft or unimproved basement space divided into the verified sale price of the property. We note that the recorded sale price may or may not represent the actual consideration paid, and as such, it is our responsibility to contact at least one of the parties involved in a sale transaction to determine the circumstances of the sale. This allows us to accurately reflect any adjustments to the recorded sale price such as real estate tax payments made by the buyer beyond customary adjustments, extraordinary costs such as hazardous waste removal costs to the buyer, corporate or individual tax payments/adjustments that may be part of the sale price. Other matters necessary to uncover include if personal property or good will is part of the sale price consideration, or if the property was sold under adverse conditions. All of these matters directly impact the per square foot comparative unit of measurement, before comparisons of the sale(s) are made respective to the property being appraised. Based on the foregoing, we have utilized the per square foot building value of similar properties that have sold via arms-length transactions to arrive at an opinion of value of the subject property. Our due diligence effort included researching the Springfield area for sales data concerning the most recent transfers of similar properties in the area to arrive at an opinion of value of the subject property. The sales utilized were those properties which were considered to be most similar to the subject property and were selected based on their comparability and similarity in regards to critical characteristics such as date of sale, location, building area, condition of the improvements, land area and utility. The sales were compared to the subject to provide a per square foot value for the subject property and they are outlined on the following pages.


Comparable Property Sale 1 20 Johnson Road, Chicopee, MA

Sale Price: $1,000,000 Sale Date August 18, 2009 Grantor: Lower Pioneer Valley Educational Corp Grantee: Ace it education Inc. Legal Reference: Book 17943, Page 201 Financing: None Noted Property Characteristics Land Area: 6.18 Acres Frontage: 500’+ on Johnson Road Zoning: Agricultural Topography: Level Utilities: Water, Sewer Gas, Electricity & Telephone Building Size: 40,000 SF Stories: 1 Year Built: 1965 Basement: Slab Parking: 100+/- Condition: Average


Additional Observations

This property is located in Chicopee the northern portion of Town. This area of Chicopee is known as a neighborhood abutting the Westover Air Force Reserve Base. There are a few commercial/industrial use properties in the neighborhood with a few institutional uses as well with residential being the dominant use in the neighborhood. This property is located on a lightly traveled and developed roadway within reasonable proximity to State Routes. Overall this property is considered to have fair/average access and visibility. Overall, the location of the subject is considered fair/average. This property is improved with a single story building, which contains approximately 40,000 square feet of gross building area, on a concrete slab foundation. The building is of wood and steel frame construction and has a masonry exterior with a pitched roof that is covered with a tar and gravel substrate. There is a mix of fixed frame windows and double hung replacement windows. There are numerous pedestrian door entrances throughout the building. The interior of the building is divided into numerous offices/classrooms, a library, cafeteria, gymnasium, garage, a kitchen, bathrooms, and mechanical rooms. The interior buildout consists of tile and carpeted floors, drywall and painted masonry walls, drop tile ceilings and florescent lighting. The building appears to have been adequately maintained since its construction and is considered to be in average condition. Based on the layout and buildout of the improvements, this property is considered to have average utility. Price Per SF: $25.00 Sales History: There have been no other transfers of this property in the prior three

years. Verified By: Grantee and Broker – (JCF)


Comparable Property Sale 2 780 Chicopee Street

Chicopee, MA

Sale Price: $750,000 Sale Date December 20, 2010 Grantor: Roman Catholic Bishop of Springfield Grantee: Church of New Covenant Legal Reference: Book 18597, Page 103 Financing: TD Bank Property Characteristics Land Area: 2.31 acres Frontage: Chicopee Street Zoning: Commercial Topography: Rolling Utilities: Water, Sewer, Electricity & Telephone Building Size: 26,962 SF Stories: 1 and 2 Year Built: 1924 & 1979 Basement: Partial Condition: Average Parking: 100+/- On Site



This property is located on Chicopee Street in the Willimansett neighborhood of Chicopee, MA. The immediate neighborhood of the property is developed with commercial and residential use properties. This property is considered to have average accessibility and visibility. This property is improved with two buildings one being a masonry and steel framed building containing approximately 21,430 square feet. The space in this building includes a variety of offices, sanctuary, chapel, sacristy, meeting hall, full service kitchen, etc. The building is both single story in portions and two stories in areas. The second building is a single family home that was used as a residence and offices. This building contains 5,532 square feet. The space in this building includes a few offices, an apartment, etc. The building is two story. The condition of the buildings was considered to be average and the improvements are of average quality construction. The utility of the building at the time of sale is average. Price Per Square Foot: $27.81 Sales History: There have not been any other transfers of this property in the past

three years. Verified By: Representative of Grantor (JCF)


Comparable Property Sale 3 1676 Main Street Springfield, MA

Sale Price: $1,825,000 Sale Date March 4, 2011 Grantor: Paramount Realty Investments Grantee: New England Farm Workers Legal Reference: Book 18694, Page 228 Financing: Chicopee Savings Bank Property Characteristics Land Area: 1.54 acres Frontage: Main St & Gridiron St Zoning: Commercial Topography: Level Utilities: Water, Sewer, Electricity & Telephone Building Size: 63,000 SF Stories: 2 and 4 Year Built: 1912 & 1929 Basement: Partial Condition: Fair/Average Parking: 110+/- On Site



This property is located in the CBD of Springfield, MA. There are a few multi-story apartment properties in the neighborhood and greater neighborhood that include Morgan Square, and the former Hotel Worthy. The majority of the remaining buildings consist of office use buildings from Class A to Class C space with some having ground floor commercial/retail use spaces. The Stearns Square area in Springfield is improved with numerous restaurant/bar properties that have been renovated and opened in the recent past. There are numerous public and private parking lots in the immediate neighborhood; there is an open air lot abutting the subject property and a large parking garage located in the neighborhood as well. This property is considered to have average/good accessibility and visibility. This property is improved with a four story mixed use commercial building that contains approximately 63,000 square feet of building area. The commercial portion of the building was constructed in 1912 and the theater portion was constructed in 1929. The commercial portion was reportedly extensively renovated in 1986 and the theater has been receiving on-going updates since 1999. The building improvements are of masonry and wood frame construction on full foundations; the exterior of the building is covered with bricks and decorative masonry finishes. The roof is flat and reportedly covered with a rubber membrane. There are fixed frame windows. The condition of the building is considered to be fair/average and the improvements are of average quality construction. The utility of the property at the time of sale is fair/average. Price Per Square Foot: $28.97 Sales History: There have not been any other transfers of this property in the past

three years. Verified By: Representatives of grantor and grantee (JCF)


Comparable Sales Chart

Location

Subject State St

Springfield

Sale 1 Johnson Rd,

Chicopee

Sale 2 780 Chicopee St

Chicopee

Sale 3 1676 Main St Springfield

Sale Price $1,000,000 $750,000 $1,825,000

Sale Date

8/2009 Similar

12/2010 Similar

3/2011 Similar

Property Rights Conveyed

Comparison

Fee Simple Similar

Fee Simple Similar

Fee Simple Similar

Fee Simple Similar

Financing Comparison

Market Similar

Market Similar

Market Similar

Market Similar

Conditions of Sale Comparison

Arm’s Length Arm's Length Similar

Arm’s Length Similar

Arm’s Length Similar

Location Comparison Average Average/Fair

Inferior Average Similar

Average/Good Superior

Land Area Comparison 0.78 acres 6.18 Acres

Superior 2.31 Acres Superior

1.54 Acres Superior

Building Size Comparison 80,000 SF 40,000 SF

Superior 26,962 SF Superior

63,000 SF Superior

Condition Comparison Poor Average

Superior Average Superior

Fair/Average Superior

Utility Comparison Poor Average

Superior Average Superior

Fair/Average Superior

Price Per Square Foot $25.00 $27.81 $28.97

Overall Comparison Superior Superior Inferior


Analysis of Comparable Sales

Comparable Sales Location Map

The comparable sales represent the most similar properties that have sold in the general area in the recent past. As indicated earlier, the unit of comparison that we are using to determine our opinion of market value for the subject is the per square foot price. This index is typically the value indicator used for these types of properties. Each sale has differences in its specific characteristics that need to be analyzed and compared to the subject so that we can arrive at a final opinion of value via our Sales Comparison Approach. The characteristics that we identified and compared to the subject were the sale date, property rights conveyed, terms of financing, conditions of sale, location, land area, building area, condition of the improvements and utility of the property. The differences are rated in comparison to the subject based on our opinion of each comparable sale’s known characteristics. For purposes of this appraisal assignment, the differences are rated as similar, inferior or superior.


Date of Sale The market for properties such as the subject is considered to be relatively small, but stable as there are rarely sales of this type of property. Even though the economy is in recession and most property types have experienced declines in value, financing of properties such as the subject are not typical and are often done in part with substantial endowments in place, personal guarantees from affluent individuals, etc. Thus, the values for this type of property do not fluctuate in line with the overall market. However, the ability to fund projects such as the subject has declined from a lack of resources as varied as they may be. Each of the Sales had their sale prices negotiated following the downturn in the economy and are rated similar to the subject respecting date of sale. Property Rights Conveyed We are appraising the fee simple interest in the subject property. The buyers of the comparable sales purchased the fee simple interest to each property since the buildings were unencumbered by long-term leases. Therefore, all of the sales were rated similar to the subject and no adjustments were applied to the sales for this standard. Financing Each of the comparable sales had typical market rate financing. As the financing of each sale was considered to be at market rates no adjustment is required to any of the sales for this element of comparison. Sale Conditions Each of these comparable properties was properly exposed to the market and none of the transfers were the result of a post-foreclosure sale or evidenced unusual sale adjustments or conditions. Thus, each sale was rated similar to the subject for this element of comparison and no adjustments are necessary. Sale 1 Analysis

This property is located on Johnson Road in a heavily developed area of Chicopee. This sale is considered to be located in an area of fair accessibility and visibility. Overall this sale is considered inferior to the subject property in regard to location. This property has a larger land area than the subject property with more land available for additional development and parking which is considered superior to the subject.

This sale has a smaller building area than the subject property, which is considered a superior characteristic based on the Economies of Scale Principle. This theory is based on the premise that when a product (in this case real property) with a smaller number of units (square feet) is purchased, a higher per unit price typically results compared to the per unit value indicated by a sale of a product with a larger number of units.


The condition of this property is considered average, which is superior to the overall condition of the subject property. The utility of this sale is considered average due to its single story layout and buildout, which is considered overall superior to the subject property. Sale 1 is considered inferior to the subject property in regard to location, superior in regard to building area, land area, condition and utility and similar in all other comparable fields. It is our opinion that the inferior location is not outweighed by the superior characteristics with most emphasis being placed on the building area, condition and utility. Therefore, it is our opinion that this sale is considered to be overall superior to the subject property and a negative value index adjustment of 45% is required to bring this sale in line with the subject property. Sale 2 Analysis

This property is located on Chicopee Street, in Chicopee in a heavily developed area. This area has similar visibility and accessibility. Thus, this sale is deemed similar in regard to location. This sale has a larger/superior land area as the subject. This sale has a smaller / superior building area than the subject based on the Economies of Scale Principle. This sale was considered to be in

average condition at the time of sale, which is superior to the subject property. The utility of this sale is deemed to be average at the time of sale and is considered overall superior to the subject property. This sale is superior to the subject with regard to land area, building area, condition and utility and similar in all other comparable fields. As such, this sale is deemed overall superior to the subject property and a negative value index adjustment of 55% is required to bring this sale in line with the subject property. Sale 3 Analysis

This sale is located on Main Street, Springfield in a heavily developed area of Springfield. This area has superior visibility and accessibility. Thus, this sale is deemed superior in regard to location. This sale has a larger / superior land area than the subject as this site has a greater amount of available land area for expansion, on site parking and maneuverability than the subject property.

This sale has a smaller / superior building area than the subject based on the Economies of Scale Principle. This sale was considered to be in fair/average condition at the time of sale, which is superior to the subject property. The utility of this sale is deemed to be fair/average as there are offices, meeting rooms, theater, commercial spaces, etc, and is considered overall superior to the subject property. This sale is superior to the subject with regard to location, land area, building area, condition and utility area and similar in all other comparable fields. As such, this sale is deemed overall


superior to the subject property and a negative value index adjustment of 40% is required to bring this sale in line with the subject property. Conclusion The sales data presented reveals an unadjusted per square foot value range of $25.00 to $27.97. Each of the comparable sales are considered overall superior to the subject. We have applied the noted adjustments to the comparable sales which revealed adjusted per square foot values for Sale 1 of $13.75, Sale 2 of $12.52 and for Sale 3 of $17.38. The subject property is extremely large for an institutional use property with nearly no on site parking available. The layout of the facility lends itself to few users as there are numerous large lodge/meeting rooms, banquet rooms, theater, etc. Furthermore, the condition and age of the facility necessitate numerous required updates and repairs that would run into the hundreds of thousands of dollars if not the millions just to be able to maintain the outdated utility of the property. It is for these reasons that we feel the market indicates a value below the range for the subject property. If the repairs and updates to the roofs, elevators, electrical, heating systems, etc were all completed we feel the subject could demand a value between $15 to $20 per square foot. However, as the repairs and updates are still required we feel a per square foot value at the low end of the adjusted value range is considered reasonable.


We feel a value at or near $12.50 per square foot is most reasonable to be applied to the subject. It is our opinion as indicated by the comparable sales that the subject would demand a value as follows:

Price Per Square Foot * Building Area = Overall Value

$12.50 * 80,000 = $1,000,000

Our opinion of the “as is” market value of the fee simple interest in the subject property via this sales comparison approach is rounded to:

ONE MILLION DOLLARS $1,000,000


Income Approach The subject property could be leased to one or more tenants. Due to the foregoing and in consideration of stable and predictable underlying market we believe that the typical market investor would estimate value based on direct capitalization. We have considered a discounted cash flow (DCF) analysis, however, it is our opinion that this would require making broad based assumptions that are not supportable in view of actual and recent market trends. The first step in the Income Approach analysis is the estimation of income and expenses. The subject property is currently subject to two non-arm’s length lease agreements. As such, we have looked to the subject property’s market area to determine a market level of rent that the subject property could demand if it were leased to arm’s length tenants. We have examined such factors as the number of similar properties in Springfield and the surrounding areas, the likelihood of additional competing properties, and the location of the subject. The comparable rental properties indicated a leasing range of $4 to $10 per square foot and were rented on either a gross or net of utilities basis. The range of leasing prices varied based on building size and condition of the comparable space. Overall, the properties considered comparable are considered the most similar for comparison to the subject property. The subject occupies an average location with average visibility and accessibility. The subject building has poor utility, is in an average location, is in poor condition and is able to accommodate either one large occupant or a number of smaller tenants on a gross basis with a significant amount of common areas. Based on the comparable lease data, the demand for municipal and institutional space in the subject market area, it is our opinion that the subject property can demand a lease rate at the lower end of the range indicated by the market. We have projected a gross rental basis at the subject property at $5 per square foot of building area on a net of utilities basis. Vacancy & Collection Losses Although the subject property is currently 100% owner occupied, all income properties are subject to potential loss of income due to vacancy or from credit factors such as non-payment or tenant/landlord disputes. A prudent investor would allocate for unanticipated vacancy, credit and collection losses that may arise, as this is a risk component involved with the ownership of real estate for investment purposes. Although the subject has had a stable occupancy rate in the past and has been 100% occupied, the projected occupancy rate at the subject property would likely vary on a regular basis and an average annual vacancy rate needs to be applied to the subject’s projected annual income. Although the vacancy and credit levels may increase and decrease from time to time, it is thought that the prudent buyer would be looking at potential rent losses in a specific range in an effort to estimate an accurate income potential.


Comparable properties and the market for properties similar to the subject indicated vacancy rates of 20% to 100%. In our opinion, an overall vacancy and credit loss factor to be anticipated at the subject is 50% due to the size of the improvements, number of floors, interior layout, poor utility and condition along with the anticipated turnover associated with such tenants. Property Expenses Owner expenses based on our projected rental structure include all expenses associated with the operation of the subject property excepting utilities. The owner of the subject is responsible for operating expenses such as administrative/ management, general maintenance, insurance, real estate taxes and reserves. We have detailed our forecasts for the applicable expenses as follows. Administrative & Management: Properties similar to the subject typically have an administrative and general expenses based on time spent at the property as well as management of the property. Expenses included in administrative and general include general manager, office and office equipment supplies, telephone and computer usage, dues and subscriptions, licenses and fees, professional services including legal and accounting, bank charges, etc. This cost is generally based on a percentage of gross income and ranges from 4% to 8%. Based on the typical tenant type, projected multiple tenants at the subject and the historical cost associated with this expense at similar properties, we have projected an administrative and management expense of 8% of effective gross income which is considered reasonable and within market standards. General Maintenance: Typical costs include labor and related supplies and equipment. The property is considered to be in poor condition. Owners and managers of comparable properties noted this expense ranging generally from $1.00 to $4.00 per square foot depending upon condition and quality of the property. Considering the subject’s usage and condition we have attributed an annual cost for this expense at approximately $1.00 per square foot. The total maintenance expense is reasonable due to the subject property’s size, type of construction, age and contracted maintenance expenses that would be associated with the subject property. Real Estate Taxes: Municipal and non-profit uses are not taxed for real estate. Thus, we have not projected any expense for this cost. Insurance: The reported cost for property insurance at comparable properties ranged from $0.15 to $0.30+ per square foot of gross building area. The cost is market sensitive and variable based on specific coverage. The property is not sprinklered which impacts the cost of insurance. Based on the cost at other properties, we have projected an insurance expense at approximately $0.15 per square foot of gross building area for the subject. Reserves: Market research reveals that reserve expense has a correlation to building area and in some cases effective gross income. The cost is market sensitive and variable based on the specific property, size of the property, the age and the use of the property. The industry averages for this cost for a property such as the subject ranges from $0.05 to $0.50 per square foot of building area and is dependant on how diligent an operator is at putting aside income in the form of reserves. The improvements are in fair condition and appear to require extensive maintenance. In our analysis we have projected a reserve expense at approximately $0.25 per square foot ($20,000 annually), which is in line with the market averages.


Our pro forma that incorporates projected income and expenses is as follows.

Projected Income Units / SF Rental Rate

Subject Building 80,000 $5.00 400,000$ Total Projected Gross Income 400,000$

Vacancy & Credit Loss 50.0% (200,000)$

Effective Gross Income 200,000$

ExpensesAdministrative/Management (16,000)$ General Maintenance (80,000)$ Real Estate Taxes -$ Insurance (12,000)$ Reserves (20,000)$ Total Expenses (128,000)$

NET OPERATING INCOME 72,000$

INCOME APPROACH ANALYSIS

Selection of Capitalization Rate The overall rate takes into consideration the type of property and the anticipated stability of the income stream provided by the property and the perceived risk in the investment property. Properties that are deemed stable/less risky or that are anticipated to provide future income growth often indicate lower capitalization rates than properties that are deemed more risky or that have less potential for future income growth. Short lease lengths and non-market lease terms also require changes to the overall rate as well. In an effort to determine a capitalization rate that a potential investor would require from the subject property, we have looked at national sources of capitalization rates. The capitalization rates for institutional type properties are in the range of 6.0% to 11.50%. The national sources tend to reflect properties in premier CBD locations in major metropolitan areas although some include properties located in secondary metropolitan areas and suburban locations. It is our opinion that an investor in the subject property would require a rate of return from the subject property from within the range indicated by the national surveys due to the location, condition and investment characteristics of the subject property (i.e. likely single governmental, institutional / credit tenant).


We have also researched capitalization rates of office properties that have sold in the recent past to help support our capitalization rate selection. Properties in and around similar locations in the region that are somewhat similar to the subject property have transferred at values that indicate capitalization rates ranging between 9.5% and 11%+. The range is due to a number of factors with the most notable being condition, location and tenant type. Properties that are in superior locations, in average/good or better condition with a stable rental history typically indicate capitalization rates near the lower end of the range. Conversely properties that are in less desirable locations or have older buildings with less stable rental histories will typically indicate capitalization rates at the upper end of the range. We also derived a capitalization rate for our analysis via the Simple Band of Investment Technique. Local lenders noted that mortgage loans on properties that are similar to the subject are commonly based on a 70% loan to value ratio and are amortized over a 20 to 30 year period with a three to five year review. Current mortgage rates for a property such as the subject range from 6.0% to 7.0%, although average five to ten year rates are higher. We have used a 20 year amortization period in this analysis and an average long term (10+ year) interest rate for a loan on the subject property is estimated at 6.0%. These characteristics are used as a basis for establishing the mortgage constant. Factors involved in equity returns include the reliability of the cash flow, the marketability of the investment product and the stability of the value. The selection of an appropriate equity rate should also be measured against alternative investment vehicles. The yield rates most often looked to as a basis for investor expectations are noted in the following table:

Investment Alternatives Rates as of 7/8/2011 Prime Rate 3.25%

US Treasury, 10 Year 3.03% US Treasury, 20 Year 3.97%

Corporate Bonds (Aaa), 10 Year 4.98% Corporate Bonds (Baa), 10 Year 5.76%

Source: Federal Reserve Board - http://www.federalreserve.gov/Releases/h15/Current/

These types of investments involve much less risk than an investment in the subject property and are considered too low as a measure of investment return for the subject property. The local investors that we spoke with and the equity rates that we have been able to extract from some market area sales of commercial real estate indicate desired return on equity for institutional use properties that ranges from 15% to 20%. The investment requirements of the subject property that were revealed to us by local investors are greater than that of investment products such as US Treasury Bills. This is due to a greater risk of the subject property as an investment versus other investment products. In our analysis, an equity dividend rate of 17.5% was considered to be a reasonable rate of return on an investment in the subject property and we have used this rate in our analysis.


This rate is higher than that of the returns from alternative investments; however, we feel that this equity dividend rate would be required to attract an investor into a real estate investment in the subject property due to the risks inherent in this investment. A capitalization rate has been developed via the Band of Investment Technique utilizing the noted information, as follows.

Loan to Value Ratio 70%Equity Ratio 30%Loan Interest Rate 7.00%Equity Dividend Rate 17.5%Loan Period (Years) 20Loan Period (Months) 240Mortgage Constant 9.30%

Debt 70% X 9.30% = 6.51%Equity 30% X 17.50% = 5.25%Weighted Rate 11.76%

Rounded to: 11.75% The Simple Band of Investment indicates an overall capitalization rate of 11.75%, which in our opinion is a likely capitalization rate than an investor would employ in the subject property. This rate is above the range indicated by the national surveys and within the range indicated by the comparable market capitalization rates. Based on our analysis, we have projected a 11.75% capitalization rate as a likely rate that an investor would employ in the subject property. As such, our opinion of value for the subject property is calculated as follows:

Net Operating Income Capitalization Rate Present Value

$72,000 / 11.75% = $612,766 The “as is” value of the subject property is rounded to:

SIX HUNDRED FIFTEEN THOUSAND DOLLARS $615,000


Reconciliation and Final Value Estimate We were requested to appraise the “as is” market value of the fee simple interest in the subject property. In valuing the subject each of the three approaches to value were considered and the income and sales comparison approaches were utilized. Our final reconciliation discusses the strengths and weaknesses of the approaches utilized.

Estimated Value via Sales Comparison Approach $1,000,000 Income Approach $ 615,000

Sales Comparison Approach The opinion of value derived for the subject property via the sales comparison approach is determined from property sales which are considered to be adequate quality. The sales are comparable to the subject, (location comparison, utility, condition, use, etc.) and the sales are considered competitive to the subject. Qualitative comparisons were made to the sales, which are supported from market data. The values are consistent with the current market. The conclusion determined via the sales comparison approach is considered reasonable and reliable. Income Approach The income approach analysis we utilized reflects the methods used in the current market. There is historical income and expense information from similar properties in the market area that is considered comparable and reliable. The income and expense data is considered average quality information from some comparable properties with similar property characteristics as the subject. The method of capitalization of income is well supported as it is often a method used by investors and purchasers of properties similar to the subject. There is adequate data available to determine capitalization rates by comparison to other investments and risks associated with ownership of real estate. The conclusion determined via the income approach is considered reasonable and reliable. Conclusion Based on the characteristics of the subject property it is our opinion that a potential buyer of the subject property would likely place primary emphasis on the sales comparison approach with support from the income approach to value. This is due to the fact that there is has been a modest amount of sales and leasing activity in the market. As such, it is our opinion that the "as is" market value of the fee simple interest in the subject property as of December 22, 2011, is:

EIGHT HUNDRED THOUSAND DOLLARS $800,000

Addendum




INVOICE #2011-4591

December 30, 2011 Atty. Steven Weiss Shatz, Schwartz and Fentin, P.C. 1441 Main Street, Suite 1100 Springfield, MA 01103 Re: Summary Appraisal Report 339 State Street, Springfield, Massachusetts Bennett Franklin Appraisal Report #4591

DESCRIPTION OF SERVICES Inspection of the subject property, research of property and market characteristics pertaining to the noted property, providing an opinion of the market value and writing the Summary Appraisal Report.

FEE FOR SERVICES $3,000.00

Thank You Please make check payable to: Bennett Franklin Real Estate Services Federal Tax ID. 04-3491336

Please visit our website at: http:/www.bennettfranklin.com

Documents

Appraisal: Basilica of the Holy Apostles