REPORT VALUATION FINANCIAL REPORTING PURPOSES · 1.5.1 We have previously valued the property for Klupko d.o.o. for investment purposes April 2008 and loan security purposes in July

Board of Directors

Klupko d.o.o. 12 Milosa Obrenovica Street 26000 Pancevo Serbia

REPORT AND

VALUATION FOR

FINANCIAL REPORTING PURPOSES

ON

MILOSA OBRENOVICA 12 PANCEVO, SERBIA AS AT

31 DECEMBER 2010

King Sturge d.o.o. Ušće Tower 6, Mihajla Pupina Boulevard 11070 New Belgrade, Serbia

T +381 (0)11 22 00 101 F +381 (0)11 22 00 102


Klupko Development Site Milos Obrenovica 12

Pancevo, Serbia

Valuation Dates: 31 December 2010 Report Date: 31 January 2011

Intro page ii

CONTENTS

REF SECTION PAGE EXECUTIVE SUMMARY

1 INTRODUCTION 1

1.1 Instructions 1 1.2 Inspection 1 1.3 Status of Valuer 1 1.4 Valuation Date 1 1.5 Conflict of Interest 2

2 LOCATION 2

2.1 Macro 2 2.2 Communications 4 2.3 Situation 5 2.4 Geographical and Socio-economic Factors 5

3 DESCRIPTION 12

3.1 Buildings 12 3.2 Site 12 3.3 Photographs 13

4 ACCOMMODATION 13

4.1 Floor Areas 13 4.2 Site Area 14

5 SERVICES 14

6 CONDITION 14

6.1 General Condition 14 6.2 Deleterious Materials 14

7 INFORMATION PROVIDED 15

7.1 Copy Documents 15

8 STATUTORY ENQUIRIES 15

8.1 Town Planning 15

9 ENVIRONMENTAL CONSIDERATIONS 16

9.1 Contamination 16

10 PROPERTY TAXATION 17

10.1 VAT 17 10.2 Stamp Duty 17

11 TENURE 17

12 TENANCIES 17

12.1 Current Leases 17



Pancevo, Serbia


Intro page iii

13 MARKET COMMENTARY 18

13.1 Market Overview 18 13.2 Occupational Market 21 13.3 Investment Market 21

14 VALUATION CONSIDERATIONS AND VALUATION METHOD 22

14.1 Valuation Considerations for 31 December 2010 22

15 VALUATION 28

15.1 MARKET Value “AS IS” as at 31 December 2010 OF SURPLUS LAND 28 15.2 MARKET Value “AS IS” as at 31 December 2010 OF THE HYPERMARKET 28

16 CONCLUSION 28

16.1 Key Issues 28

17 CONFIDENTIALITY 31



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Intro page iv

Appendices 1 PHOTOGRAPHS

2 OWNERSHIP DOCUMENTS

3 COPY OF THE PARCEL PLAN

4 VALUATION MODELS

5 SENSITIVITY ANALYSIS

Annexes A BASIS OF VALUATION & VALUATION ASSUMPTIONS

B INSTRUCTION LETTER

C PREVIOUS VALUATIONS ON SITE

D VALUER EXPERIENCE

E VALUER DECLARATION LETTER



Pancevo, Serbia


Intro page v



Pancevo, Serbia


Intro page vi

EXECUTIVE SUMMARY Location: In 2002 (Date of the last official census), the city had a total population of

77,087, while Pančevo municipality had 127,162 inhabitants. It is the administrative center of the South Banat District of Serbia. Pančevo is also the most important port on Tamiš river, which flows near the city. It is an industrial city with oil/gas refineries being the major industry.

The Subject Property is situated between Prvomajska and Milosa Obrenovica Street and Vojvodjanski Bulevar in Pancevo. The location is approximately 12 km from Belgrade which is Capital city of the Republic of Serbia.

Description: This is a development site approximately 7.3 ha. It is flat and in Zone 4 in Pancevo. It lies between two major road ways and has excellent access and exposure.

The site is surrounded by retail, residential and industrial developments. The first phase of the development is a hypermarket which is completed and the second phase is partially completed.

Tenure: Klupko d.o.o. owns the freehold interest in the site and structures on site 4377 in the Cadastral Municipality of Pancevo. The site has an encumbrance of 2.7million registered to Bank Intesa and easement rights of passage by two individuals (details in Tenure Section).

Tenancy: The lease has been signed for the Hypermarket to be developed on site dated 24 June 2009 with DIS d.o.o. from Krnjevo, The agreed rent is €534,240 p.a. on a triple net rent basis which is approximately €10/m2/month. The agreement is for 10 years plus 10 years if agreed between Lessor and Lessee. The Lessor has the right to increase the rent 7% at the end of each 5 year. The rented area is a standalone building with 4,427 m2 including canopy. If a gallery is requested by Lessee, it can be added and rented at a price of €5/m2/month (€60 /m2 p.a.).

Market Value Big Box on the Valuation Date 31 December 2010:

€5,350,000 showing €1,280 /m²

Market Value “As is” of Surplus Land on the Valuation Date 31 December 2010:

€15,900,000 showing €234 /m² land area including project expenditures

Financial Reporting IAS 40

Exchange Rate On 31 December 2010 1 eur = 105.4882 RSD

Exchange rate is the middle exchange rate reported by the National Bank of



Pancevo, Serbia


Intro page vii

Serbia. It is normal for transactions to be conducted in the euro but paid in

Republic of Serbia Dinars.

Key Issues: • The retail phases of the development are considered quite feasible.

However, the office development is not feasible and we found

that it would reduce the value of the land if it was actually

developed. Therefore, the office part of the development was

assumed to not contribute to the land value as any reasonable

investor would not pay for negative cash flows.

• The developer has signed leases for the first and second phase of

the development which is a hypermarket and a small strip mall.

There are no other hypermarkets in the city zone which would be

considered competition or are there any in the pipeline that we are

aware of. Roda Hypermarket in Pancevo is quite far away from the

centre and access is poor.

• There is no other retail project in the area that has been able to

lease up its project like this one. Retailers have shown interest but

without avail as there have been no projects ready to construct.

• The location of the Klupko development in Pancevo is very good for

this type of retail development with excellent access and exposure.

• There is possibility of residential component on the land which will

be applied for in future building permits that will increase the value

of the land. The land base has a high plot ratio and there for

increase significantly the planned amount of area. However,

demand in Pancevo is the main constraint to this site from being

fully developed.

• Many parts of the world are in recession and there is no exception

in Serbia. However, the phasing of the project is such that it is quite

possible that the larger retail phases would be finished after the

recession.

• Pancevo sees little in the way of investment deals as it is a tertiary



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Intro page viii

location behind the capital city Belgrade. Moreover, there is very

little interest in Pancevo in term of investment and only has been

semi-interesting to speculative developers with retail development

having 90% of the interest. However, it is only 12 km away from

Belgrade which is quite acceptable distance in most countries i.e.

Parndorf, Austria.

• There have been many privatizations but most stock available is

dated the purchasers are usually purchasing the company for the

land value or development potential. There no privatisations that is

remotely comparable to this project.

• In today’s market there are two major problems. Firstly, most

purchasers cannot find product that will produce their required

yields as unsophisticated domestic owners do not understand the

investment / finance market. Therefore, when interest rates go up

there is no corresponding reduction of price which may be normally

seen a developed economy. Secondly, the acquiring investment

financing is very difficult due to restrictive lending policies.

• During 2010, the budget for the subject development has been

made and construction of the second phase started. Also, the

financing of the project has been approved and commenced with

90% leased area.

• In the previous year the financial crisis continued and the recession

period entered. The economies worldwide slowed during this period

as credit tightened and international trade declined. Some of the

Western economies have shown signs of improvement and it is

expected that the recovery will continue. Serbia will follow suit with

a lag time of approximately one year after more developed

economies.

This summary should be read in conjunction with the remainder of the valuation Report and must not be relied upon in isolation.

Klupko d.o.o. 12a Milosa Obrenovica Street 26000 Pancevo Serbia

Klupko Development Site Milos Obrenovica 12a

Pancevo, Serbia

Valuation Date: 31 December 2010 Report Date: 31 January 2011

Page 1

1 INTRODUCTION

1.1 INSTRUCTIONS

1.1.1 In accordance with the engagement letter dated 21 December 2010 (a copy of which is

attached at Annexe C), we have inspected and valued the freehold interest in the above

property for financial reporting purposes on the following basis:

• Market Value “as is” on Valuation Date 31 December 2010

1.1.2 Our valuation advice has been prepared in accordance with the Basis of Valuation and

Valuation Assumptions set out in Annexe A and in accordance with the Valuation Standards

published by the Royal Institution of Chartered Surveyors. The bases of valuation are those

used in the Standards and are further explained in Annexe A attached.

1.1.3 We confirm that in accordance with our confirmation of instructions letter dated 21 December

2010 our legal liability in providing this valuation report will be limited to €5million, on a per

claim per property basis, and that we have adequate professional indemnity insurance cover

in this regard.

1.2 INSPECTION

1.2.1 The property was inspected 25 January 2010 by Bryan Beaton, who is the author of this

report. We confirm that this surveyor has the necessary experience in this type of property

in this location in order to undertake this valuation. This valuation has been overseen by

Omar Choudhury, MRICS.

1.3 STATUS OF VALUER

1.3.1 In preparing this report, we confirm that King Sturge are acting as external valuers as

defined in the Standards. We can also confirm that we consider ourselves to be

independent for the purposes of this instruction.

1.4 VALUATION DATE

1.4.1 The property has been valued as at 31 December 2010.



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1.5 CONFLICT OF INTEREST

1.5.1 We have previously valued the property for Klupko d.o.o. for investment purposes April 2008

and loan security purposes in July 2009 and December 2009 for financial reporting

purposes. However, we do not consider that this presents a conflict of interest in providing

the advice you have requested.

2 LOCATION

2.1 MACRO

2.1.1 Serbia is located in South Eastern Europe between Romania to the west, Bulgaria to the

southwest, Macedonia and Albania to the south, Montenegro, Croatia, Bosnia to the east

and Hungary to the north.

2.1.2 The Subject property is located in Pancevo which is in the northern province of Vojvodina, 15

km northwest from Belgrade. Pancevo sits on the northern bank of the Tamis river which

flows directly into the Danube river. The industrial part of the city sits at the confluence of

the Tamis and Danube rivers which is 3 km to the west of the city centre.

2.1.3 In 2002 (date of the last official census), the city had a total population of 77,087, while

Pančevo municipality had 127,162 inhabitants. It is the administrative center of the South

Banat District of Serbia. Pančevo is also the most important port on Tamiš river, which flows

near the city. It is an industrial city with oil/gas refineries being the major industry.

2.1.4 South Banat Region is situated in the north eastern Serbia, on the total area of 4.245 km2. It

consists of eight Municipalities: Alibunar, Bela Crkva, Vršac, Kovačica, Kovin, Opovo,

Pančevo and Plandište. Regional seat of the municipality is the town of Pančevo. It has a

strong industrial background with the petrochemical, fertilizer, machinery, and aircraft

industries. Pančevo is connected with Belgrade through the Pančevo’s bridge which is

situated only 10 km away from the town. The site is in the periphery of the city centre,

alongside the international highway E-92 (Belgrade -Timisoara – Bucharest), and the other

side of the site along the central zone of the Pancevo city.



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Note: Parcel is not accurately reflected on this map and is for access reference only.



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2.2 COMMUNICATIONS

2.2.1 Belgrade is accessed along Pancevo Road (E-70) which lies across the Pancevo Bridge and

is 15 km to the southeast.

2.2.2 Pancevo has good communication with other major towns in Vojvodina, such as Novi Sad,

Zrenjanin and Vrsac. The Romanian border can be accessed 74 km from Pancevo in the

northwest direction. Zrenjanin, which is 74 km away in the northeast direction from Pancevo,

one can arrive choosing between one of the three existing directions, one across Opovo, the

other one across Sečanj to Dobrica and the third also across Sečanj all the way to Plandište.

The distance between Pancevo and Vrsac is 65 km in the northwest direction and close to

the Romanian border and between Pancevo and Novi Sad 168 km in the northeast direction.

2.2.3 This site is also 2.4 km away from the Port Pancevo, 2.4 km away from Railway Cargo

station, the passenger rail station stop of “Beovoz” is 150 m away and the international

airport “Nikola Tesla” is 27 km away.

2.2.4 The site has its own industrial railway connection; however, given the future usage this

would not be needed.

2.2.5 Access to site is possible from following directions:

• E-70 highway (Prvomajska Street) gives access to the site from the north but it could be

possible with approval from the city to have access to the site from a separate left turn

lane. There is currently no access to the site from the north as this part of the parcel is

empty.

• From Milosa Obrenovica cars can turn left or right into the site.

• Access is not currently possible from this Boulevard Vojvodanski as this street does not

directly touch the property; however, this street provides a link between Milosa

Obrenovica and E-92 highway.

2.2.6 Regarding public transport in Pancevo, we are informed that there are several bus lines

passing through the town (2, 3, 4a, 11, 11a, 12, 14). Bus lines passing near the Subject site

(Milosa Obrenovica Street) are 2, 3, a part of line 12 and a part of line 11a. The buses go

every half an hour on working days and every hour on weekends. There are also some

private companies that do passengers transport but as they are not officially registered, we

cannot comment on this.

2.2.7 According to ATP Pancevo (Public Transport Agency of Pancevo) there is a possibility to

introduce a new bus line, at the request of some company or group of citizens. A special



Pancevo, Serbia


Page 5

procedure should be followed and the request should be presented to municipal authorities

and to ATP as well. A new bus line is introduced once the feasibility studies performed by

ATP find it profitable and of interest.

2.3 SITUATION

2.3.1 The Subject Property is situated between Prvomajska Street, Milosa Obrenovica (Paje

Marganovica) Street and Vojvodjanski Boulevard in Pancevo. The address is 12 Milosa

Obrenovica, Pancevo. GPS coordinates are 44°52'4.87"N 20°39'38.66"E .

2.4 GEOGRAPHICAL AND SOCIO-ECONOMIC FACTORS

SERBIA

2.4.1 The Serbian economy pushed back out of recession in 2010 and grew 1.5% which is still

way below 5-6% pre-crisis growth rates. This is a slow recovery from the recessionary year’s

downturn as fiscal and monetary tightening dampened the effects of rising exports and

private investment.

2.4.2 And weak FDI leaves external deficit financing reliant on IMF support continuing when the

current standby ends in 2011, forcing the government to persist with unpopular budget cuts.

Food prices raised and subsidy withdrawals lift inflation to 8.8% in December 2010, forcing

higher interest rates to curb price pressures and slow the exchange rate depreciation. After

cutting interest rates from 17% in 2008 to just 8% in May 2010, the central bank started

increasing them again since August and since October interest rates have moved up from

9.5% to 11.5%. The central bank is trying to preserve stability and is generally reluctant to kill

growth, but was still cautious and raised rates. While higher interest rates are used as tool

for limiting inflation, they will also prevent faster economic recovery. There is a possibility

that interest rates will rise in the first half of 2011 in case of further inflationary pressures, but

we think that the central bank will not push them too much above inflation rate in order to

preserve growth.

2.4.3 The depreciation pressures on the dinar have finally eased but underlying pressures can still

cause sudden problems and companies should be aware of that. The central bank has

intervened massively to prevent sharper currency fall – more than Euro 2bn was sold in 2010

to prevent deeper depreciation. Since 2008, over Euro 3bn has been spent on currency

interventions and the IMF has agreed to additional Euro 2.5bn of future interventions if

needed. The dinar has now stabilized at some 105 rsd to the euro.



Pancevo, Serbia


Page 6

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2006 2007 2008 2009 2010e 2011f 2012f 2013f 2014f

GDP growth (%) forecast

Source: Oxford Economics, January 2011

Key Macroeconomic Indicators2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010 Q2 2010 Q3 2010

Oct

2010

Nov

2010

Dec

2010

Real GDP grow th (in %) 3.9 2.4 8.3 5.6 5.2 6.9 5.5 -3.1 0.3 2.0 2.7

Consumer prices (in %, relative to

the same month a year earlier)2)14.8 7.8 13.7 17.7 6.6 11.0 8.6 6.6 4.7 4.2 7.7 8.9 9.6 10.3

NBS foreign exchange reserves

(in EUR million)2,208 2,854 3,131 4,952 9,041 9,660 8,190 10,602 10,445 10,493 9,876 9,721 9,662 10,002

Exports (in EUR million)3) 3,125 3,847 4,475 5,330 6,949 8,686 10,157 8,478 2,009 2,505 2,668 918 958

- grow th rate in % compared

to a year earlier16.0 23.1 16.3 19.1 30.4 25.0 16.9 -16.5 8.1 17.2 20.4 17.2 32.9

Imports (in EUR million)3)7) -6,387 -7,206 -9,543 -9,613 -11,971 -16,016 -18,843 -13,237 -3,214 -3,665 -3,918 -1,204 -1,379

- grow th rate in % compared

to a year earlier27.2 12.8 32.4 0.7 24.5 33.8 17.7 -26.0 -4.4 12.5 16.1 1.9 14.8

Current account balance4)7)

(in EUR million) -671 -1,347 -2,620 -1,778 -2,356 -5,053 -7,054 -1,743 -760 -610 -523 -102 160

as % of GDP -4.2 -7.8 -13.8 -8.8 -10.1 -17.6 -21.1 -7.0 -11.3 -8.2 -6.7 -4.1 6.4

Unemployment according to the

Survey (in %)5)13.3 14.6 18.5 20.8 20.9 18.1 13.6 16.1 / 19.2 / 19.2

Wages

(average for the period, in EUR)152.1 176.9 194.6 210.4 259.5 347.6 358.4 337.9 321.5 335 324.8 320.4 321.7

Source: National Bank of Serbia

6.8 7.7 8.87.9 10.3 4.1 2.3 1.9 5.7Core inflation (in %, relative to the

same month a year earlier)2)4.4 6.1 11 14.5 5.9

2.4.4 Newly revealed long term economic plans acknowledge the need for reform to reduce state

spending, attract inward investment and boost exports. But the required restraint on

domestic wages and consumption, on top of near 20% unemployment rate is undermining

the popularity of ruling party ahead of the next legislative elections in May 2012.

2.4.5 In the 3rd quarter of 2010, GDP increased by 2.7% in comparison to the corresponding

period of the previous year. Compared to the corresponding period of the previous year,

gross domestic product (GDP) in nine months of 2010 increased by 1.7%.Observed by

activities, in the third quarter 2010, the highest growth in the gross value added was noted as

follows: the section of financial intermediation – 8.7%, the section of transport – 7.4%, the

section of mining and quarrying – 6.2%, the section of trade – 6.2%, and in the section of

manufacturing –

5.0%. The

highest fall in

the gross value

added was

recorded in the

section of

construction –

9.2%, and the

section of

electricity, gas

and water

supply – 4.4%.Seasonally adjusted GDP data, at constant prices 2002, in the third quarter of

2010, increased by 1.6%, in comparison to the second quarter of 2010.



Pancevo, Serbia


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2.4.6 Oxford Economics estimates that GDP growth by 2014 will achieve the level of 5.1% which

is still below previously forecasted 5.9% that was achieved in 2008 before the recession.

2.4.7 Estimates from the Business Monitor International Ltd show that the unemployment rate will

decrease, from about 18.8% in 2008 to 17.0% by the year 2014. These estimates might be

too optimistic, and the actual unemployment rate might remain higher for the years to come.

Serbia needs to go through the privatisation of some major government companies, like

Telekom and restructuring of its own sectors.

2.4.8 According to the projection of the NBS’s research, it is highly likely that inflation in the first

half of 2011 will not fall below 10.0% nor exceed 14.5%. If no unexpected shocks

materialise, inflation will most probably move around the midpoint of the target tolerance

band, falling back to the target in the second half of 2011. The target for end-2011 is

4.5±1.5%.

PANCEVO

2.4.9 Pancevo is a city and municipality located in the southern part of Serbian province of

Vojvodina. The City of Pancevo is located in South Vojvodina, at the confluence of the Tamis

and the Danube rivers, at the very edge of the Panonian Plain. It is the economic, cultural

and administrative centre of South Banat and one of the most important industrial centres in

the Republic of Serbia. Including its 9 surrounding villages, the city area covers 755 km2.



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120,000

121,000

122,000

123,000

124,000

125,000

126,000

127,000

128,000

129,000

130,000

2002* 2003** 2004** 2005** 2006** 2007** 2008** 2009**

Population of Pancevo

Source: Statistical Office of the Republic of Serbia*Official Census** Estimates

Pancevo is just 15 km away from Belgrade and 40 km away from the Nikola Tesla

International Airport.

2.4.10 Since the pan-European Corridors 7 and 10 run through this region, the city of Pancevo has

good strategic position. It has good road and railway connections with Belgrade being on the

regional route E70 (Belgrade-Pancevo-Vrsac-Romania). Also, situated at the confluence of

the Tamis and the Danube rivers (on the Danube transversal of Corridor 7), LUKA DUNAV -

the main port of Pancevo, adds to the attractiveness of the city in terms of business

locations.

2.4.11 The most important economic branches in our city are crude oil processing, production of

plastic masses (HIP Petrochemical Complex), fertilizers (Nitrogen Plant), textile and fashion

industry and agriculture.

2.4.12 Pancevo is the biggest petrochemical centre in the Balkans (Oil Refinery, Petrochemical

Complex), also known for its metal processing industry (“Utva” – Aircraft Factory, Large

Vehicle Factory), structural carpentry (“Tehnomarket”; a private company for the production

of aluminium profiles – Extrusion, CLUSTER), light textile and leather processing industry

(more successful private companies: The Passage Group, Modus, Aries) and a CAD CAM

technology centre. 99% of all businesses in Pancevo are SMEs. There are about 5,000

stores and 2,000 companies (60% of which private).

2.4.13 According to the last Census held

in 2002, Pancevo has 127,296

residents, whilst urban area

numbers 77,087 citizens. The

Statistical Office of the Republic

of Serbia estimates that so far a

population in the city has been

constantly decreasing, as well as

the population of South Banat

District district that the city

belongs to.

2.4.14 It is estimated that the population of the District has decreased for approximately 4.4% since

2002 and the number of city residents for 2.4%. According to the data published by the

Statistical Office of the Republic of Serbia, Pancevo has the population of 124,362, 51% out

of which is female and 49% male population. Pancevo has more residents of the age

between 50 and 65 years (22%) than the ones of the age under 10 years (10%). We are



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250,000

260,000

270,000

280,000

290,000

300,000

310,000

320,000

2002* 2003** 2004** 2005** 2006** 2007** 2008** 2009**

Population of South Banat District

Source: Statistical Office of the Republic of Serbia* Official Census

** Estimate

currently manipulating with

the data for 2009, last

published by the Statistical

Office of the Republic of

Serbia.

0 2000 4000 6000 8000 10000 12000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85+ Age structure of the population in Pancevo in 2009 (estimate)

Source:: Statistical Office of the Republic of Serbia

RETAIL SPENDING AND SALARIES IN PANCEVO

2.4.15 Average net wages and retail spending in Pancevo, according to the data published by the

Statistical Office of the Republic of Serbia had the same upward trend until the last quarter of

2008. In the first half of 2009 there was a sharp decrease featuring the average monthly net

salary of €359 and retail spending €260/household/month which represents 25% decrement

compared to the second half of 2008.

2.4.16 The statistical authorities registered a moderate increase in retail spending in the first three

quarters of 2010. The retail spending in Pancevo in 2009 amounted to

€266/household/month and, as the statistical office so far has published only the data

regarding the first three quarters we assumed that there have not been significant changes



Pancevo, Serbia


Page 10

in the last quarter compared to the 3Q2010; therefore we estimated that the city averagely

spent €289 on retail goods per household.

2.4.17 In 3Q2010 average net salary in Pancevo amounted to €352 per month and in the following

two months it increased to €377 per month. The oscillations in salary figures in 2010,

especially in the last half of the year are partly caused by the oscillations in the exchange

rate EUR/RSD as a great part of the salaries, especially those earned in public sector, do not

follow the oscillations in the exchange rates.

€ 100.0

€ 150.0

€ 200.0

€ 250.0

€ 300.0

€ 350.0

€ 400.0

€ 450.0

€ 500.0

€ 550.0Retail Spending per Household and Salaries

in Pancevo

Retail Spending per Household

Salaries

Source:King Sturge Research

2.4.18 According to the Statistical Office of the Republic of Serbia, in the 3Q2010 in Vojvodina

69.9% of the whole expenditure is spent on food and non-alcoholic beverages, 8.1% on

alcoholic drinks and tobacco and 9.7% on clothes and footwear. The least is spent on

restaurants and hotels, only 3.1%.

69.9%

8.1%

9.7%

9.2%

3.1%

Retail Spending Structure in Vojvodina as at 3Q2010

Food and non-alcoholic beverages

Alcoholic drinks and

tobacco

Clothes and footwear

Home furniture, equipment and maintenance

Restaurants and hotelsSource: King Sturge Research



Pancevo, Serbia


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€ 100,000,000

€ 120,000,000

€ 140,000,000

€ 160,000,000

€ 180,000,000

€ 200,000,000

€ 220,000,000

2009 2010e 2011f 2012f 2013f 2014f

Prediction of Annual Retail Spending in Pancevo

Source: King Sturge Research

2.4.19 According to the official data published for the first three quarters we estimated that Pancevo

spent app 142 million euro in 2010 on retail goods. In 2011 it is expected a moderate growth

to 155 billion euro and by 2014 the city is suppose to have 203 million euro.

2.4.20 In the 3Q2010 the retail spending participated with 55.5% (69.9% food and non-alcoholic

beverages, 8.1% alcoholic drinks and tobacco, 9.7% clothes and footwear, 9.2% home

furniture, equipment and maintenance and 3.1% restaurants and hotels) in the total spending

registered in the city. We applied the same percentage for the future years and the table

below shows the forecast regarding the future retail spending in Pancevo according to goods

categories.

Municipality 2009 2010e 2011f 2012f 2013f 2014f Percentage

Pancevo € 142,005,696 € 155,741,220 € 170,442,240 € 202,719,360 € 214,027,200 € 225,262,800 100.0%

€ 142,005,696 € 155,741,220 € 160,854,864 € 170,711,040 € 187,273,800 € 203,809,200 100.0%

Goods 2009 2010e 2011f 2012f 2013f 2014f Percentage

Food and non-alcoholic beverages € 99,300,000 € 108,900,000 € 112,400,000 € 119,300,000 € 130,900,000 € 142,500,000 69.9%

Alcoholic drinks and tobacco € 11,500,000 € 12,600,000 € 13,100,000 € 13,900,000 € 15,200,000 € 16,600,000 8.1%

Clothes and footwear € 13,800,000 € 15,100,000 € 15,600,000 € 16,600,000 € 18,200,000 € 19,800,000 9.7%

Home furniture, equipment and maintenance € 13,100,000 € 14,300,000 € 14,800,000 € 15,700,000 € 17,200,000 € 18,800,000 9.2%

Restaurants and hotels € 4,400,000 € 4,800,000 € 5,000,000 € 5,300,000 € 5,800,000 € 6,300,000 3.1%

100.0%

Pancevo spending power

Pancevo spending power by group class



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3 DESCRIPTION

3.1 BUILDINGS

CONSTRUCTION AND EXTERIOR

3.1.2 The current finished structure is a Big Box format. It is a prefabricated concrete structure

with reinforced concrete slab with an insulated corrugated tin panel facade. It has only a

ground floor. It has approximately 6 m ceiling height but in some areas (WC and retail units

the ceiling height is cca 2.8 m). The roof is prefabricated beams covered in insulated

corrugated tin with hydro insulation covering. The flooring is treated finished concrete.

However, there are areas such as the retail units, entrance areas and the WC that have tiled

floors. It has large shop windows across the front of the building. We were not allowed to

inspect back storage areas but we assume it would be like the sales area of the hypermarket

with some cold storage and large bay doors for goods receipt.

3.1.3 The part of the development in the phase of construction is a prefabricated structure with the

roof installed. The prefabricated structure is in place with the foundation partially completed.

The roof is prefabricated beams covered in insulated corrugated tin with hydro insulation

covering.

BUILDING SERVICES

• Electric currency supply 2.8 MW

• Natural gas supply unit 400 m3/h

• Municipal water supply network

• Municipal sewerage system with rain drainage

• Fire fighting water network (hydrants)

• Heating station with capacity of 6000 m3/h of steam

• Ventilation ducts to all built up space.

• Compressed air substation and distribution network.

3.2 SITE

3.2.1 The site was composed of several parcels. The buildings are being erected from the north

side (Paje Marganovica) moving south. All old buildings except one small building have

been demolished.



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3.2.2 The site has a park area and a retail area on the western border, industrial and rural housing

on the southern border, industrial complexes on the eastern border and residential and retail

on the northern border across the street.

Graphic: Picture is meant for reference only and not meant to accurately reflect parcel borders.

3.2.3 The site comprises of parcel 4733 is 73,878 m2 according to land book no. 11906.

3.2.4 The site has a polygon shape. The site is being designed as a retail park.

3.3 PHOTOGRAPHS

3.3.1 Photographs of the property and the surrounding area are attached at Appendix 1.

4 ACCOMMODATION

4.1 FLOOR AREAS

4.1.1 We have relied upon the gross floor areas stated in the building permit. However, we have

assumed a net rentable area given in the contract with “DIS”. Moreover, we have used a

93% gross to net for the DIY and gross area to GLA for the retail shopping mall of 70%.

Building / Floor

Gross External Area (GEA)

GLA (m²)



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Hypermarket 4,427.88 4245.47

Phase II 7068.57 6739.64

Phase III 2160.00 2052.00

Total 13,656.45

4.1.2 For the purpose of the valuation, we have used the standard measuring practice of the

Republic of Serbia which is SRP. Due to the fact that this is applied consistently throughout

the valuation and development process, this should not affect the valuation outcome as

sales, lettings and construction all use this standard.

4.2 SITE AREA

4.2.1 According to the land book no. 11906, Cadastral Municipality Pancevo, parcel number 4733

has an area of 7.3878 ha.

4.2.2 The site coverage of the buildings can amount to 80% of the site according to the general

plan. The planned site coverage of approximately 52%.

5 SERVICES

5.1.1 We understand that all mains services are available to the property including electricity, gas,

water and mains drainage. We have assumed that the capacity of the services is adequate

for the future use of the property but have been unable to verify that this is the case.

6 CONDITION

6.1 GENERAL CONDITION

6.1.1 The buildings were in very poor condition and most were demolished. The site is in the

process of redevelopment.

6.2 DELETERIOUS MATERIALS

6.2.1 We have not been able to determine whether or not deleterious materials have been used in

the original construction or subsequent refurbishment of the property.

6.2.2 Should there be further concerns with regard to the presence of potentially deleterious

materials within the building, we would recommend the appointment of a suitable specialist

to advise accordingly.



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7 INFORMATION PROVIDED

7.1 COPY DOCUMENTS

7.1.1 To assist us with this valuation and report, the Borrower have provided copies of the

following documents:

(i) Sample lease contract

(ii) Landbook number 11906, KO Pancevo, Parcel 4733 dated 22.12.2010;

(iii) Urban project for Site 4733 conditions for the specific site in Serbian language;

and,

(iv) Letter of offer to Peacock for tenancy in Pancevo;

(v) Tenancy Plan

(vi) Schedule of signed leases

7.1.2 We have relied upon these documents as being true and complete copies of the originals

and we have not made further enquiries in this regard. We have assumed there are no other

material documents that would affect our valuation that have not been supplied to us.

7.1.3 We have relied upon these documents as being true and complete copies of the originals

and we have not made further enquiries in this regard. We have assumed that there are no

other material documents that would affect our valuation.

8 STATUTORY ENQUIRIES

8.1 TOWN PLANNING

8.1.1 The General Town Plan outlines conditions for this zone.

8.1.2 Summary of General Town Plan Condition Highlights:

(a) Usage allowed for commercial/industrial/residential.

(b) Footprint 80% of parcel area.

(c) Scheme can have 2 basement levels + GF + 6



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(d) Max. build up index is 5.0.

(e) Basement can be business space, additional rooms and car parking,

(f) Business Space means the activities can be for commerce, trade, administration,

business apartments, etc

(g) Ground floor cannot be higher than 1.2 m above the level of the street pavement.

(h) Parking ratio is 1 to 70 m2

8.1.3 The current building planning:

(a) The building of “Pancevo Retail Park”.

(b) There are envisioned 6 commercial buildings with a structure of ground floor and/or

ground floor plus gallery level. The gross area of all six buildings is 56,715.37 m2.

The footprint (plot) coverage 66%.

Building GF (Gross m2) Gallery (Gross m2) Total

1 19,218.39 10,774.67 29,993.06

2 12,828.34 8,491.08 21,319.42

3 32.24 32.24

4 32.24 32.24

5 575.00 575.00

Hypermarket 4,763.41 4,763.41

Total 37,449.62 19,265.75 56,715.37

(c) The gross development footprint can be 37,449.62 m2 and area of 56,715.37 m

2. This

indicates a plot density of approximately 0.77. The site coverage will depend on the

developers wish to cover the site.

(d) The amount of surplus land according to the current conditions is 68,060 m2. The land

associated with the hypermarket under these development conditions is 5,818m2.

9 ENVIRONMENTAL CONSIDERATIONS

9.1 CONTAMINATION

9.1.1 We have not undertaken, commissioned or been provided with an environmental

assessment to establish whether contamination exists or may exist. We have not

undertaken any investigations into past and present uses of the subject property or of any

adjoining property.



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9.1.2 We did not observe evidence of potential and actual contamination on the property.

9.1.3 Overall, therefore, for the purposes of this Valuation, we have assumed that no

contamination exists in relation to the property sufficient to affect value. However, should

this assumption prove to be incorrect, the values reported herein might be reduced.

10 PROPERTY TAXATION

10.1 VAT

10.1.1 The company is registered in the VAT system; however, we have assumed that VAT issues

should not adversely affect the value of the property.

10.2 STAMP DUTY

10.2.1 We understand that the property is established within a Special Purpose Vehicle (SPV)

where stamp duty may be payable at a lower rate than normal property transactions. It

should, therefore, be possible for your borrower to dispose of the property as a business

entity and, hence, at lesser levels of stamp duty. However, as this is IAS 40 valuation,

purchasing costs are disregarded.

11 TENURE

11.1.1 The freehold interest in the land and structures is owned by Klupko d.o.o.

11.1.2 Landbook nr. 11906, Municipality Pancevo, Site nr. 4733. Specifies a storage building and a

supermarket.

11.1.3 Encumbrances registered by Erste Bank a.d. on the supermarket for €2.7 million.

11.1.4 Vladan Krcadinac has easement rights through the parcel next to parcel number 5176/10.

11.1.5 Zikica Brkic has easement rights through the parcel next to parcel number 5176/6.

12 TENANCIES

12.1 CURRENT LEASES

HYPERMARKET



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12.1.1 The lease has been signed for the Hypermarket to be developed on site dated 24 June 2009

with DIS d.o.o. from Krnjevo, The agreed rent is €534,240 p.a. on a triple net rent basis

which is approximately €10/m2/month. The agreement is for 10 years plus 10 years if

agreed between Lessor and Lessee. The Lessor has the right to increase the rent 7% at the

end of each 5 year period. The rented area is a standalone building with 4,427 m2 including

canopy. If a gallery is requested by Lessee, it can be added and rented at a price of

€5/m2/month (€60 /m2 p.a.).

12.1.2 Lessee may sublease up to 10% of area. The leased building will include 128 parking

spaces adjacent to the building. The building was completed and the tenant is occupying the

premise.

PHASE II

12.1.3 This phase of the development is in the construction phase. The majority of the tenants

have been signed. The current signed a fixed weighted average of this phase is €10.5 /m2.

This is the expected end weighted average. These results do not include the turnover rent

which from the point of valuation point of view very uncertain to the extent of the

Retail Category % of Space

Food 5.3%

Fashion 30.0%

Furniture 17.3%

Shoes 7.4%

Cosmetics 5.3%

Children 6.0%

Leisure 8.0%

Other 10.6%

Situation at 31.12.2010.

13 MARKET COMMENTARY

13.1 MARKET OVERVIEW

13.1.1 Retail market in Pancevo is considered moderate, reflecting the economic and retail trade

situation of all smaller cities in Serbia. Pancevo has still been keeping the old and traditional

concept of high street shopping. Yet, it is being recognized a slight immersion of modern

retail trends mostly coming from Belgrade, the capital city which is only 15 km away.



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13.1.2 High streets represent a core of the city centre and very busy shopping and business zone.

Domestic and foreign bank branches are located here occupying the retail space over 100

m2 and smaller retail units usually owned and rented by local retailers, featuring domestic

and international brands.

13.1.3 In regard of modern retail schemes, Pancevo is disposed of several

supermarkets/megamarkets making part of strong internation and domestic retail chains

such as Delta Maxi, Mercator, Idea, DIS. Maxi opened two supermarkets in city centre,

Mercator one Roda megamarket in the city outskirts and smaller supermarket in the city

centre and the retailer DIS opened its hypermarket within the first development phase of

Pancevo retail park The retail chain SI Market has 13 small retail units in Pancevo occupying

total area of approximately 3,500 m2.

13.1.4 The lack of modern retail supply (shopping

malls, hypermarkets, big boxes, DIY etc) in

Pancevo is caused and justified by the vicinity

of Belgrade and its growing retail supply and

fast retail delivery. However, this year is

expected the opening of modern shopping

centre within a luxurious residential/commercial

project Tamis kapija I in the city centre along



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the riverside.

13.1.5 In addition to luxury and modern equipped apartments, the Tamis Gate tenants will also

have at their disposal numerous entertainment contents, stores, coffee shops, restaurants,

banks, a large Idea supermarket, a zone for recreation and other catering activities.

13.1.6 A shopping center within Tamis Gate will span about 12,000 square meters and it will be one

of the largest centers on the territory of south Banat. Idea supermarket will be situated on the

ground floor of the facility and it will occupy 2,000 square meters and additional 1,000 square

meters for accompanying activities. Beauty parlours, travel agencies, betting houses and

coffee shops will be situated on the same level. That part of the commercial space will be

independent of the upper level and other units within the complex. It will host a total of 17

outlets, ranging in size between 35 and 60 square meters, while four outlets will also have a

gallery.

13.1.7 The main lounge on the ground floor of Tamis Gate will be the place where an exchange

office, an optical store, a computer store, and offices of mobile operators will be situated,

while the size of booths will range between 10 and 40 square meters. Escalators in the main

lounge will lead to the first level where a shopping mall, spanning over 5,000 square meters,

and about 50 outlets, occupying between 25 and 363 square meters, will be located. The

mall has a round pedestrian corridor that will make it possible for visitors to see all the

stores.

13.1.8 Belgrade was experiencing very fast and significant changes regarding real estate

development several years ago. In last few years Belgrade retail market was exposed to new

retail and shopping trends in terms of modern shopping mall concepts already present in the

real estate market worldwide. Since Pancevo is 15 km away from Belgrade, the population of

this city makes a part of catchment area for the Capital, especially for the projects near the

Danube, in the Municipality of Palilula.

13.1.9 Two significant retail projects, Metro and Pevec, situated at the other side of the Danube, in

Belgrade neighbourhood of Krnjaca, are easily approachable from the city centre of

Pancevo. They are approximately 10 km away from the Subject site.

13.1.10 Metro, Cash & Carry, featuring 8,500 m2 of GLA, was opened in January 2005 at

Zrenjaninski put in Krnjaca.

13.1.11 Croatian retail chain Pevec opened its centre for the consumers in December 2008. This Do

It Yourself featuring 35,000 m2 of GLA due to financial problems was taken by OTP bank.



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13.2 OCCUPATIONAL MARKET

DEMAND

13.2.1 Many hypermarkets and DIY have chosen to develop their own buildings. These occupiers

include Idea, Tempo, Roda/Mercator, DIS, Merkur, Metro, Pevac, Uradi Sam. Although

some of them rent premises, most are developing their own buildings. There are still several

Big Box occupiers i.e. SPAR, Pratiker, Obi, and others that are carefully watching the

Serbian market for a time to enter.

RENTAL GROWTH

13.2.2 Lessors usually link rental contracts to the EUROSTAT index to increase the prices annually.

13.3 INVESTMENT MARKET

DEMAND

13.3.1 There are few investors willing to purchase yielding properties at the current time. The

investment market was slow in Belgrade before the crises and continues to be slow.

However, distressed properties are the current trend. There are a lot of competing projects

in Western European (UK, France, Germany) properties that have significantly attractive

yields and most investors are shopping there first. Many of these properties are going at a

discount as property owners found themselves over leveraged and financial institutions

calling in loans. Investors would and are adding a significant discount to properties in Serbia

due to political and economical risk.

YIELDS

13.3.2 The last transaction noted was for the supermarket space in the mixed use development in

the T-Kapija development that was purchase at a net initial yield of 9.5%. A lease

agreement was signed in January 2009 for a lease period of 10 years. The rent stated was

€11/m2 for the sales area and €6/m

2 for storage area (weighted average is €10 /m

2). The

rent is increased every year by the EUROSTAT index. The lease is a full repairing leasing

so that the lessee if responsible for all repairs; however, insurance was not mentioned but

we assume it would also be the Lessee’s responsibility. This is a new building on Dositeja

Obradovica Street. The SPA was signed in December 2009.

13.3.3 The market is quite illiquid. We have adopted yields similar to the transactions above. We

have increased the yields slightly due to market illiquidity. Moreover, yields in the later

stages were increased by 50bp due risk of oversupply.



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14 VALUATION CONSIDERATIONS AND VALUATION METHOD

14.1 VALUATION CONSIDERATIONS FOR 31 DECEMBER 2010

14.1.1 This is a valuation report for financial reporting purposes under IAS 40. Therefore, all costs

for acquisition and purchase will be ignored.

14.1.2 The market has been suppressed for the past two years and very little in the way of

transactions have been completed. This therefore introduces even more uncertainty than

the normal uncertainty that one would expect in this type of market. In our opinion, the

market has not changed significantly in the last year. Due to this, we decided that there was

not enough information to change the yields significantly from last year.

14.1.3 This development would have significantly lower risk than the above development due to

better location, development type, and synergies between retailers.

14.1.4 We have valued the completed scheme (Gross Development Value) using the income

approach of valuation based on comparable rental information and yields based on risk

analysis.

14.1.5 To arrive at the value of the property at the certain date (31st December 2010) we have used

a development appraisal method of valuation which involves calculating the residual value by

first estimating the Gross Development Value (GDV) of the property and then deducting all

estimated development costs and profit required to carry out the project.

14.1.6 The valuation of development sites is a complex matter, involving a large number of

variables that must be determined for each individual property. Typically many of the

limitations on development only become clear once specialists have carried out detailed

investigations.

14.1.7 In particular, the following points can all have a significant impact on value and the cost

implications have to be determined by specialists:

• Contamination – if contamination exists the costs of cleaning up the site can be

considerable,

• Other factors – in addition to the above, some sites involve special considerations

such as, additional taxes, fees, etc, which can rarely be estimated accurately

without obtaining specialist advice.

14.1.8 It is not the role of the appraiser to attempt to accurately quantify the cost implications of the

above factors in a first valuation exercise. Although there was an informal budget for the



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phase II, there is no budget yet for the greater part of the development. There were some

missing elements that we added such as financing but the greater part of the costing was

there.

14.1.9 We recommend that you instruct development specialists to coordinate the various studies

that will be needed to answer all these questions.

14.1.10 In view of the above, we have estimated the value of this site without having made any

deductions for the cost of:

• De-contamination of the site

• Any other extraordinary costs that may be associated with this scheme

14.1.11 The residual method requires the input of relatively large amounts of data, which are rarely

absolute or precise. A small difference in each figure can lead cumulatively to a much larger

difference in the residual land value. This applies especially to the sale price per m2, build

costs and finance costs.

14.1.12 We would therefore stress that:

• The residual value given by the residual approach should be treated as an

approximate indication of value rather than a definitive figure, and

• The residual value will change in time with changes in the property and

financial markets. Quite minor changes in those markets can lead to much

larger changes in end values.

14.1.13 In our development appraisal, we have proceeded as follows:

14.1.14 We have valued the property assuming the construction of the scheme mentioned in this

report based adjusted yields and income for the city. We have valued the property using a

period to period cash flow model using “Circle Developer” software. All payments and

receipts are assumed to be in advance.

14.1.15 We have phased the valuation in the following way:



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14.1.16 We have assumed that the development will be built in 6 phases with the first phase already

completed. We assumed a total development period for all remaining phases will be 30

months beginning in December 2010 and ending in June 2013. The retail strip phase is

scheduled to take four more months. The next small retail phase is schedule to commence

immediately afterwards and to take 9 months to complete from December 2010. The rest of

the retail phases will take 12 months each overlapping with a total time of 24 months.

14.1.17 As this is a phased development so will be the cash flows from the project. In the following

is an example of the predicted incoming cash flows.

14.1.18 We have used comparable rents and for a retail park with Novi Sad project aiming at 13

eur/m2. We have applied rents to reflect fixed rents averaging €10.5/m

2 for the first phase

according to schedule of tenancy received. The hypermarket rent is as in the contract at

€10/m2/month (€120 m

2 p.a.). The ERV is €6.4million per annum (€11.2 /m² per month) if

the project was fully developed at the date of valuation for phases II - VI. We have assumed



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market rates for insurance which were 1.2 eur/m2 of net area and 0.4% for real estate tax of

market price. This reduces GOI to NOI. The rest of the costs for management, cleaning,

security, maintenance, etc will be subject of a service charge (SC). We have assumed there

will no surplus or deficit from the SC. We assumed a vacancy rate of 3% in phase IV and

5% in phases V and VI each.

14.1.19 We have applied net initial yields 9.5% for the hypermarket, 10.0% for phases II, III, IV, and

due to oversupply risk 10.5% for the rest of the phases.

14.1.20 We have arrived at a Gross Development Value of the completed scheme of €61.3 million

exclusive of VAT equating to 1,280€/m2 overall.

14.1.21 Although we were provided a budget by the client for the phase II, the greater part of the

development must still be estimated at this time. In absence of a detailed development

budget by the developer or a designed Quantity Surveyor, we have based our costs on

discussions with King Sturge’s Building Consultancy Team and the client although we would

strongly recommend a full cost survey be commissioned. We have deducted our estimates

of the following items from our Gross Development Value to arrive at a residual land value.

• Acquisition Fees – These fees have been ignored due to rules under IAS 40 for

reporting Market value.

• Legal and Agent Fees – The legal fee is taken as 0.5% of the yearly rent and the

agent fee is taken as 12% which is normally between 10% to 12% year rent. The

entire amount taken for the project is €738,674. We have assumed the marketing

is included in this amount. We have assumed that each phase would be pre-let as

the developer has been pre-letting before starting construction. This assumption is

also supported by current restrictions in bank financing require the scheme to be at

least 50% let before first disbursement. Moreover, given the conditions that the

current scheme phase II was let in, if the conditions improve which are likely in the

next couple of years, letting the scheme will likely improve also.

• Construction costs – We have assumed a construction cost €510 and €500/m2

GEA (Gross External Area) for the second phase and the other remaining phases

respectively. We have assumed an “S-Curve” distribution of construction costs to

reflect the typical pattern of expenditure.

• Cost Overrun Contingency - We have also made a contingency allowance for

project cost over-run at 5% of construction costs.



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• Permitting and Other Related Fees – This category includes all fees that are

related to getting all permits such as location permit, start work permit, construction

permit and usage permit.

• Site Clearance and Preparation – we aware that most of clearance and

preparation works are paid.

• Utility Connections – the connection fees and we have assumed that central

heating connections are not included. We applied a €15/m2 per net area for utility

connection fees.

• Initial Development Fee – this is a municipal tax used to pay for bring

infrastructure to the site whether it has it or not. The infrastructure fee is calculated

based on the zone which in this case is Zone 4. Klupko received a credit for pre-

existing building earlier. The fee being paid now is €28/m2 of net area. According

to the client, the second phase IDF has been paid.

• Professional fees – The two highest fees in professional fees is the

architect/designer and the project manager. The architect is contracted at €7.5/m2

and this is a normal fee for architects. It is normal in Serbia for foreign investors to

hire a project manager i.e. employee and to contract one. The former is obviously

very cheap. This is what the contractor has done. We have halved the normal

project fee for this reason to 2.5%. We would expect that this is also what a

potential buyer would do also.

• Financing - Interest charges during the construction period assuming development

finance at 7% using a 70/30 loan to equity ratio.

• Developer’s profit – As this project is entirely speculative we have assumed a

fixed developer’s profit at 20% on GDV, reflecting a reasonable return for the risk.

14.1.22 We understand that the General Town Plan will allow residential component on the site;

however, the residential component has not been stated in either the building permit or the

Urban Detail Plan for the site. Therefore, we have not included it in the valuation. However,

it is worth mentioning that if the residential component is added to the site. Then it could

significantly increase the site value.

14.1.23 In addition to office space the detailed town plan specifically lays out the maximum gross

154,996 m2. Even though it is commonly thought that a higher plot index equals higher land

value, there must be demand for this space. Pancevo is a smaller industrial town that does



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not invoke this amount of demand. It is our opinion that the retail side of the development is

feasible and sustainable; moreover, we think that a residential phase would add to the

scheme and provide a synergy to the retail side.

14.1.24 Although implicit, the land area of the hypermarket that we calculated was 5,765 m2 which is

roughly double the area of the gross area of the hypermarket. This was done to account for

the parking area and green areas normally accounted for in the development process. The

hypermarket must have at least 1 park place per 70 m2 of net area. The parking places

usually utilize approximately 1/3 of the area needed for size of the parking development due

to communication routes and infrastructure installation i.e. lamp standards.

14.1.25 Sensitivity Analysis – We analysed the variables rent, yield and construction cost. We found

that the most sensitive variables were yield and rent which affected the land price. We

analysing the lower land value the rent was the most sensitive variable which reduced a land

value of 30%. We have to emphasise that we have taken into consideration any increase in

rent from turnover rents which will effectively hedge against lower rent reduction risk.

Sensitivity Analysis Original Value 15,924,564€

Variable Change Residual Land Value % Land Value Change

Rent + 10% 20,600,059€ 29%

Rent - 10% 11,225,499€ -30%

Construction Cost + 10% 13,153,717€ -17%

Construction Cost - 10% 18,675,413€ 17%

Yield + 100 basis points 11,973,829€ -25%

Yield - 100 basis points 20,706,000€ 30%



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15 VALUATION

15.1 MARKET VALUE “AS IS” AS AT 31 DECEMBER 2010 OF SURPLUS LAND

15.1.1 Having regard to the facts and assumptions set out in this Valuation Report, we are of the

opinion that the Market Value of the freehold interest in the property subject as at 31

December 2010 is

€15,900,000 (FIFTEEN MILLION AND NINE HUNDRED THOUSAND EURO)

15.2 MARKET VALUE “AS IS” AS AT 31 DECEMBER 2010 OF THE HYPERMARKET

15.2.1 Having regard to the facts and assumptions set out in this Valuation Report, we are of the

opinion that the Market Value of the freehold interest in the property subject to the existing

lease and tenancy and as at 31 December 2010 is

€5,350,000 (FIVE MILLION THREE HUNDRED AND FIFTY THOUSAND EURO)

16 CONCLUSION

16.1 KEY ISSUES

16.1.1 We consider the key issues relating to the property and the valuations are:

• The retail phases of the development are considered quite feasible. However, the office

development is not feasible and we found that it would reduce the value of the land if

it was actually developed. Therefore, the office part of the development was assumed to

not contribute to the land value as any reasonable investor would not pay for negative cash

flows.

• The developer has signed leases for the first and second phase of the development which is

a hypermarket and a small strip mall. There are no other hypermarkets in the city zone

which would be considered competition or are there any in the pipeline that we are aware of.

Roda Hypermarket in Pancevo is quite far away from the centre and access is poor.



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• There is no other retail project in the area that has been able to lease up its project like this

one. Retailers have shown interest but without avail as there have been no projects ready to

construct.

• The location of the Klupko development in Pancevo is very good for this type of retail

development with excellent access and exposure.

• There is possibility of residential component on the land which will be applied for in future

building permits that will increase the value of the land. The land base has a high plot ratio

and there for increase significantly the planned amount of area. However, demand in

Pancevo is the main constraint to this site from being fully developed.

• Many parts of the world are in recession and there is no exception in Serbia. However, the

phasing of the project is such that it is quite possible that the larger retail phases would be

finished after the recession.

• Pancevo sees little in the way of investment deals as it is a tertiary location behind the capital

city Belgrade. Moreover, there is very little interest in Pancevo in term of investment and

only has been semi-interesting to speculative developers with retail development having 90%

of the interest. However, it is only 12 km away from Belgrade which is quite acceptable

distance in most countries i.e. Parndorf, Austria.

• There have been many privatizations but most stock available is dated the purchasers are

usually purchasing the company for the land value or development potential. There no

privatisations that is remotely comparable to this project.

• In today’s market there are two major problems. Firstly, most purchasers cannot find product

that will produce their required yields as unsophisticated domestic owners do not understand

the investment / finance market. Therefore, when interest rates go up there is no

corresponding reduction of price which may be normally seen a developed economy.

Secondly, the acquiring investment financing is very difficult due to restrictive lending

policies.

• During 2010, the budget for the subject development has been made and construction of the

second phase started. Also, the financing of the project has been approved and commenced

with 90% leased area.

• In the previous year the financial crisis continued and the recession period entered. The

economies worldwide slowed during this period as credit tightened and international trade

declined. Some of the Western economies have shown signs of improvement and it is



Pancevo, Serbia


Page 30

expected that the recovery will continue. Serbia will follow suit with a lag time of

approximately one year after more developed economies.



Pancevo, Serbia


Page 31

17 CONFIDENTIALITY

17.1.1 This Valuation Report is provided for the use only of the party to whom it is addressed and

no responsibility is accepted to any third party for the whole or any part of its content. The

basis of valuation may not be appropriate for other purposes and should not be so used

without prior consultation with us.

17.1.2 Neither the whole nor any part of this Valuation Report nor any reference thereto may be

included in any published document, circular or statement, nor published in any way without

our written approval of the form and context in which it may appear.

Bryan Beaton MRICS Associate King Sturge d.o.o. T +381 11 2200 109 (Direct)

F +381 11 2200 102 (Direct)

M +381 63 344 222 (Mobile)

[email protected]

Omar Choudhury, MRICS Senior Associate King Sturge d.o.o.

T +385 1 4826 114

F +385 1 4826 194

M +385 91 4826 910

[email protected]

Report Date: 31 January 2011 King Sturge LLP is a limited liability partnership, registered in England and Wales, registered number OC311501, registered office 30 Warwick Street, London, W1B 5NH. A List of members is available at the above address. King Sturge LLP is authorised and regulated by the Financial Services Authority. Part of the King Sturge International Group with offices throughout Europe, The Americas and Asia-Pacific. In association with King Sturge Corfac International

APPENDIX 1

PHOTOGRAPHS

APPENDIX 2

OWNERSHIP DOCUMENTS

APPENDIX 3

COPY OF THE PARCEL PLAN

Appendix 3 – Copy of Parcel Plan

APPENDIX 4

VALUATION MODELS

King Sturge d.o.o., Serbia

Development Appraisal

Pancevo Retail Park

Arlon - Klupko

Milos Obrenovica 12a Pancevo, Serbia

Report Date 31/1/2011

Prepared by Bryan Beaton

TIMESCALE & ASSUMPTIONS KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko

Timescale (Duration in months)

Project commences Dec 2010 Part 1: Phase II Stage Name Duration Start Date End Date Anchored To Aligned Offset Phase Start Dec 2010 Construction 4 Dec 2010 Mar 2011 Pre-Construction End 0 Phase End Apr 2011 Part Length 4

Part 2: Phase III Stage Name Duration Start Date End Date Anchored To Aligned Offset Phase Start Jan 2011 Pre-Construction 3 Jan 2011 Mar 2011 Purchase End 0 Construction 6 Apr 2011 Sep 2011 Pre-Construction End 0 Phase End Oct 2011 Part Length 9

Part 3: Phase IV Stage Name Duration Start Date End Date Anchored To Aligned Offset Phase Start Jun 2011 Pre-Construction 3 Jun 2011 Aug 2011 Purchase End 0 Construction 9 Sep 2011 May 2012 Pre-Construction End 0 Phase End Jun 2012 Part Length 12

Part 4: Phase V Stage Name Duration Start Date End Date Anchored To Aligned Offset Phase Start Dec 2011 Pre-Construction 3 Dec 2011 Feb 2012 Purchase End 0 Construction 9 Mar 2012 Nov 2012 Pre-Construction End 0 Phase End Dec 2012 Part Length 12

Part 5: Phase VI Stage Name Duration Start Date End Date Anchored To Aligned Offset Phase Start Jun 2012 Pre-Construction 3 Jun 2012 Aug 2012 Purchase End 0 Construction 9 Sep 2012 May 2013 Pre-Construction End 0 Phase End Jun 2013 Part Length 12

Project Length 31 (Merged Parts - Includes Exit Period)

Assumptions

Expenditure Professional Fees are based on Construction (Manual relations applied to some Professional Fees) Purchaser's Costs are based on Gross Capitalisation Purchaser's Costs Deducted from Sale (Not added to Cost) Sales Fees are based on Gross Capitalisation Sales Fees Added to Cost (Not deducted from Sale)

Receipts Show tenant's true income stream On Offset income against development costs Off Rent payment cycle Monthly Apply rent payment cycle to all tenants Off

File: X:\Circle Saves\Serbia\Arlon\Arlon Phase Fin Rep 31 dec 2010.wcf Circle Version: 3.00.003 - 2 - Date: 31/1/2011


Assumptions

Renewal Void and Rent Free apply to first renewal only Off

Initial Yield Valuation Method Off Default Capitalisation Yield 0.0000% Apply Default Capitalisation to All Tenants Off Default stage for Sale Date Off Align end of income stream to Sale Date Off Apply align end of income stream to all tenants On When the Capital Value is modified in the cash flow Recalculate the Yield Valuation Tables are Quarterly in Advance (Effective) Rent Free method Defer start of Tenant's Rent

Finance Financing Method Structured Financing Include interest and Finance Fees in IRR Calculations On

Calculation Site Payments In Arrears Other Payments In Arrears Negative Land In Advance Receipts In Advance

Initial IRR Guess Rate 12.00% Minimum IRR -100% Maximum IRR 99999% Manual Discount Rate Off IRR Tolerance 0.001000

Letting and Rent Review Fees are calculated on Net of Deductions Development Yield and Rent Cover are calculated on MRV at Sale Date(s) Net of Non-Recoverable costs On Net of Ground Rent deductions On

Value Added Tax Global VAT Rate 0.00% Global Recovery Rate 0.00% Recovery Cycle every 2 months 1st Recovery Month 2 (Jan 2011) VAT Calculations in Cash Flow On

Residual Land Cost Mode Residualised Land Value Multi-Phasing Separate Land Residual for each part Target Type Profit on GDV

Part Number Target Value Locked Treat Neg Land Value as Revenue

1. Phase II 20.00% No No 2. Phase III 20.00% No No 3. Phase IV 20.00% No No 4. Phase V 20.00% No No 5. Phase VI 20.00% No No

Distribution Construction Payments are paid on S-Curve Sales Receipts are paid on Single curve Sales Deposits are paid on Even curve



Assumptions

Finance Rates

Interest Set 1

Rate Months Start Date 7.00% Perpetuity Dec 2010

Inflation and Growth

Growth Sets

Rent Growth Inflation/Growth for this set is calculated in advance Is Not stepped


Inflation Sets

0 Inflation/Growth for this set is calculated in advance Is Not stepped



APPRAISAL SUMMARY KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko

Appraisal Summary for Merged Parts 1 2 3 4 5

REVENUE Rental Area Summary m² Rate m² Gross MRV Adjustment Net Income

Phase II 6,740.00 €126.00 849,240 (42,058) 807,182 Phase III 1,944.00 €144.00 279,936 (13,530) 266,406 Phase IV 13,050.00 €144.00 1,879,200 (147,204) 1,731,996 Phase V 13,050.00 €132.00 1,722,600 (170,694) 1,551,906 Phase VI 13,050.00 €132.00 1,722,600 (170,694) 1,551,906 Totals 47,834.00 6,453,576 (544,180) 5,909,396

Investment Valuation Phase II Current Rent 807,182 YP @ 10.0000% 10.6176 8,570,304 Phase III Current Rent 266,406 YP @ 10.0000% 10.6176 2,828,576 Phase IV Current Rent 1,731,996 YP @ 10.0000% 10.6176 18,389,563 Phase V Current Rent 1,551,906 YP @ 10.5000% 10.1410 15,737,895 Phase VI Current Rent 1,551,906 YP @ 10.5000% 10.1410 15,737,895

61,264,232

NET REALISATION 61,264,232

OUTLAY

ACQUISITION COSTS Residualised Price (68,060.00 m² €233.98 pm²) 15,924,564

15,924,564 CONSTRUCTION COSTS Construction m² Rate m² Cost

Phase II 7,068.57 €510.00 3,604,971 Phase III 2,160.00 €500.00 1,080,000 Phase IV 14,500.00 €500.00 7,250,000 Phase V 14,500.00 €500.00 7,250,000 Phase VI 14,500.00 €500.00 7,250,000 Totals 52,728.57 26,434,971 26,434,971

Contingency 5.00% 180,249 Contingency 5.00% 54,000 Contingency 5.00% 362,500 Contingency 5.00% 362,500 Contingency 5.00% 362,500 Road/Site Works 12,000 Road/Site Works 2,160.00 m² 5.00 pm² 10,800 Road/Site Works 14,500.00 m² 5.00 pm² 72,500 Road/Site Works 14,500.00 m² 5.00 pm² 72,500 Road/Site Works 14,500.00 m² 5.00 pm² 72,500 Initial Development Fee 2,160.00 m² 28.00 pm² 60,480 Initial Development Fee 14,500.00 m² 28.00 pm² 406,000 Initial Development Fee 14,500.00 m² 28.00 pm² 406,000 Initial Development Fee 14,500.00 m² 28.00 pm² 406,000

2,840,529 Other Construction

Permits and Related Costs 50,000 Permits and Related Costs 2,160.00 m² 8.00 pm² 17,280 Permits and Related Costs 14,500.00 m² 8.00 pm² 116,000 Permits and Related Costs 14,500.00 m² 8.00 pm² 116,000 Permits and Related Costs 14,500.00 m² 8.00 pm² 116,000


APPRAISAL SUMMARY KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko

415,280 Utilities

Utilities 20,000 Utilities 1,944.00 m² 15.00 pm² 29,160 Utilities 13,050.00 m² 15.00 pm² 195,750 Utilities 13,050.00 m² 15.00 pm² 195,750 Utilities 13,050.00 m² 15.00 pm² 195,750

636,410 PROFESSIONAL FEES

Architect 7,068.57 m² 1.00 pm² 7,069 Architect 2,160.00 m² 7.50 pm² 16,200 Architect 43,500.00 m² 7.50 pm² 326,250 Quantity Surveyor 0.20% 46,391 Structural Engineer 0.20% 46,391 Mech./Elec. Engineer 0.20% 46,391 Project Manager 14,726 Project Manager 2.50% 579,882

1,083,298 MARKETING & LETTING

Letting Agent Fee 12.00% 96,862 Letting Agent Fee 12.00% 612,266 Letting Legal Fee 0.50% 29,547

738,674 FINANCE

Interest paid to Debt Sources: Debt (7.00%) 564,304 Total Interest paid to debt financing 564,304

Total Interest Paid 564,304

TOTAL COSTS 48,638,030

PROFIT Equity Residual Percentage (100.00%) 12,626,202

12,626,202 12,626,202

Performance Measures Profit on Cost% 25.96% Profit on GDV% 20.61% Profit on NDV% 20.61% Development Yield% (on MRV) 12.15% Equivalent Yield% (True) 10.26% Gross Initial Yield% 10.53% Net Initial Yield% 9.65%

Ungeared IRR% 58.09% Geared IRR% (with Interest) 55.29% Equity IRR% (with Interest) 80.23% Rent Cover 2 yrs 2 mths


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page A 1

Period ending SET 000:Nov 2010 003:Feb 2011 006:May 2011 009:Aug 2011 012:Nov 2011 015:Feb 2012 018:May 2012 QuarterlyB/F Int Inf 0 (6,780,051) 529,502 (5,679,422) (5,501,518) (12,713,405)

1 Ph01 Revenue 1 Phase II YN 0 0 8,570,304 0 0 0 0 1 Ph02 Revenue 2 Phase III YN 0 0 0 0 2,828,576 0 0 1 Ph03 Revenue 3 Phase IV YN 0 0 0 0 0 0 0 1 Ph04 Revenue 4 Phase V YN 0 0 0 0 0 0 0 1 Ph05 Revenue 5 Phase VI YN 0 0 0 0 0 0 0 1 Ph01 Acquisition Costs 1 Residualised Price YN 0 (2,793,490) 0 0 0 0 0 1 Ph02 Acquisition Costs 2 Residualised Price YN 0 (888,892) 0 0 0 0 0 1 Ph03 Acquisition Costs 3 Residualised Price YN 0 0 0 (5,416,284) 0 0 0 1 Ph04 Acquisition Costs 4 Residualised Price YN 0 0 0 0 0 (3,412,949) 0 1 Ph05 Acquisition Costs 5 Residualised Price YN 0 0 0 0 0 0 0 1 Ph01 Construction Costs 1 Road/Site Works YN 0 (12,000) 0 0 0 0 0 1 Phase II YN 0 (2,869,153) (735,817) 0 0 0 0 1 Permits and Related Costs YN 0 (39,794) (10,206) 0 0 0 0 1 Utilities YN 0 (15,918) (4,082) 0 0 0 0 1 Contingency YN 0 (143,458) (36,791) 0 0 0 0 1 Ph01 Professional Fees 1 Architect YN 0 (5,626) (1,443) 0 0 0 0 1 Project Manager YN 0 (11,720) (3,006) 0 0 0 0 1 Ph02 Construction Costs 2 Road/Site Works YN 0 0 (10,800) 0 0 0 0 2 Phase III YN 0 0 (260,842) (695,605) (123,553) 0 0 2 Permits and Related Costs YN 0 0 (4,173) (11,130) (1,977) 0 0 2 Utilities YN 0 0 (7,043) (18,781) (3,336) 0 0 2 Contingency YN 0 0 (13,042) (34,780) (6,178) 0 0 2 Initial Development Fee YN 0 0 (60,480) 0 0 0 0 1 Ph02 Professional Fees


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page B 1

000:Nov 2010 003:Feb 2011 006:May 2011 009:Aug 2011 012:Nov 2011 015:Feb 2012 018:May 2012

2 Architect YN 0 0 (3,913) (10,434) (1,853) 0 0 2 Quantity Surveyor YN 0 0 (530) (1,413) (251) 0 0 2 Structural Engineer YN 0 0 (530) (1,413) (251) 0 0 2 Mech./Elec. Engineer YN 0 0 (530) (1,413) (251) 0 0 2 Project Manager YN 0 0 (6,625) (17,668) (3,138) 0 0 1 Ph03 Construction Costs 3 Road/Site Works YN 0 0 0 0 (72,500) 0 0 3 Phase IV YN 0 0 0 0 (1,751,023) (3,264,620) (2,234,357) 3 Permits and Related Costs YN 0 0 0 0 (28,016) (52,234) (35,750) 3 Utilities YN 0 0 0 0 (47,278) (88,145) (60,328) 3 Contingency YN 0 0 0 0 (87,551) (163,231) (111,718) 3 Initial Development Fee YN 0 0 0 0 (406,000) 0 0 1 Ph03 Professional Fees 3 Architect YN 0 0 0 0 (26,265) (48,969) (33,515) 3 Quantity Surveyor YN 0 0 0 0 (3,558) (6,634) (4,540) 3 Structural Engineer YN 0 0 0 0 (3,558) (6,634) (4,540) 3 Mech./Elec. Engineer YN 0 0 0 0 (3,558) (6,634) (4,540) 3 Project Manager YN 0 0 0 0 (44,476) (82,921) (56,753) 1 Ph04 Construction Costs 4 Road/Site Works YN 0 0 0 0 0 0 (72,500) 4 Phase V YN 0 0 0 0 0 0 (1,751,023) 4 Permits and Related Costs YN 0 0 0 0 0 0 (28,016) 4 Utilities YN 0 0 0 0 0 0 (47,278) 4 Contingency YN 0 0 0 0 0 0 (87,551) 4 Initial Development Fee YN 0 0 0 0 0 0 (406,000) 1 Ph04 Professional Fees 4 Architect YN 0 0 0 0 0 0 (26,265) 4 Quantity Surveyor YN 0 0 0 0 0 0 (3,558) 4 Structural Engineer YN 0 0 0 0 0 0 (3,558) 4 Mech./Elec. Engineer YN 0 0 0 0 0 0 (3,558) 4 Project Manager YN 0 0 0 0 0 0 (44,476) 1 Ph05 Construction Costs 5 Road/Site Works YN 0 0 0 0 0 0 0 5 Phase VI YN 0 0 0 0 0 0 0 5 Permits and Related Costs YN 0 0 0 0 0 0 0 5 Utilities YN 0 0 0 0 0 0 0 5 Contingency YN 0 0 0 0 0 0 0


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page C 1


5 Initial Development Fee YN 0 0 0 0 0 0 0 1 Ph05 Professional Fees 5 Architect YN 0 0 0 0 0 0 0 5 Quantity Surveyor YN 0 0 0 0 0 0 0 5 Structural Engineer YN 0 0 0 0 0 0 0 5 Mech./Elec. Engineer YN 0 0 0 0 0 0 0 5 Project Manager YN 0 0 0 0 0 0 0 1 Ph01 Marketing/Letting 1 Letting Agent Fee YN 0 0 (96,862) 0 0 0 0 1 Letting Legal Fee YN 0 0 (4,036) 0 0 0 0 1 Ph02 Marketing/Letting 2 Letting Agent Fee YN 0 0 0 0 (31,969) 0 0 2 Letting Legal Fee YN 0 0 0 0 (1,332) 0 0 1 Ph03 Marketing/Letting 3 Letting Agent Fee YN 0 0 0 0 0 0 0 3 Letting Legal Fee YN 0 0 0 0 0 0 0 1 Ph04 Marketing/Letting 4 Letting Agent Fee YN 0 0 0 0 0 0 0 4 Letting Legal Fee YN 0 0 0 0 0 0 0 1 Ph05 Marketing/Letting 5 Letting Agent Fee YN 0 0 0 0 0 0 0 5 Letting Legal Fee YN 0 0 0 0 0 0 0


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page D 1


Quarterly Total Before Finance 0 (6,780,051) 7,309,553 (6,208,924) 180,703 (7,132,970) (5,019,825) Finance Costs (All Loans) 0 0 0 (2,798) (78,918) (175,970) Period Total After Finance 0 (6,780,051) 7,309,553 (6,208,924) 177,905 (7,211,888) (5,195,795) Cumulative Total C/f Quarterly 0 (6,780,051) 529,502 (5,679,422) (5,501,518) (12,713,405) (17,909,200)


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page A 2

021:Aug 2012 024:Nov 2012 027:Feb 2013 030:May 2013 031:Jun 2013 (17,909,200) (6,954,760) (12,050,647) (278,723) (2,887,692)

1 Ph01 Revenue 1 Phase II 0 0 0 0 0 1 Ph02 Revenue 2 Phase III 0 0 0 0 0 1 Ph03 Revenue 3 Phase IV 18,389,563 0 0 0 0 1 Ph04 Revenue 4 Phase V 0 0 15,737,895 0 0 1 Ph05 Revenue 5 Phase VI 0 0 0 0 15,737,895 1 Ph01 Acquisition Costs 1 Residualised Price 0 0 0 0 0 1 Ph02 Acquisition Costs 2 Residualised Price 0 0 0 0 0 1 Ph03 Acquisition Costs 3 Residualised Price 0 0 0 0 0 1 Ph04 Acquisition Costs 4 Residualised Price 0 0 0 0 0 1 Ph05 Acquisition Costs 5 Residualised Price (3,412,949) 0 0 0 0 1 Ph01 Construction Costs 1 Road/Site Works 0 0 0 0 0 1 Phase II 0 0 0 0 0 1 Permits and Related Costs 0 0 0 0 0 1 Utilities 0 0 0 0 0 1 Contingency 0 0 0 0 0 1 Ph01 Professional Fees 1 Architect 0 0 0 0 0 1 Project Manager 0 0 0 0 0 1 Ph02 Construction Costs 2 Road/Site Works 0 0 0 0 0 2 Phase III 0 0 0 0 0 2 Permits and Related Costs 0 0 0 0 0 2 Utilities 0 0 0 0 0 2 Contingency 0 0 0 0 0 2 Initial Development Fee 0 0 0 0 0 1 Ph02 Professional Fees


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page B 2

021:Aug 2012 024:Nov 2012 027:Feb 2013 030:May 2013 031:Jun 2013

2 Architect 0 0 0 0 0 2 Quantity Surveyor 0 0 0 0 0 2 Structural Engineer 0 0 0 0 0 2 Mech./Elec. Engineer 0 0 0 0 0 2 Project Manager 0 0 0 0 0 1 Ph03 Construction Costs 3 Road/Site Works 0 0 0 0 0 3 Phase IV 0 0 0 0 0 3 Permits and Related Costs 0 0 0 0 0 3 Utilities 0 0 0 0 0 3 Contingency 0 0 0 0 0 3 Initial Development Fee 0 0 0 0 0 1 Ph03 Professional Fees 3 Architect 0 0 0 0 0 3 Quantity Surveyor 0 0 0 0 0 3 Structural Engineer 0 0 0 0 0 3 Mech./Elec. Engineer 0 0 0 0 0 3 Project Manager 0 0 0 0 0 1 Ph04 Construction Costs 4 Road/Site Works 0 0 0 0 0 4 Phase V (3,264,620) (2,234,357) 0 0 0 4 Permits and Related Costs (52,234) (35,750) 0 0 0 4 Utilities (88,145) (60,328) 0 0 0 4 Contingency (163,231) (111,718) 0 0 0 4 Initial Development Fee 0 0 0 0 0 1 Ph04 Professional Fees 4 Architect (48,969) (33,515) 0 0 0 4 Quantity Surveyor (6,634) (4,540) 0 0 0 4 Structural Engineer (6,634) (4,540) 0 0 0 4 Mech./Elec. Engineer (6,634) (4,540) 0 0 0 4 Project Manager (82,921) (56,753) 0 0 0 1 Ph05 Construction Costs 5 Road/Site Works 0 (72,500) 0 0 0 5 Phase VI 0 (1,751,023) (3,264,620) (2,234,357) 0 5 Permits and Related Costs 0 (28,016) (52,234) (35,750) 0 5 Utilities 0 (47,278) (88,145) (60,328) 0 5 Contingency 0 (87,551) (163,231) (111,718) 0


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page C 2


5 Initial Development Fee 0 (406,000) 0 0 0 1 Ph05 Professional Fees 5 Architect 0 (26,265) (48,969) (33,515) 0 5 Quantity Surveyor 0 (3,558) (6,634) (4,540) 0 5 Structural Engineer 0 (3,558) (6,634) (4,540) 0 5 Mech./Elec. Engineer 0 (3,558) (6,634) (4,540) 0 5 Project Manager 0 (44,476) (82,921) (56,753) 0 1 Ph01 Marketing/Letting 1 Letting Agent Fee 0 0 0 0 0 1 Letting Legal Fee 0 0 0 0 0 1 Ph02 Marketing/Letting 2 Letting Agent Fee 0 0 0 0 0 2 Letting Legal Fee 0 0 0 0 0 1 Ph03 Marketing/Letting 3 Letting Agent Fee (207,840) 0 0 0 0 3 Letting Legal Fee (8,660) 0 0 0 0 1 Ph04 Marketing/Letting 4 Letting Agent Fee 0 0 (186,229) 0 0 4 Letting Legal Fee 0 0 (7,760) 0 0 1 Ph05 Marketing/Letting 5 Letting Agent Fee 0 0 0 0 (186,229) 5 Letting Legal Fee 0 0 0 0 (7,760)


DETAILED CASH FLOW KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Detailed Cash Flow (Merged Phases) Page D 2


Quarterly Total Before Finance 11,040,093 (5,019,825) 11,823,885 (2,546,041) 15,543,907 Finance Costs (All Loans) (85,653) (76,063) (51,961) (62,929) (30,012) Period Total After Finance 10,954,440 (5,095,887) 11,771,924 (2,608,970) 15,513,895 Cumulative Total C/f Quarterly (6,954,760) (12,050,647) (278,723) (2,887,692) 12,626,202


Building FloorNet Area

(m2)

ERV (Euro/m2/

Month)

ERV

(Euro/Month)

Hypermarket 4,245.47 10.50 44,577

Total Net Area: 4,245.47 10.50 44,577

Total Floor Areas : 4,245.47

TOTAL ESTIMATED GROSS RENTAL VALUE (MONTHLY): 44,577

TOTAL ESTIMATED GROSS RENTAL VALUE (ANNUAL) : 12 534,929

Rounded to : € 535,000

Less :

Non-recoverable out-goings :

External Repairs & Maintenance 0% 0

Insurance 1% 5,350

Real Estate Tax 0.4% 21,500

Contingencies & Unexpected Cost 0% 0

Total non-recoverable out-goings : 26,850

TOTAL ESTIMATED NET RENTAL VALUE (ANNUALLY) : 508,150

Capitalisation in Perp @ 9.50% 10.53

GROSS CAPITAL VALUE 5,348,947

NET CAPITAL VALUE € 5,348,947

Rounded to : € 5,350,000

Value (Euro/sqm Net Area) € 1,260

Note: All costs to the building are the responsibility of the Lessee except RE tax and building insurance

VALUATION OF THE HYPERMARKET, 12A M. OBRENOVICA, PANCEVO

GF

APPENDIX 5

SENSITIVITY ANALYSIS

SENSITIVITY ANALYSIS KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Table of Residual Land Price and Profit on Cost % Capitalisation Yield - 1.000% Rent Rate

Constr. Tot Cost -10.000% -5.000% 0.000% +5.000% +10.000% -10.000% €18,300,439 €20,873,964 €23,447,489 €26,021,014 €28,594,539

26.177% 26.287% 26.385% 26.453% 26.474% -5.000% €16,930,153 €19,503,679 €22,077,203 €24,650,728 €27,224,253

26.058% 26.185% 26.288% 26.382% 26.450% 0.000% €15,546,636 €18,133,404 €20,706,918 €23,280,443 €25,853,968

25.946% 26.074% 26.192% 26.290% 26.379% +5.000% €14,162,753 €16,752,588 €19,336,636 €21,910,158 €24,483,683

25.832% 25.967% 26.088% 26.197% 26.291% +10.000% €12,774,798 €15,368,705 €17,958,541 €20,539,873 €23,113,398

25.725% 25.859% 25.986% 26.100% 26.203% Capitalisation Yield - 0.500% Rent Rate

Constr. Tot Cost -10.000% -5.000% 0.000% +5.000% +10.000% -10.000% €16,045,254 €18,492,180 €20,939,068 €23,385,957 €25,832,845

26.051% 26.179% 26.284% 26.377% 26.454% -5.000% €14,661,370 €17,121,910 €19,568,783 €22,015,671 €24,462,559

25.937% 26.061% 26.181% 26.280% 26.369% 0.000% €13,277,488 €15,739,900 €18,198,506 €20,645,386 €23,092,274

25.817% 25.953% 26.070% 26.183% 26.277% +5.000% €11,889,233 €14,356,017 €16,818,429 €19,275,104 €21,721,989

25.705% 25.839% 25.967% 26.078% 26.184% +10.000% €10,497,610 €12,968,572 €15,434,545 €17,896,959 €20,351,704

25.601% 25.732% 25.859% 25.980% 26.084% Capitalisation Yield 0.000% Rent Rate

Constr. Tot Cost -10.000% -5.000% 0.000% +5.000% +10.000% -10.000% €13,997,489 €16,342,817 €18,675,413 €21,008,021 €23,340,629

25.941% 26.061% 26.182% 26.281% 26.370% -5.000% €12,613,607 €14,961,026 €17,305,136 €19,637,736 €21,970,344

25.815% 25.951% 26.064% 26.178% 26.273% 0.000% €11,225,499 €13,577,143 €15,924,564 €18,267,456 €20,600,059

25.696% 25.832% 25.960% 26.067% 26.175% +5.000% €9,832,861 €12,189,607 €14,540,680 €16,888,102 €19,229,776

25.590% 25.718% 25.847% 25.967% 26.069% +10.000% €8,433,043 €10,798,824 €13,153,717 €15,504,218 €17,851,639

25.543% 25.613% 25.738% 25.860% 25.975% Capitalisation Yield + 0.500% Rent Rate

Constr. Tot Cost -10.000% -5.000% 0.000% +5.000% +10.000% -10.000% €12,140,183 €14,383,307 €16,622,331 €18,851,284 €21,080,243

25.826% 25.960% 26.071% 26.185% 26.279% -5.000% €10,752,609 €12,999,424 €15,242,548 €17,481,003 €19,709,957

25.699% 25.836% 25.963% 26.067% 26.176% 0.000% €9,359,698 €11,612,202 €13,858,664 €16,101,789 €18,339,676

25.590% 25.716% 25.845% 25.966% 26.064% +5.000% €7,959,939 €10,220,751 €12,471,798 €14,717,905 €16,961,030

25.544% 25.607% 25.730% 25.853% 25.967% +10.000% €6,558,472 €8,822,007 €11,081,805 €13,331,395 €15,577,146

25.502% 25.553% 25.624% 25.744% 25.861% Capitalisation Yield + 1.000% Rent Rate

Constr. Tot Cost -10.000% -5.000% 0.000% +5.000% +10.000% -10.000% €10,445,092 €12,596,012 €14,744,108 €16,886,222 €19,020,742

25.714% 25.851% 25.976% 26.080% 26.187% -5.000% €9,052,552 €11,209,460 €13,360,224 €15,508,319 €17,650,458

25.598% 25.724% 25.854% 25.971% 26.070% 0.000% €7,653,285 €9,818,018 €11,973,829 €14,124,435 €16,272,531

25.548% 25.611% 25.734% 25.857% 25.967% +5.000% €6,251,863 €8,419,515 €10,583,485 €12,738,198 €14,888,647

25.505% 25.556% 25.623% 25.742% 25.860% +10.000% €4,849,573 €7,018,540 €9,185,741 €11,348,952 €13,502,567

25.465% 25.514% 25.563% 25.634% 25.749%


SENSITIVITY ANALYSIS KING STURGE D.O.O., SERBIA Pancevo Retail Park Arlon - Klupko Sensitivity Analysis : Assumptions for Calculation

Rent Rate Heading Phase Original Value Phase II 1 €126.00 pm² Phase III 2 €144.00 pm² Phase IV 3 €144.00 pm² Phase V 4 €132.00 pm² Phase VI 5 €132.00 pm²

These fields varied in Steps of 5.0000 % of the original value

Construction Total Cost Heading Phase Original Value Phase II 1 €3,604,971 Phase III 2 €1,080,000 Phase IV 3 €7,250,000 Phase V 4 €7,250,000 Phase VI 5 €7,250,000

These fields varied in Steps of 5.0000 % of the original value

Capitalisation Yield Heading Phase Original Value Phase II 1 10.0000% Phase III 2 10.0000% Phase IV 3 10.0000% Phase V 4 10.5000% Phase VI 5 10.5000%

These fields varied in Fixed Steps of 0.5000%


ANNEXE A

BASIS OF VALUATION AND VALUATION ASSUMPTIONS



Pancevo, Serbia

Valuation Dates:31 December 2010 Report Date: 31 January 2011

BASIS OF VALUATION AND VALUATION ASSUMPTIONS

A.1 BASIS OF VALUATION

A.1.1 The date of the visual inspection was the 25 January 2010 and the date of the valuation is 31

December 2010.

A.1.2 This valuation has been made in accordance with the Statements of Asset Valuation Practice

and Guidance Notes published by the Royal Institution of Chartered Surveyors. The property

is held for part occupation and investment and is therefore valued to "Market Value" having

taken account of the deferred income. This is the amount which an investor would be willing

to pay in order to receive the same level of income at the date of valuation.

A.1.3 The use of the expression "Market Value", is not qualified by any reference to Existing Use or

Alternative Use, it implies the value for any use to the extent to which that value is reflected in

the price obtainable in the open market.

A.1.4 Market Value (MV) - means the best price at which the sale of an interest in property might

reasonably be expected to have been completed unconditionally for cash consideration on

the date of valuation, assuming:

A.1.4.1 a willing seller;

A.1.4.2 that, prior to the date of valuation, there had been a reasonable period (having

regard to the nature of the property and the state of the market) for the proper

marketing of the interest, the agreement of the price and terms and for the

completion of the sale;

A.1.4.3 that the state of the market, level of values and other circumstances were, on any

earlier assumed date of exchange of contracts, the same as on the date of

valuation;

A.1.4.4 that no account is to be taken of an additional bid by a purchaser with a special

interest;

A.1.4.5 A stated length of term and stated principal conditions applying or assumed to

apply to the letting and that the other terms are not exceptionally onerous or

beneficial for a letting of the type and class of the subject property;

A.1.4.6 that no premium passed and that any rent free period is in respect only of the time

which would have been needed by the incoming tenant to make the subject

property fit for occupation; and,



Pancevo, Serbia


A.1.4.7 that both parties to the transaction had acted knowledgeably, prudently and without

compulsion.

A.1.4.8 Fair Value – The amount for which an asset could be exchanged between

knowledgeable, willing parties in an arm’s length transaction. (International

Valuation Standards 2, 3.2; GN3, 3.1 taken from the Eighth Ed 2007)

A.2 VALUATION ASSUMPTIONS

A.2.1 Sources of information

A.2.1.1 Third parties have provided us with such information as details of tenure, use, town

planning consents and the like.

A.2.1.2 We have not made any official searches and for the purposes of this valuation we

have assumed that full planning consent exists, or established use rights are

available for the existing buildings and present uses. Before our valuation is relied

upon we recommend these assumptions be verified by your lawyers who we

presume will be making the usual searches and enquiries.

A.2.1.3 Our valuation is based upon the assumption that there are no unusually onerous

restrictions or obligations attaching to the property and that it enjoys good

marketable title. The site boundary as shown on the accompanying site plan is as

identified to us on site and we have relied upon this for the purposes of our

valuation.

A.2.2 Structural surveys and deleterious materials

A.2.2.1 We have not carried out a structural survey nor have we inspected those parts of

the property which are covered, unexposed or inaccessible and such parts have

been assumed to be in good repair and condition. We cannot express an opinion

about or advise the client about the condition of un-inspected parts and this

certificate should not be taken as making any implied representation or statement

about such parts. We have had regard to the general condition of the property as

observed in the course of our inspection for valuation purposes.

A.2.2.2 We have not arranged for any investigation to be carried out to determine whether

or not high alumina cement, calcium chloride additive or any other potentially

deleterious material has been used in the construction of the property and we are

therefore unable to report that the property is free from risk in this respect. For the

purposes of this valuation we have assumed that such investigation would not

disclose the presence of any such material in any adverse conditions.



Pancevo, Serbia


A.2.2.3 Certain types of composite cladding panels contain combustible insulation which

causes concern to some insurance companies. During the course of our inspection

for valuation purposes we were not able to determine the insulation within any

composite cladding panels and recommend that you obtain assurances that the

panels have a suitable fire retardant quality and insurance is available.

A.2.2.4 No specialist tests have been carried out on any of the services systems and for the

purpose of this valuation we have assumed that all are in reasonable working order

and in compliance with any relevant statutory or Bye-Law regulations.

A.2.3 Site conditions and contamination

A.2.3.1 No soil bearing tests have been carried out by us and we cannot offer any opinion

either as to the suitability of the site for existing or proposed developments nor the

condition of or potential liability for any embankment, river, wharf or retaining wall.

A.2.3.2 We have not made any assessment of the potential liability for flooding and for the

purposes of this valuation have assumed the property would not be subject to

flooding.

A.2.3.3 We are not aware of the content of any environmental audit, site survey or any

other investigation which may have been carried out on the property that may draw

attention to any contamination or the possibility of any contamination and we have

assumed that no hazardous or potentially contaminated substances have been or

are being used at the property. Should it however be established subsequently that

contamination exists at the property or on any neighboring land or that the premises

have been or are being put to any contaminative uses, this might reduce the values

now reported.

A.2.4 Other Assumptions

A.2.4.1 Timing: There we have assumed a certain timing (specified in model and valuation

considerations in valuation report) of the project which is speculative based on the

economy improving in the medium term, the investor choosing to develop and the

required financing being available. The availability of financing and the economy

are the most difficult to ascertain and these will be the key issues regarding the

investor choosing to develop.

A.2.4.2 Developer’s Profit: We have assumed the developer requires a 20% on GDV for his

return on investment to develop this project.



Pancevo, Serbia


A.2.4.3 Product Mix: We have assumed a certain mixed use development that is

reasonable for this location at this time. However, we have not performed a highest

and best study to quantify if this mix maximizes the return to the developer.

Moreover, we were not provided with a detailed concept but were told by the

investor/developer that this is the current product mix that they are seeking.

A.2.4.4 Voids and Non-recoverables: We have used rents net of non-recoverables and

voids.

A.2.4.5 Gross Area to Rentable Area: Gross area to rentable area is 90% except

hypermarket which is specified in the lease contract.

A.2.4.6 End Product: We have assumed that the end development would be retail park.

This is consistent with the development plan of developer. The development plan

only goes as far as developing the third phase with a total of 13,656.45 m2. The

Town Plan specifies 56,715 m2.

A.2.4.7 Fair Value: According to the IVS purchase costs and acquisition costs should be

ignored when reporting Fair Value under IAS 40. We have assumed no purchase

costs or acquisition cost exist.

A.2.4.8 Circle residual valuation assumptions: For all assumptions on residual please refer

to the Circle report in Appendices part.

A.2.4.9 Services Fee: Some parts of the retail park will be managed by Management

Company and other required services that will be covered by a service fee. It is our

assumption, that the service fee will cover all costs and there will be neither a

surplus nor deficit.

A.2.4.10 VALUATION ANALYSIS

A.2.5 Highest and Best Use

A.2.5.1 We were not instructed to perform a highest and best use study and therefore we assume

that this development will be the sites highest and best use. The highest and best use

analysis is a market driven analysis designed to identify the most profitable competitive use

for which the property can be used. Because market forces create market value, the inter-

action of the market and property’s highest and best use are very important when

determining the market value of the property. The highest and best use also sets the ground

work for the valuation of the property, by identifying those property types that are most similar

to the property and that should be used in the comparable sales analysis for vacant land and

improved property.



Pancevo, Serbia


A.2.5.2 Inherent in this definition is the separation of land and improvements. That is, the highest

and best use for the land, as if vacant and available could be different from the highest and

best use of the improved property. This is true when improvements do not constitute an

appropriate use. The existing use will continue, unless or until the land value in its highest

and best use exceeds the sum of the value of the entire property in its existing use, plus the

cost to remove the improvements. Therefore all criteria must be met separately for both land

and improvements. Then these two analyses are reconciled into a final estimate of highest

and best use.

A.2.5.3 In this respect we would make you aware that for social, economic or political reasons the

final use of land is not always the highest and best use. However, it provides the maximum

in order that the opportunity cost for the lesser use can be understood.

A.2.5.4 Accordingly in order for the subject property to fulfil its highest and best use that use must

meet four criteria:

(a) It must be physically possible

(b) It must be legally permissible

(c) It has to be financially feasible

(d) It must be maximally productive

A.3 Method of Valuation

A.3.1 To determine the market value of the fee simple ownership interest in the property,

consideration was given to the combination of the traditional valuation approaches: the

Market Comparison Approach, Income Approach and Residual Development Approach.

A.3.1.1 The Market Comparison Approach

(a) This approach is based upon the Principle of Substitution which affirms that a

prudent purchaser will not pay more for a property than the price of an equally

desirable substitute property available under similar conditions. This approach

provides a reliable indication of value, particularly in an active market, given

reasonable availability of market data having a sufficient degree of

comparability to the Subject.

A.3.1.2 The Income Approach

(a) The Income Approach involves a conversion of anticipated future benefits to

be derived from the ownership of property into a value estimate through a

capitalization process which converts the anticipated future income and/or



Pancevo, Serbia


reversions to a present worth estimate.

(b) We have used comparable rents and adjusted them due to location and other

factors. We have also used comparable sales prices of apartments in the

area.

A.3.1.3 Residual Development Approach

(a) The "Residual Method" is an approach accepted by the professional

institutions for the valuation of development land.

(b) The theoretical basis of this method is that the Income method including the

sale of development is gross development value. From this, one deducts the

total gross development costs which are a combination of hard and soft costs

and profits. The hard costs are considered as construction materials, site

clearance and demolition whilst soft costs are defined as planning fees,

architects, project management, mechanical and electrical engineering,

marketing and agency, contingency costs and cost of finance. A further

amount is deducted for the developer’s profit (the risk reward accrued to the

developer for undertaking the project). The resultant figure represents the

residual value of the land and any value added improvements.

ANNEXE B

INSTRUCTION LETTER

King Sturge d.o.o.

Bulevar Mihajla Pupina 6 11 070 Beograd

T + (381) 11 2200 101 F + (381) 11 2200 102 www.kingsturge.com PIB 100347859

Part of the King Sturge International Group with offices throughout Europe, North America and Asia Pacific. In association with King Sturge Corfac International Raiffeisen Bank 265-1100310000111-07

Registrovan u Agenciji za privredne registre pod brojem 1-86293-00 Matični Broj 17371436

Mr. Nir Saar


Belgrade, 21st December 2010

Dear Mr. Saar,

LETTER OF ENGAGEMENT FOR VALUATION OF KLUPKO SITE IN PANCEVO FOR FINANCIAL REPORTING PURPOSES AS AT 31 DECEMBER 2010 AND QUARTERLY UPDATE LETTERS Thank you for your Request for Proposal (RFP) concerning your need for Valuation Services regarding Klupko site in Pancevo for Financial Reporting Purposes and quarterly update letters. It is our pleasure to submit for your review the following proposal which is subject to the enclosed Terms and Conditions for Valuation Services.

1 INTRODUCTION

This document has been prepared at the request of Klupko d.o.o, Pancevo.

1.1 SCOPE OF SERVICES

Following our communication we confirm that Klupko d.o.o. requests that King Sturge undertakes Valuation Services and quarterly update letters concerning Klupko site in Pancevo, Serbia. King Sturge will undertake valuation services regarding:

• Market Value/Fair Value of Klupko site in Pancevo for Financial Reporting Purposes as at 31 December 2010

Update letters will be issued quarterly confirming whether any material changes to the valuation or assumptions have been changed. Update letters will only be issued after the confirmation that the client need them with the quarter letters dated 31.03.2011, 30.06.2011 and 30.09.2011. If the update letter states that there are material changes in the valuation, then a separate engagement letter and contract will be issued separately to cover this new valuation.

1.2 REPORT ON BASIS FOR VALUATION

The Valuation report will be written in the English language. If translation to another language is needed, we can arrange this with a reasonable charge according to market practice. The purpose of our Valuation will be to assess the Market Value of the Freehold in the above properties for Financial Reporting purposes. The basis of valuation adopted may not be appropriate for other purposes, so the Valuation should not be relied upon for any other purpose without prior consultation with us.

King Sturge d.o.o.



Part of the King Sturge International Group with offices throughout t Europe, North America and Asia Pacific. In association with King Sturge Corfac International

Raiffeisen Bank 265-1100310000111-07 Registrovan u Agenciji za privredne registre pod brojem 1-86293-00

Matični Broj 17371436

2 FEE PROPOSAL

Following the request of Klupko d.o.o, we have a pleasure to submit this Letter of Engagement for valuation services and update letters regarding Klupko site in Pancevo for Financial Reporting Purposes.

Please find below proposed fee for our services inclusive of all travel and other related expenses:

Valuation Report: €3,000 Update Letters: €500 each in total

The fee is exclusive of VAT but are included all travel and other related expenses.

3 TIMING

The valuation draft report is to be delivered on 7th February 2011 and the final report on 14

th February 2011

(depending on timely reply of draft).

4 INFORMATION DELIVERY

We would rely upon the principle information being received from the client and being given access to the Property within 1 day of being instructed to accomplish the deadline above. If the time to recieve information is delayed the draft will also be delayed. Should you have any questions please do not hesitate to contact us. Contact person:

Bryan Beaton Joint Head of Valuation King Sturge d.o.o Usce Tower 6, Mihaila Pupina Boulevard 11070 New Belgrade, Serbia T +381 (0)11 22 00 109 F +381 (0)11 22 00 102 M +381 (0)63 344 222 [email protected]

King Sturge d.o.o.






5 CONFIDENTIALITY

The Report and Services provided to the Client will be treated by KS in confidence and KS will take reasonable steps to keep such matters confidential as may be required by the Client in writing save for such information which:

• is now or hereafter becomes available in the public domain other than through the fault of KS or any of its partners, employees sub-contractors or advisers

• is already or becomes known to KS or any of its partners, employees, sub-contractors or advisors at the time of its disclosure

• is required by law by any court of competent jurisdiction, or by a governmental or regulatory authority, or where there is a legal duty or requirement to disclose.

6 STATUS OF VALUER AND CONFLICTS OF INTEREST

We confirm that the valuation will be undertaken by us, King Sturge, d.o.o, acting as an External Valuer, qualified for the purpose of the valuation. The undersigned, Bryan Beaton will be the nominated Valuer for the Report.

We further confirm that we have had no recent or current involvement with the property or the parties to the transaction and we do not anticipate any future fee earning relationship with the property, the borrower or a party connected to the transaction. Therefore, we do not consider that any conflict arises in preparing the advice requested.

7 REPORTING

We anticipate providing you with two copies of our final Valuation Report.

8 DISCLOSURE

Any information that you may be aware that may affect the valuation in any material way must be disclosed to us.

9 PROFESSIONAL INDEMNITY INSURANCE

We can confirm that we hold professional indemnity insurance in respect of the service provided. However, may we particularly draw your attention to Paragraph 2.3.3 of our Terms & Conditions where we limit our legal liability to a maximum of € 5 million, in total, for each and every claim arising from this instruction.

King Sturge d.o.o.






Your comments and questions are most welcome.

We are prepared to commence the project immediately upon your written acceptance to this instruction. We would be grateful if you could confirm acceptance by signing where indicated. Once received we will issue you a Mandate Contract. Please enclose your VAT Registration Certificate so we can issue pro forma invoice once the services are performed. Thank you in advance. We look forward to opportunities to be of service. Yours sincerely, Bryan Beaton Srdjan Vujicic Joint Head Valuation Department Director King Sturge d.o.o King Sturge d.o.o We hereby agree and accept the terms of the above Letter of Engagement including the Terms and Conditions for Valuation Services – Serbia, Version 1 (September 2009) Signed HHHHHHHHHHHHHHHHHHHHHHHHHH.. for and on behalf of HHHHHHHHHHHHHHHHHHHHH date HHHHHHHHHHHHHHHHHHHHHHHHHHH..

ANNEXE C

PREVIOUS VALUATIONS ON SITE

Annexe C - Previous Pancevo Site Valuations

Valuation Date Purpose Market Value (€)

01.04.2008 Loan Security Purposes 17,200,000

22.07.2009 Investment 14,600,000

31.12.2009 Financial Reporting Purposes 15,900,000

ANNEXE D

VALUER EXPERIENCE

Bryan Beaton MRICS

Bryan Beaton is a member other the Royal Institution of Chartered Surveyors. Bryan has a BSc. from the University of British Columbia and a Graduate Diploma in Administration from Simon Fraser both in Vancouver, Canada. An education in finance has provided a strong technical background for his analytical and process oriented approach to valuation, feasibility studies, and other consulting. Currently, he has completed the 2

nd year at the University of Reading MBA in Real Estate and

Construction.

Details of Some Project in Last 3 years.

Rimini Fiera Highest and Best Use Study February 2009 and Feasibility Study May 2009, Belgrade Fair. Plaza Centers Valuation of Serbian Portfolio for Stock Exchange Reporting, 2007, 2008, 2009, 2010 Lewis Charles Property Fund Residential and Leisure Development Valuations for Financial Reporting Purposes, 12 properties, Bulgaria, 2008. Delta Holdings Valuation of seven properties in Belgrade for loan security and investment purposes, 2008. Plaza Centers Feasibility Study and Valuation of Plaza Centers’ Kragujevac site for loan security purposes, 2008. MPC/Merrill Lynch Valuation for Loan Security Purposes of Usce Office Tower, 2007. Marfin Bank Development Valuation for Loan Security, Atlas Capital Center, Podgorica, Montenegro, 2008. Merrill Lynch Residential Market Study, Belgrade, 2007. “Beograd” Valuation of Department stores “Beograd” portfolio in Serbia, 2007. Immoeast Development Land Valuation for Investment Purposes, 2007 Morgan Stanley Development Valuation for Investment Purposes of Shopping Centre USCE, Serbia, Belgrade, 2007. Ominvest Development Valuation for Acquisition Purposes for a Leisure Property in Budva, Montenegro, 2009 Europolis Logistics Development Appraisal for financial reporting purposes in Serbia 2009, 2010

Bryan Beaton MRICS

Dehaize Group, Belgium Food Retailer Valuation of cca 350 retail units and stores for acquisition of Food Retailer in Serbia, 2010 Infinity, Investment Fund Valuation Financial Reporting Purposes of Development Land for Retail Parks, 2008, 2009

ANNEXE E

VALUER DECLARATION LETTER

King Sturge d.o.o.



Raiffeisen Bank 265-1100310000111-07, Registrovan u Agenciji za privredne registre pod brojem1-86293-00, Maticni Broj 17371436

Part of the King Sturge International Group with offices throughout Europe, The Americas and Asia Pacific. In association with King Sturge Corfac International

Mr Eyal Bartov, CFO Aviv Arlon Ltd. 7 Jabotinsky St. Ramt Gan Israel

Belgrade, 23 February 2011 To Whom It May Concern RE: Appraisal for Hypermarket and Development Land in Pancevo We understand that the appraisals carried out by our firm dated 31 January 2011 ("Appraisal Report") will be used by Aviv Arlon Ltd. (“Aviv Arlon”) for the preparation of its annual financial statements for 2010. We consent to the use of our Appraisal Report in Aviv Arlon financial statements and to its publication should Aviv Arlon be required to do so. However, we take no responsibility or liability for any misrepresentation of the appraisal information in the prospectus or any other publication for public disclosure. Best regards, Bryan Beaton, MRICS Joint Head of Valuation King Sturge d.o.o., Serbia

HENDRY REAL ESTATE

Advisors, Inc.

2011-022

SUMMARY APPRAISAL REPORT

Center of Bonita Springs Community Shopping Center

3300 Bonita Beach Road Bonita Springs, Lee County, Florida 34134

For

Aviv Arlon Ltd.

HENDRY REAL ESTATE

Advisors, Inc.

2011-022 i

SUMMARY APPRAISAL REPORT



For

Aviv Arlon Ltd. 7 Jabotinsky St. Ramt Gan

Israel

Attention

Mr. Eyal Bartov

Effective Date of Appraisal: December 31, 2010

Date of Inspection: January 27, 2011

Date of Report: February 3, 2011

Copyright © 2011 by Hendry Real Estate Advisors, Inc. All rights reserved.

HENDRY REAL ESTATE ADVISORS, INC. 1102 W. Cass Street

Tampa, Florida 33606 (813) 209-9616

www.hendryrea.com

HENDRY REAL ESTATE

Advisors, Inc. APPRAISERS ● BROKERAGE ● CONSULTANTS

PROPERTY MANAGEMENT

OFFICES ● TAMPA ● MIAMI ● FORT MYERS

2011-022 ii

Haynes T. Hendry, MAI, President 1102 W. Cass Street [email protected] Tampa, Florida 33606 Florida Certified General Appraiser #RZ839 (813) 209-9616, Ext. 229 Georgia Certified General Appraiser #C004163 (813) 209-9515 (Fax) Florida Real Estate Broker #BK3008283 (813) 731-2812 (Cell) Captain’s License (OUPV)–Mariner #2797306 (305) 423-9616 (Miami) February 3, 2011 Aviv Arlon Ltd. 7 Jabotinsky St. Ramt Gan Israel Attention: Mr. Eyal Bartov, CFO

Re: Center of Bonita Springs Community Shopping Center


File No.: 2011-022

Dear Mr. Bartov:

We have performed a summary appraisal report on the above-captioned property for the purpose of developing a retrospective market value “As Is” opinion of the leased fee interest for the shopping center as of December 31, 2010. In addition, the retrospective market value “As Is” opinion of the outparcel ground lease has also been provided. The property is a community shopping center known as Center of Bonita Springs and contains 287,277 square feet of net rentable area. The shopping center is generally located at the northwest corner of U.S. Highway 41 and Bonita Beach Road in Bonita Springs, Lee County, Florida.

A complete legal description, further identification of the subject property, and a discussion of pertinent valuation influences may be found in the body of the following report.

After considering the various factors and forces that influence the property under appraisement, we have concluded to the following market value opinion(s). The effective date of appraisal was December 31, 2010.

HENDRY REAL ESTATE

Advisors, Inc.

2011-022 iii

Retrospective Market Value “As Is” Opinion - Shopping Center

This value opinion reflects the occupancy and condition of the shopping center (287,277 S.F. of net rentable area) as of the effective date of appraisal, December 31, 2010, and represents the leased fee interest. The market data indicated exposure time of 12 months or less. Based on current conditions, we have estimated a marketing time of 12 months or less.

TWENTY FIVE MILLION ONE HUNDRED THOUSAND DOLLARS

($25,100,000) Retrospective Market Value “As Is” Opinion – Autozone Ground Lease Outparcel

This value opinion reflects the value of the executed ground lease and represents the leased fee interest as of the effective date of appraisal, December 31, 2010. The market data indicates an exposure time of 12 months or less. Based on current conditions, we have estimated a marketing time of 12 months or less.

ONE MILLION EIGHT HUNDRED EIGHTY THOUSAND DOLLARS

($1,880,000)

The attached appraisal is subject to and contingent upon certain extraordinary assumption(s)/hypothetical condition(s) that are outlined in the Assumptions and Limiting Conditions section of the following report.

The attached appraisal was prepared in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation.

Our analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with (and the use of this report is subject to) the requirements of the Code of Professional Ethics of the Appraisal Institute. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. Hendry Real Estate Advisors, Inc. has provided a previous service regarding the subject property within three years prior to this assignment.

HENDRY REAL ESTATE

Advisors, Inc.

2011-022 iv

The following report sets forth our reasoning, methodology, assumptions and limiting conditions, and conclusions. Should you have any questions regarding the following document, please contact Mr. Haynes T. Hendry, MAI.

Respectfully submitted,

HENDRY REAL ESTATE ADVISORS, INC.

Haynes T. Hendry, MAI President State-Certified General Appraiser #RZ839

HTH/SHM

HENDRY REAL ESTATE

Advisors, Inc.

2011-022 v

SUMMARY OF SALIENT FACTS IDENTIFICATION Subject Property Name: Center of Bonita Springs Address/Location: 3300 Bonita Beach Road

Bonita Springs, Lee County, Florida Assessor’s Parcel Number(s): 33-47-25-B3-00270.0000

33-47-25-B3-00291.0000 33-47-25-B3-00273.0010

Property Type Appraised: Shopping Center + Outparcel Purpose of Appraisal: Retrospective Market Value “As Is” OpinionIntended Use of Appraisal: Asset Valuation Client/Intended User(s): Aviv Arlon Ltd. Property Rights Appraised: Leased Fee Effective Date of Appraisal: December 31, 2010 Date of Inspection: January 27, 2011 Date of Report: February 3, 2011 PHYSICAL DESCRIPTION Land Size: 1,350,083 S.F. (30.994 Acres) – Shopping

Center 50,043 S.F. (1.15 Acres) – Autozone Outparcel

Zoning/Land Use: CG & CC, “General Commercial & Community Commercial” / General Commercial, by City of Bonita Springs

Excess Land: N/A Zoning/Land Use: N/A Improvements Size: 287,277 S.F. Year Built: 1988/93; 2008-2009 Renovated Parking Spaces: 1,158 Total Spaces - Shopping Center

3.96 Spaces per 1,000 S.F. Density (FAR): 0.21 FAR – Shopping Center Chronological Age: 23 years Remaining Economic Life: 15 years Occupancy:

“As Is” Physical Occupancy: Stabilized Physical Occupancy:

74%/33% 90%

HENDRY REAL ESTATE

Advisors, Inc.

2011-022 vi

Flood Map: Map Panel No.: Flood Zone, Date

12071C0658F Zones X & AE, August 28, 2008

Highest and Best Use: As Vacant: As Improved:

Development of a neighborhood shopping center Continued use as a neighborhood shopping center with redevelopment potential

ALLOCATION OF VALUE “AS IS” Improvements: N/A Land: N/A Improvements and Land: $25,100,000 – Shopping Center

$1,880,000 – Autozone Outparcel Furniture, Fixtures and Equipment: N/A Total: $25,100,000 – Shopping Center

$1,880,000 – Autozone Outparcel COST APPROACH Market Value “As Is” Opinion: N/A Market Value “As Is” Opinion per index: N/A Land Value: N/A SALES COMPARISON APPROACH Retrospective Market Value “As Is” Opinion

$25,855,000

Retrospective Market Value “As Is” Opinion per S.F.:

$90.00

Stabilized Value: N/A Stabilized Value per index: N/A

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INCOME CAPITALIZATION APPROACH Retrospective Market Value “As Is” Opinion:

$24,460,000

Retrospective Market Value “As Is” Opinion per S.F.:

$85.14

Stabilized Value: N/A Stabilized Value per index: N/A NET OPERATING INCOME “As Is” Operating Statement Year: December 2011-November 2011 Appraiser’s Estimate Total ($) $ Per SF-NLA/NRA Gross Annual Income: $2,946,767 $10.26 Expense Reimbursements: $616,135 $2.15 Total Gross Annual Income: $3,563,031 $12.40 Vacancy/Collection Loss: $1,100,885 $3.83 Effective Gross Income: $2,462,146 $8.57 Expenses: $906,040 $3.15 Net Operating Income: $1,556,106 $5.42 Overall Capitalization Rate: 7.75% Terminal Capitalization Rate: 8.25% Discount Rate: 10.00%

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FINAL VALUE CONCLUSIONS Retrospective Market Value “As Is” Opinion:

$25,100,000

Retrospective Market Value “As Is” Opinion per S.F:

$87.37

Marketing Time: 12 months or less Exposure Time: 12 months or less Retrospective Market Value “As Is” Opinion - Autozone Outparcel

$1,880,000

Marketing Time: 12 months or less Exposure Time: 12 months or less Stabilized Value: N/A Stabilized Value per index: N/A Marketing Time: N/A Exposure Time: N/A Contract Sales Price: N/A Listing Price: N/A Assessed Value: $14,895,633 Outstanding Taxes: None Effective OAR (%): N/A Overall PGIM (#): N/A Property Concerns: N/A INSURABLE REPLACEMENT COST/VALUE(S) N/A Enter Insurable Values in this column

Bldg. # N/A Bldg. # N/A Bldg. # N/A Bldg. # N/A Bldg. # N/A

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T A B L E O F C O N T E N T S Title Page i Letter of Transmittal ii Summary of Salient Facts v Certificate of Appraisal 1 Assumptions and Limiting Conditions 4

Extraordinary Assumptions 6 Hypothetical Conditions 8

Introduction 9 Identification of Subject Property 9 Personal Property Statement 9 Client 9 Intended Use of Appraisal 9 Intended User of Appraisal 9 Purpose and Date of Appraisal 10 Interest Appraised 10 Scope of Appraisal 10 Competency Statement 11 Definition of Market Value 11 Definition of Value “As Is” 12 Definition of Leased Fee Estate (Interest) 12 Definition of Reasonable Exposure Time 13 Definition of Reasonable Marketing Period 13 Legal Description 13 History of Subject Property 13 Assessment and Taxes 15 Exposure Time/Marketing Period 16 Most Likely Buyer/Most Likely User 16

Regional Market Overview 17 Area Map 21

Neighborhood Description 22 Overview 22 Access 22 Land Uses and Trends 23 Demographics 25 Existing Competition 25 Future Competition 26 Concurrency 26 Location Map 28

Property Description 29 Site Overview 29

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Improvements Overview 32 Subject Property Exhibits 36

Highest and Best Use 59 “As Vacant” Analysis 59 “As Improved” Analysis 61

Valuation Procedure 62 Valuation Methodology 63 Outparcel Valuation 64 Autozone Outparcel Valuation 65 Absorption 65 Potential Base Rental Revenue (Direct Capitalization Method) 65 Expense Reimbursement Revenue 66 Total Potential Gross Revenue 66 Vacancy and Collection Loss 66 Effective Gross Revenue 66 Explanation of Expenses 66 Summary of Expenses 66 Net Operating Income 67 Autozone Outparcel “As Is” Pro Forma 68 Capitalization Analysis 69 Shopping Center Valuation 72 Sales Comparison Approach 73

Improved Comparables 74 Improved Comparables Summary and Adjustment Grid 86 Improved Comparables Map 87

Analysis of Improved Comparables 88 Income Capitalization Approach 89

Rent Comparables 90 Rent Comparables Summary 103 Rent Comparables Map 104

Analysis of Local Space Rent Comparables 105 Rent Roll 107 Analysis of Subject Rent Roll 112 Absorption 116 Miscellaneous Income/Percentage Rent 117 Expense Reimbursement Revenue 117 Vacancy and Collection Loss 117 Explanation of Expenses 118 Fixed Expenses 118 Variable Expenses 119 Summary of Expenses 120 Net Operating Income 121

“As Is” Income Pro Forma 122

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Retail Expense Comparable Summary 123 Subject Historical Operating Data 124

Discounted Cash Flow Analysis 125 Direct and Terminal Capitalization Rates 127 Band of Investment 128 “As Is” Cash Flow Excl. Renovation Costs & Entrepreneurial Incentive 132 “As Is” Present Value Table Excl. Renovation Costs & Entrepreneurial Incentive 134 Summary 136 Market Value “As Is” Opinion Analysis 136

Reconciliation and Final Value Opinions 138

A D D E N D A Legal Description Individual Tenant Cash Flows Engagement Letter/Appraisal Guidelines Qualifications of Haynes T. Hendry, MAI Qualifications of Stephen H. McGucken Jr.

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CERTIFICATE OF APPRAISAL

We (I) certify that, to the best of our (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 (is) our (my) personal, impartial, unbiased professional analyses, opinions, and conclusions.

We (I) have no present or prospective interest in the property that is the subject of this report, and we (I) have no personal interest or bias with respect to the parties involved.

We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

Our (my) engagement in this assignment was not contingent upon developing or reporting predetermined results.

Our (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.

Our (my) analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with (and the use of this report is subject to) the requirements of the Code of Professional Ethics of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

Except as noted herein, no one has provided significant professional assistance to the

person(s) signing this report. No individuals other than the undersigned prepared the analyses, conclusions, and opinions concerning real estate that are set forth in this appraisal report.

The value opinion(s) in this report were not based on a requested minimum valuation,

a specific valuation, or for the approval of any loan. The value opinion(s) contained in this report in no way represent a guarantee of the

values and are merely opinions based on market data collected at the time of this appraisal.

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Hendry Real Estate Advisors, Inc. has provided a previous service regarding the subject property within three years prior to this assignment.

Haynes T. Hendry, MAI, and Stephen H. McGucken Jr. have made a personal inspection of the property that is the subject of this report and have considered all known or discoverable factors considered to affect the value thereof.

Based on the effective date of appraisal, December 31, 2010, we have concluded to the following market value opinion(s).


This value opinion reflects the occupancy and condition of the shopping center

(287,277 S.F. of net rentable area) as of the effective date of appraisal, December 31, 2010, and represents the leased fee interest. The market data indicated exposure time of 12 months or less. Based on current conditions, we have estimated a marketing time of 12 months or less.





($1,880,000)

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As of the date of this report, Haynes T. Hendry, MAI, has completed the requirements of the continuing education program of the Appraisal Institute and is currently certified under the Florida State Certification Program for appraisers. Mr. Hendry is also certified under the Georgia State Certification Program.

Certified by,

HENDRY REAL ESTATE ADVISORS, INC. Haynes T. Hendry, MAI Certificate No. 8682 State-Certified General Appraiser #RZ839

Stephen H. McGucken Jr. State-Registered Trainee Appraiser RI21382

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ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report has been made with the following general assumptions: 1. No responsibility is assumed for the legal description or for matters including legal

or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated.

2. The property is appraised free and clear of any or all liens or encumbrances unless

otherwise stated. 3. Responsible ownership and competent property management are assumed. 4. The information furnished by others is believed to be reliable. However, no warranty

is given for its accuracy. 5. All engineering is assumed to be correct. The plot plans and illustrative materials in

this report are included only to assist the reader in visualizing the property. 6. It is assumed that there are no hidden or unapparent conditions of the property,

subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

7. It is assumed that there is full compliance with all applicable federal, state, and local

environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report.

8. The date of value to which the opinions in this report apply is set forth in the letter of

transmittal. The appraiser assumes no responsibility for economic or physical factors occurring at some later date, which may affect the opinions, stated herein.

9. It is assumed that all applicable zoning and use regulations and restrictions have been

complied with, unless nonconformity has been stated, defined, and considered in the appraisal report.

10. It is assumed that all required licenses, certificates of occupancy, consents, or other

legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or reviewed for any use on which the value opinion contained in this report is based.

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11. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report.

12. Subsurface rights (minerals and oil) were not considered in making this report unless

otherwise stated. 13. The tracts according to survey, map or plat, indicate riparian rights and/or littoral

rights are assumed to go with the property unless easements or deeds of record were found by the appraiser to the contrary.

14. Unless otherwise stated in this report, the existence of hazardous material, 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. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value opinion 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 any such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

This appraisal report has been made with the following general limiting conditions:

1. The distribution, if any, of the total valuation in this report between land and

improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

2. Possession of this report, or a copy thereof, does not carry with it the right of

publication. It may not be used or relied upon for any purpose by any person or party, other than the party or client to whom it is addressed and prepared for, without the written consent of the appraiser; and in any such event only with proper written qualification(s) and only in its entirety. The appraisal is not intended to influence any third party’s investment decisions.

3. It should be noted that the appraiser has no ability to predict future events. Our

estimates of market value as of future dates are based upon known supply and demand conditions existing in the current market. The appraisers have researched market conditions and know of no conditions, which would contribute to a lower market value of the subject over a typical loan term or holding period. However, it is the nature of risk in the real estate industry that such highly volatile and unpredictable factors as supply (new construction) and demand (absorption rates) can

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fluctuate, exerting measurable upward/downward pressure on market value over the course of time. Other influences on value include changes in national economic conditions, tax or interest rates. The appraisal opinions contained in this report in no way represent a guarantee of the values and are merely opinions based on market data collected at the time of this appraisal.

4. The appraiser herein by reason of this appraisal is not required to give further

consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made.

5. Neither all nor any part of the contents of this report (especially any conclusions as to

value, the identity of the appraiser, or the firm with which the appraiser is 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.

6. In the event of a claim against Hendry Real Estate Advisors, Inc. or their respective

officers or employees or the Appraisers in connection with or in any way relating to this Report or this engagement, the maximum damages recoverable shall be the amount of the monies actually collected by Hendry Real Estate Advisors, Inc. for this Report and under no circumstances shall any claim for consequential damages be made.

Extraordinary Assumptions

An assumption, directly related to a specific assignment, which, if found to be false,

could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends, or about the integrity of data used in an analysis.

Source: Dictionary of Real Estate Appraisal, Fourth Edition, Page 107.

Information regarding the subject property was furnished by the following individual(s):

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Name/Phone Relation Information Supplied

Eric Koche (734) 748-7003 Strathmore Development Company

Site inspection, leasing information

Scott Chappelle (517) 664-4113 Strathmore Development Company

Property information, cost budget, income pro forma, drawings, survey, etc.

Bill Hoolihan (305) 695-8700 Terranova Corp Rent Rolls, Income/Expense/Budget Info, etc.

Amit Barnoon AAG Bonita Springs LLC Property data, etc

Eyal Bartov Aviv Arlon LTD Property data, etc.

Jim Michalak (813) 837-1300 Plaza Advisors Market information, Publix anchored centers

Brad Luger (813) 349-8383 LVR Partners Market Information, Publix anchored centers

T.J. Ownby (813) 675-0111 Tavernier Capital Partners Financing/interest rate information

Data furnished by the above source(s) is deemed reliable. Any inaccuracies in this

information will void our market value opinion. 1. A Phase I Environmental Site Assessment Report was requested, but not provided.

This appraisal assumes that the subject property is free of any and all contamination. If any contamination is discovered on the site, our value opinions will be void.

2. A Physical Assessment Report was requested, but not provided. This appraisal

assumes that all structural and mechanical elements are sound and in good working order. If any deviation in the aforementioned, our value opinions will be void.

3. This appraisal assumes that all leases provided are executed to the exact terms

outlined in the information provided by Scott Chappelle of Strathmore Development Company and Bill Hoolihan of Terranova Corporation. If the leases are not executed in conformance with the exact terms provided, our value opinions are void.

4. The Americans with Disabilities Act (“ADA”) became effective January 26, 1992.

We have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have an adverse effect upon the value of the property.

5. This appraisal assumes that the renovations are performed in a timely and

workmanlike manner. If there is any deviation in the renovation timeline and/or any deviation in the costs, our value opinions are void.

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Hypothetical Conditions That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.

Source: Dictionary of Real Estate Appraisal, Fourth Edition, Page 141.

1. None.

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INTRODUCTION



Identification of the Subject Property

The property is a community shopping center located at the northwest corner of U.S.

Highway 41 and Bonita Beach Road in Bonita Springs, Lee County, Florida. The project, known as Center of Bonita Springs comprises 287,277 square feet of net rentable area. The anchor space accounts for 62% of the center. The local space totals 109,298 square feet, or 38% of the center. The property has undergone a portion of a $4,741,840 ($16.25/S.F.) renovation. Approximately half of the center has been re-faced. For the purpose of this appraisal, the appraisers have assumed that the owners will re-face the remainder of the center. The completion date of the renovation project is presently unknown; however the project is permitted and can commence at any time. Upon completion of the renovations, the improvements will be similar to recently renovated neighborhood shopping centers in the area.

Personal Property Statement

No personal property is included in our value opinions.

Client

The client is Aviv Arlon Ltd. The client is the only entity that may rely on the

opinions of value set forth in this appraisal.

Intended Use of Appraisal

Our appraisal analysis and the following report are intended only for the preparation of the client’s annual year-end financial statements for 2010. Our appraisal analysis and the report are not intended for any other use.

Intended User of Appraisal

Intended user is defined as the client, and any other party as identified, by name or type, as users of the appraisal, consulting, or review report, by the appraiser based on communication with the client at the time of the assignment.

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Purpose and Date of Appraisal

The purpose of this appraisal is to develop a retrospective market value “As Is” opinion of the leased fee interest for the shopping center and the Autozone ground leased outparcel. The effective date of the appraisal was December 31, 2010.

Interest Appraised

The leased fee interest in the subject property has been appraised. Other liens and encumbrances, if any, have been disregarded and the subject property has been analyzed as if free and clear.

Scope of Appraisal

The property is located on the northwest corner of U.S. 41 and Bonita Beach Road in Bonita Springs, Lee County, Florida. An inspection of the property occurred on January 27, 2011 and included inspecting the interior and exterior of the subject’s improvements, examining the land and topography of the site, as well as the roads providing access to the site.

We have gathered both state and local government information that was analyzed and presented in various sections of this report. A study of the subject neighborhood was also conducted regarding access, land uses and trends, concurrency, demographics, and competition. Once all the data was gathered, we analyzed the subject property with regard to its highest and best use “As Vacant” and “As Improved”. This involved considering what is legally permissible, physically possible, financially feasible and maximally productive for the subject property.

Both primary and secondary data sources to include conversations with property

managers, property owners and developers, local realtors and appraisers were used in the analysis of the subject property. Secondary sources were employed in gathering general information regarding the regional and local economy, land uses and trends, demographics, as well as data concerning current market supply/demand conditions and trends. This information consisted of investment surveys, newspaper articles, Internet web sites, etc. Primary data was gathered from subject property surveys and plans, operating pro forma reports, floor plans, and other related documents, and by a physical on-site inspection in order to evaluate the current status of the subject property. Various primary sources to include property owners, sellers, buyers, brokers, property managers, agents, appraisers, and government officials provided information regarding comparable sales, rents, and general data employed in this analysis.

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Several local retail experts provided information regarding market conditions including rents, capitalization rates, marketing periods, etc. Below is a sample of the experts we spoke with:

Jim Michalak, Plaza Advisors - founder of Plaza Advisors and Co-Managing Partner of the firm. Mr. Michalak has more than 25 years of commercial real estate experience and has specialized in the disposition of shopping centers for the past 21 years. Mr. Michalak has consummated retail dispositions totaling more than $1 billion throughout the Southeastern United States on behalf of private equity and major institutional clients including fund advisors, life insurance companies, REITs, developers, private investors and money center banks.

Data was used from comparable sales and rental properties. Sale comparables were

obtained from public records, published sources and the local brokerage community, and each was inspected by the appraiser. All data was confirmed with the buyers, sellers, brokers or knowledgeable parties, who were involved with, or had knowledge of, the transaction or leasing information.

This is a summary report, and the Sales Comparison and Income Capitalization

Approaches were used to develop market value opinions for the subject. The Cost Approach is not applicable for the valuation of the subject as market participants do not employ this technique when valuing older properties similar to the subject, due to the subjectivity involved with estimating depreciation. The Argus software program, a lease-by-lease analysis, was used in preparing a discounted cash flow analysis (DCF).

No limitations restricted our use of the applicable appraisal methodology.

Competency Statement

The appraisers have significant experience in appraising the type of property noted and meet the competency requirements of the Uniform Standards of Professional Appraisal Practice (USPAP).

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 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;

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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 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. Source: Dictionary of Real Estate Appraisal 5th Edition (Chicago, 2010), p. 123

Important factors affecting market value include the time element, neighborhood and

economic changes as well as anticipation thereof. Market prices do not necessarily follow all of these concepts and are often affected by salesmanship and the urgency and need of the buyer and/or the seller. At a given moment in time, market value is the most probable selling price subject to the aforementioned conditions while market price is the amount for which the property actually sells.

The market value opinion of the property appraised in this report was developed based on investigations as of the date shown in the Certificate of Appraisal. Constantly changing economic conditions have varying effects upon real property values. Even after the passage of a relatively short period of time, property values may change substantially and require a review of the appraisal and recertification.

Definition of Value “As Is”

The value of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. Source: Dictionary of Real Estate Appraisal, 5th Edition (Chicago, 2010) p. 12.

Definition of Leased Fee Estate (Interest)

A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship. (i.e., a lease). Source: Dictionary of Real Estate Appraisal, 5th Edition (Chicago, 2010) p. 111.

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Definition of Reasonable Exposure Time

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 the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market.

Exposure Time is always presumed to precede the effective date of the appraisal. However, exposure time is not intended to be a prediction of a date of sale or a one-line statement. Instead, it is an integral part of the analysis conducted during the appraisal assignment. The opinion may be expressed as a range and can be based on one or more of the following:

* statistical information about days on the market and the appraisal assignment * information gathered through sales verification; and interviews of market

participants

The Reasonable Exposure Time is a function of price, time, and use, not an isolated estimate of time alone. Exposure Time is different for various types of real estate and under various market conditions.

Exposure Time differs from Marketing Period, which is the period of time estimated to sell a property interest in real estate at the estimated market value during the period immediately after the effective date of the appraisal.

Source: Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, Adopted September 16, 1992, and Revised September 16, 1998.

Definition of Reasonable Marketing Period

Reasonable Marketing Period is an opinion of the amount of time it might take to sell

a property interest in real estate at the concluded market value level during the period immediately after the effective date of an appraisal.

Source: Advisory Opinion AO-7 of the Appraisal Standards Board of The Appraisal Foundation

Legal Description

Please see the Addenda for a complete legal description.

History of the Subject Property

The current owner of record of the shopping center is AAG Bonita Springs LLC, who acquired the center in a foreclose sale for $38,000,000 on December 28, 2009 as recorded in

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Instrument # 2010000005712 of the Lee County Official Records. Center of Bonita Partners, LLC was the previous owner who was foreclosed upon. They originally acquired the center in November 2007 for $41,000,000 as recorded in Instrument # 2007000360922. The contract was entered into on May 23, 2007. There have been no other sales transactions within the last three years. Overall, the improvements are of average quality and in average condition for their age.

Center of Bonita Partners, LLC had planned to renovate the center. Renovations were

partially completed prior to foreclosure. The renovation budget was estimated at $4,741,846 ($16.25/S.F.). However, to date, only half of the center was refaced. Summarized renovation costs are as follows:

Improvement Estimated Cost Hard Costs Structural Steel $18,200 EFFIS $586,850 Painting $61,400 Glass $682,100 Concrete Curbing $48,020 Landscaping & Signage $291,200 Electrical $31,050 Asphalt Repair $25,000 Site Lighting $32,250 Miscellaneous $10,000 Hard Cost Subtotal $1,786,340 Soft Cost Total $2,952,500 Total $4,738,840

As of the date of this appraisal, the new owners have tentative plans to complete the

renovations. Part of the renovation includes buying-out the remainder of the Bealls lease and re-locating Publix to a new 54,340 square foot bay. According to the owners, the new lease is still on the table and negotiations are ongoing. The lease is expected to commence when the new Publix space is completed.

The old Publix space will be subdivided into three bays. In addition, a 1.15± acre pad will be developed in the center of the site which will be ground leased. As of the effective date of appraisal, no lease has been signed for this outparcel.

The current owner of record of the Autozone outparcel is AAG Bonita Springs LLC

which acquired the property in the same foreclosure sale as previously mentioned. Tamiami Investment Properties LLC was the prior owner of record and acquired the outparcel in November 2007 for $2,000,000 as recorded in Instrument # 2007000360923. The contract was entered into on May 23, 2007. There have been no other sales transactions within the last three years. The outparcel totals approximately 1.15 acres or 50,043 square feet. Currently, under the terms of a ground lease, Autozone has built a retail store on the site.

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Assessment and Taxes

The property is currently assessed for ad valorem taxes by Lee County. The County Commission sets the millage rate to be used in calculating the tax bill in September or October of each year. The County Tax Collector (239) 533-6161 issues the tax bills providing for a 4% discount for payment in November, a 3% discount for payment in December, a 2% discount for payment in January and a 1% discount for payment in February. All tax bills are delinquent after March 31 of the following year.

The subject property is identified by the following tax number. The corresponding 2010 assessment and taxes are illustrated as follows.

Tax ID No. 33-47-25-B3-00270.0000 Assessment Gross Taxes

Land & Improvements $12,888,880 $209,628.62

Special District(s) $8,599.85

Total Gross Taxes w/o early payment $218,228.47

Tax ID No. 33-47-25-B3-00291.0000 Assessment Gross Taxes

Land & Improvements $884,660 $14,388.38

Special District $364.65


Tax ID No. 33-47-25-B3-00273.0010 (Autozone Outparcel) Assessment Gross Taxes

Land & Improvements $1,122,093 $18,250.06

Special District $590.46


TOTAL ASSESSMENTS AND TAXES Assessment Gross Taxes

Land & Improvements $14,895,633


The subject is encumbered by a special tax for solid waste. The millage rate for the

subject neighborhood is 15.4696 mills. According to the County Tax Collector’s Office, the 2010 taxes for all three parcels have been paid. There are no delinquent taxes related to the subject property. The total assessment of the subject property declined 25.66% from 2009 to 2010 and the total taxes declined 21.53% over the same time period. Further discussion on the assessment and taxes is found in the Income Capitalization Approach section.

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Exposure Time/Marketing Period Exposure Time is a commonly misunderstood term. Exposure Time measures the amount of time a property must be exposed to the market prior to the effective date of value to consummate a sale. In this case, the effective date of value is December 31, 2010. Thus, the Exposure Time estimates the amount of time in the immediate past that the property would need to be exposed to the marketplace (i.e. on the market) prior to being sold and closed at the value opinions derived in the report. It is noted that the Exposure Time estimate encompasses the time necessary to properly market the property for sale to the general public, putting together proper offering memoranda on the property (and circulating the information to appropriate parties), achieving a contract (written offer), allowing for a proper due diligence period (property inspections, appraisal, securing financing, etc.), and finally achieving the closing and transfer on the property. The sales comparables in the subject’s market area indicated exposure times of up to 12 months or less. Based on historical market data and discussions with real estate professionals in the subject’s market area, we have estimated an Exposure Time for the subject of 12 months or less at the market value opinions provided in this report.

On the other hand, the Marketing Period measures the amount of time it may take to sell a property during the period immediately after an effective date of value. Thus, the Marketing Period is usually more relevant to the intended user of the appraisal report as it measures the amount of time necessary to achieve a sale of a property moving forward, rather than estimating the past time necessary to achieve a sale in the present (i.e. Exposure Time). Based on historical exposure times, trends in the market, estimated market values derived in this report, and our analysis as well as conversations with real estate brokers and developers active in the area, we have estimated a marketing period for the subject property to be 12 months or less.

Most Likely Buyer/Most Likely User

The most likely buyer of the subject property would be either an investor, or group of investors, purchasing the property with the experience and financial acumen to continue the operation and management of the shopping center.

The most likely user of the subject property would be national, regional and local retail tenants.

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RETAIL MARKET OVERVIEW According to the 1st quarter 2010 Southwest Florida Retail Market Overview prepared by Colliers Arnold, which is the most recently published market report, six submarkets make up the Southwest Florida retail market: Ft. Myers, Cape Coral, Lehigh, Charlotte County, Bonita/Estero, and Naples.

The retail industry faced many challenges throughout the country over the past few years. Numerous retailers closed their doors, while others reorganized or downsized to maintain operations. These adjustments have diminished allowing more activity to emerge in the retail industry during the first quarter of 2010. National retail sales were stronger than anticipated in March, according to the latest survey published by the National Retail Federation. The industry experienced a 0.9 percent growth in sales over the previous month with the apparel, home goods, outdoor equipment and furniture segments experiencing the largest increases. National GDP continued to remain positive for the third consecutive quarter, after four straight quarters of contraction from Q3 2008 to Q2 2009. The local unemployment figures, which quickly eroded during the past three years, are finally experiencing a noticeable decline as businesses are beginning to hire again. The current unemployment rate is 13.5 percent, down 0.5 percent when compared to the previous month. Consumer attitude has adjusted and retailers are adapting. Dollar General, Dollar Tree and Family Dollar continued to focus on the economic recessionary conditions to cater to budget-conscious consumers. The dollar store segment expects to open approximately 1,500 stores nationwide over the course of 2010. Discount retailers now have the ability to occupy space within sought after areas due to discounted rental rates. Walgreens and Target recently announced plans to adapt their business models to significantly expand into the grocery segment throughout 2010. Other retailers are experimenting with “pop-up” stores that occupy small spaces for short term periods to capture a niche within a submarket. The end-result of these new concepts is a new retail market traveling in uncharted waters. Regardless of the success or failure of these new concepts, the activity will garner consistent positive absorption over the coming year.

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Vacancy beginning to stabilize, rental rates still falling. During the first quarter of

2010, the Southwest Florida retail market continued to experience negative absorption throughout the market. However, this downward trend is beginning to show signs of retreating, as evidenced by negative absorption of 71,280 square feet compared to the previous quarter’s negative net absorption of 389,552 square feet. As fewer retailers are vacating spaces in the market, this has allowed the overall average vacancy rate to stabilize in the first quarter. Currently, 13.1 percent of the market is vacant, marginally higher than the 13.0 percent average experienced during the fourth quarter of 2009. Landlords continued to lower asking rental rates which in turn began the stabilization of the market. At the end of the first quarter, the average asking rental rate was $15.05 per square foot triple net. First generation space is currently asking $17.10 per square foot whereas second generation is averaging $14.62 per square foot triple net.

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Positive absorption has returned in three of the six submarkets during the first quarter. The Charlotte County submarket registered the highest amount of absorption with a posting of 53,488 square feet. Vacancy within the submarket decreased a full percentage point to 7.4 percent from 8.4 percent in the previous quarter. The increase in the amount of completed deals during the first quarter aided in the decline in vacancy. Approximately 15 deals were completed, up significantly from the six reported in the previous quarter. Since the second quarter of 2009, the Fort Myers submarket has experienced a continual increase in the average vacancy rate. During the first quarter of 2010, leveling began to occur holding vacancy at 17.6 percent when compared to the previous quarter. Net absorption was slightly positive at 4,926 square feet. The average rental rate declined significantly to $13.58 per square foot triple net from $14.59 in the fourth quarter of 2009. Construction activity increased in the submarket to 58,005 square feet from 23,512 square feet in the fourth quarter.

The Bonita/Estero submarket has registered two consecutive quarters of positive absorption. During the first quarter of 2010, 11,703 square feet of space was absorbed. The average vacancy rate fell from 10.0 percent in the fourth quarter of 2009 to 9.7 percent in the current quarter. Construction activity remains non-existent and rental rates continue to decline. The average asking rental rate is currently $15.26 per square foot triple net, down from $15.51 per square foot triple net in the previous quarter.

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AREA MAP

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NEIGHBORHOOD DESCRIPTION

Overview

The defined subject neighborhood is delineated by the following boundaries:

North Pelican Landing Pkwy./Old U.S. Hwy. 41

South Lee County/Collier County Line

East Interstate 75

West Gulf of Mexico

The predominant property types within the defined neighborhood are single and

multifamily residential with support facilities along the major thoroughfares. The property is located in Census Tract No. 506.00 (Lee County).

Access The subject’s major road frontage is on U.S. Highway 41 which is a four-lane divided roadway that serves traffic operating in north and south directions. The 2008 traffic count along U.S. Highway 41, north of Bonita Beach Road was 53,500 vehicles, and along U.S. Highway 41 north of the Collier County line was 45,000 vehicles. U.S. Highway 41 is the major north/south arterial through Lee County connecting with Fort Myers to the north and Naples to the south. Access to the neighborhood is considered average.

Significant nearby roads that impact the neighborhood’s access include the following:

SIGNIFICANT NEIGHBORHOOD ACCESS ROADS

Name No. Lanes Direction of Travel Proximity to Subject

U.S. Highway 41 4 North/south Adjacent to the East

Bonita Beach Road 4 East/west Adjacent to the South

Old U.S. Highway 41 2 – 4 North/south 1.75 miles east

Interstate 75 4 North/south 3.50 miles east

U.S. Highway 41, approximately 1.50 miles north of subject, underwent a widening

project which was completed in 2006. As a result, U.S. Highway 41 contains 6/8 lanes with a center turn lane and the widening project has enhanced the flow of traffic through the subject neighborhood.

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Land Uses and Trends

The overall subject neighborhood is approximately 95% built up and the predominant land uses are planned residential communities with commercial uses predominantly oriented along U.S. Highway 41. The neighborhood encompasses the area of Lee County known as Bonita Springs. The area is approximately 15 miles south of Fort Myers and 10 miles north of Naples. Residential Development The majority of new residential development in Bonita Springs is situated within planned residential communities which include a wide variety of products from condominiums and townhomes to high-rise and waterfront/golf course homes. Most of the larger communities feature country club amenities including golf courses and marinas. The largest developments incorporate commercial uses such as shopping and office facilities. Some of the developments in the Bonita Springs area include Pelican Landing, Bonita Bay, Spanish Rose, Highwoods Golf and Country Club, Huntridge County Club, The Brooks, and the Colony, to name a few. Among residential development in the neighborhood are older more modest single family homes, condominiums, and manufactured home parks. These are concentrated in the southern and eastern portions of the neighborhood.

The neighborhood of Bonita Beach to the east of the subject includes a variety of residential development including some mid to high-rise luxury condominiums, single homes and townhomes. The vast majority of these uses possess direct frontage along the Gulf of Mexico (the west side of the island) or Estero Bay on the east side of the island. The condominium development is primarily concentrated in the northern portion of Bonita Beach, while the southern portion of the island is almost entirely comprised of single family development. There is presently very little vacant developable land available for new construction, and that which exists is vacant lots suitable for a single residence.

Commercial Development Commercial development in the overall neighborhood is concentrated along major roadways. Interchanges with Interstate 75 (approximately 7 miles southeast and northeast) are dominated by convenience stores, gas stations, motel/hotels, and a variety of restaurants. Most larger residential support uses are concentrated along U.S. Highway 41.

The neighborhood also includes a regional outlet mall at Interstate 75 and Corkscrew Road (approximately 7 miles northeast) with such stores as Nike Outlet, Docker’s Outlet, Ann Taylor, and other retail outlet stores. The most recent commercial development proximate to the subject is Coconut Point which is located on the east side U.S. Highway 41 between Corkscrew Road and Coconut Road. This is a regional mall developed by Simon. Coconut Point is the center of focus for a 500-acre, master planned community. The

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property includes 90,000 square feet of office condominiums, residential units, up to 1.2 million square feet of retail space, and a variety of restaurants, all of which surround several acres of lakes with a boardwalk. The development is anchored by Dillard’s, Muvico, Office Max, Bed Bath & Beyond, Barnes & Noble, DSW Shoe Warehouse, Best Buy, Ross, T.J. Maxx, and Old Navy. The mall opened in 2006. Other commercial development in the neighborhood includes a number of suburban office buildings, civic centers, mini storage facilities, as well as hotels. To the north of the subject is The Promenade at Bonita Springs and Bonita Bay Plaza. Located at the intersection of Bonita Beach Road and U.S. Highway 41 is the Center of Bonita Springs shopping center located in the northwest quadrant of this intersection is anchored by a Big Kmart, Publix and Bealls, while Springs Plaza, situated in the southeast quadrant of the intersection, is anchored by Sweetbay and Bealls Outlet. Overall, commercial development within the subject neighborhood is considered adequate. Employment Centers As noted earlier, there are a number of office developments located in Bonita Springs and these facilities are generally oriented along U.S. Highway 41 and Bonita Beach Boulevard. Major employment centers are located in the city of Naples (approximately 15 miles to the south and Fort Myers approximately 18 miles to the north). These include both city central business districts, as well as numerous office and business parks. Furthermore, there are numerous resorts, such as the Ritz Carlton, which provide employment. Recreation Centers Recreational uses in the neighborhood are scattered. In the immediate vicinity of the subject there are several public beach access points along Hickory Boulevard, as well as a public beachfront park. There are several marinas in the area, as well as a number of golf course facilities throughout Bonita Springs. Recreational centers in this area are considered good.

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Demographics

Demographic information for the subject neighborhood was provided by Site to Do Business Online. Pertinent details from this survey are summarized as follows.

DEMOGRAPHIC SUMMARY

Florida Lee

County 1 Mile Radius (from subject)

3 Mile Radius (from subject)

5 Mile Radius (from subject)

Population

2015 Projection 19,720,776 680,206 7,995 43,116 83,507

2010 Estimate 18,917,612 628,829 7,436 40,270 77,465

2000 Census 15,982,378 440,888 5,190 31,079 59,087

% Growth 2010-2015 4.25 8.17 7.52 7.07 7.80

% Growth 2000-2010 18.37 42.63 43.28 29.57 31.10

Households

2015 Projection 7,762,708 288,101 4,005 19,629 37,988

2010 Estimate 7,448,581 266,624 3,702 18,321 35,138

2000 Census 6,337,929 188,599 2,541 14,230 26,645

% Growth 2010-2015 4.22 8.06 8.18 7.14 8.11

% Growth 2000-2010 17.52 41.37 45.69 28.75 31.87

Income

2010 Est. Avg. HH Income $64,516 $67,243 $86,998 $87,746 $88,494

2010 Est. Median HH Income $49,910 $51,699 $61,915 $56,898 $59,735

2010 Est. Per Capita Income $25,768 $28,657 $43,308 $39,715 $39,733

Age

2010 Est. Median Age 41.40 47.80 59.00 56.80 56.40

2010 Est. Median Housing Value $130,344 $127,082 $193,873 $174,221 $188,788

Source: STDBOnline

Within a five-mile radius of the subject, the population is anticipated to increase a

total of 7.80% from 2010 to 2015. Correspondingly, the number of households is projected to increase by 8.11% over the same period.

It must be noted that we caution use of these demographics as all demographics are

based on predated information and assessed into the future. With the results of the residential and now total economic downturn many figures from other sources are reporting greatly reduced or even negative population growths. There was no reliable literature available for the subject area that was considered recent that we could utilize.

Existing Competition

There are several competing facilities within the defined neighborhood and additional

competition in tertiary areas. The following table summarizes pertinent characteristics of the surveyed facilities.

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EXISTING COMPETITION

Comparable Year Built Size Occupancy-

Overall/Local Rental Rate/S.F. Overall

Comparability

CENTER OF BONITA SPRINGS (Subject)

1988 287,277 177,979 109,298

74% 33%

$14.00-$20.00/S.F., Triple Net N/A

SPRINGS PLAZA

1974/82 03/04/

08

199,932 138,504 61,428

76% 23%

$10.00-$17.00/S.F., Triple Net Similar

BAY LANDING 1998 70,502 51,699 18,803

90% 61%

$5.00-$10.00/S.F., Triple Net Inferior

BONITA BAY PLAZA

1998 53,275 23,500 29,775

100% $18.00/S.F., Triple Net Similar

SHOPPES AT PELICAN LANDING

86,262 37,887 48,375

91% 83%

$12.00/S.F., Triple Net Similar

THE PRADO AT SPRING CREEK

2000 152,000 81,170 70,830

54% 64%

$12.00-$19.00/S.F., Triple Net Similar

Rental rates for the local space range from $5.00 to $19.00 per square foot with

overall occupancies ranging from 54% to 100%. The trend in rents is decreasing and the trend in occupancies is also decreasing.

Future Competition

There is no new competition planned in the foreseeable future.

Concurrency

Concurrency is part of the “Comprehensive Growth Management Act” adopted in

1985 by the Florida Legislature under the title “Local Government Comprehensive Planning and Land Development Regulation Act”. The purpose of this law was to ensure that local government would implement planning programs to manage current and future growth.

Although the Comprehensive Growth Management Plan and concurrency are

statewide issues, each local government is required to implement its own concurrency management system (CMS). This CMS must provide for a systematic review of all development approvals including rezoning, site plan approval, subdivisions, building permits, and other land use requests to ensure the level of service for the specific public utilities and services will not be reduced by new development. In particular, these facilities and services include water, sewer, transportation, parks, schools, recreation, and fire capacity. The following table illustrates the status of local infrastructure.

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Service Status Verifying Source/Phone No.

Water Adequate City of Bonita Springs/(239) 949-6262

Sewer Adequate City of Bonita Springs/(239) 949-6262

Traffic Adequate Lee County/(239) 332-2737

Concurrency issues would not impact new development in this neighborhood.

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LOCATION MAP

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PROPERTY DESCRIPTION

Site Overview

The site is located at the northwest corner of U.S. Highway 41 and Bonita Beach Road in Bonita Springs, Lee County, Florida. Size and Dimensions – Shopping Center

Major Road Frontage: 1,000’± along U.S. Highway 41 Secondary Road Frontage: 1,255’± along Bonita Beach Road Depth: Varies Shape: Irregular Total Land Area: 30.994 Net Acres; 1,350,083 Net S.F.

Size and Dimensions – Autozone Outparcel

Major Road Frontage: 257’± on U.S. Highway 41 Secondary Road Frontage: None Depth: 195’ Shape: Rectangular Total Land Area: 1.15 Net Acres; 50,043 Net S.F.

Topography and Drainage

Proximity to road grade: At road grade Slope of site: Generally level Foliage: Native trees and shrubbery Drainage: Master retention Adequacy of drainage: Adequate Special features: None

Soil and Subsoil

We assume no responsibility for hidden or unapparent conditions beyond the area of our expertise as appraisers. No adverse conditions were noted at the time of inspection and we assume that the site is suitable for development. We suggest any party contemplating buying or lending money on the subject have an environmental study conducted due to the onerous impact of environmental problems. A Phase I Environmental Site Assessment was requested, but not provided. This appraisal assumes that the subject property is free of any and all contamination. If any contamination is discovered on the site, our value opinion will be void.

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Access There are several points of access to the subject property. The primary points of access are located on the west side of U.S. Highway 41 and the north side of Bonita Beach Road. Access to the property is adequate. Please see Site Plan for further edification. Zoning Zoning District/Jurisdiction: CG & CC, “General Commercial & Community

Commercial”, by City of Bonita Springs Uses Permitted: Various uses including neighborhood shopping

centers Front Setback: 25' Side Setback: 0' Rear Setback: 25' Minimum Lot Area: 10,000 S.F. Maximum Density: 0.35 Height Limit: 50' Parking Requirements: Site plan specific

Land Use

District: General Commercial, by City of Bonita Springs Uses Permitted: Various commercial uses including neighborhood

shopping centers Are Zoning/Land Use Consistent: Yes Are improvements a Conforming use: Yes

HUD Flood Data

Flood Zone Areas: X & AE Flood Insurance Map No.: 12071C0658F Flood Map Date: August 28, 2008

The Federal Emergency Management Agency (FEMA) updates the maps on a case-

by-case basis. Based on the most recent flood map, the subject appears to be in the aforementioned zone. Further certification is advised.

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Utilities Yes/No Provider

Water: Yes City of Bonita Springs Sewer: Yes City of Bonita Springs Electric: Yes Florida Power & Light Telephone: Yes Verizon Police: Yes City of Bonita Springs Fire: Yes City of Bonita Springs

Easements and Restrictions We are not aware of any unusual easements or restrictions on the site that would adversely affect the existing development. We assume usual utility, drainage, and cross access easements are in place. If any unrecorded adverse easements are discovered on the subject site, our value opinion is void. The easements and restrictions identified by the boundary survey are summarized as follows:

EASEMENTS AND RESTRICTIONS

Easement Location O.R. Book/Page

No adverse easements were noted

Surrounding Land Uses

North: Commercial development South: Commercial development East: Commercial and Residential development West: Commercial and Residential development

Concurrency

Concurrency issues would not inhibit development of this site if it were vacant.

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Improvements Overview General Details:

Project Classification: Community Shopping Center

Year Built: 1988/93; 2008-2009 Renovated Net Rentable Area: 287,277 S.F. Anchor Tenants: Big K - 86,479 S.F.

Publix - 56,000 S.F. Bealls - 35,500 S.F. Anchor Tenants Total Area: 177,979 S.F./61%

No. of Stories: One No. of Bays: 50± Bay Depths/Typical: 50’ - 30’ / 75’ Bay Widths/Typical: 15’ - 110’ / 20’ Bay Size/Typical: 675 – 86,479 S.F./ 1,000 - 4,050 S.F. Density: 0.21 FAR (Shopping Center)

Parking Spaces: 3.96 per 1,000 S.F. / 1158 total spaces

Quality: Average

Condition: Average

Chronological Age: 21Years Effective Age: 11 Years - As a result of the re-facing

Remaining Economic Life: 34 Years

Foundation/Floor System: Reinforced concrete slab on grade

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Exterior Walls: Concrete block bearing walls with steel columns. The facades are designed in a conventional retail style and consist of split block, brick, painted stucco, and pedestrian canopies.

Roof: Steel bar joists supporting a flat deck and build-up

roof. We were not provided with roof design or installation details. Furthermore, current management was not able to provide the actual age of the roof. No standing water or leaking was noticed. A property condition report was requested, but not provided.

Roof Inspection: No Walkway: Concrete Windows and Doors: Storefront windows and doors are commercial grade

tempered plate glass in anodized aluminum frames. The rear pedestrian doors are hollow core metal and the interior doors include metal and hollow core wood. A majority of the anchor tenants also have rear, metal overhead access doors.

Interior Finish: Interior finish includes metal and stud wall partitions

with painted and papered drywall. Ceilings include suspended acoustical panels in a grid with insulation above and recessed lighting. The concourses are tiled. The local space is customized depending on its use. The grocery anchor space has additional buildout for coolers and warehouse areas.

Loading: Dock high and grade level. Electrical: The common area incoming services are rated 800

amp, 3-phase, 4-wire 277/480-volt mains. The main distribution panels (MDP) are located in five electrical rooms. Step-down dry transformers and sub panels for power, lighting and HVAC units are fed off the main service. Multiple tenant meter stacks powering sub panels to tenant spaces are fed from multiple transformers. The typical panel size is 200-400 amps, with 120/208 or 277/480-volt services. Assumed adequate and in conformance with local codes.

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HVAC: The common areas are heated and cooled by rooftop-

mounted electric HVAC units. Each tenant space is climate controlled by individual rooftop-mounted electrical HVAC units ranging from 5 to 30 tons. Assumed to be adequate for each tenants’ use. A property condition report was requested, but not provided.

Site Improvements: The site improvements include asphalt-paved parking,

overhead light fixtures, and landscaped parking lot areas.

Functionality: The improvements are of functional design and

accommodate a variety of retail uses. Proposed Improvements: The subjects proposed renovation and its cost are

summarized in the box below:

Improvement Estimated Cost Hard Costs Structural Steel $18,200 EFFIS $586,850 Painting $61,400 Glass $682,100 Concrete Curbing $48,020 Landscaping & Signage $291,200 Electrical $31,050 Asphalt Repair $25,000 Site Lighting $32,250 Miscellaneous $10,000 Hard Cost Subtotal $1,786,070 Soft Cost Total $2,952,500 Total $4,738,570

***It should be noted that only half of the center was

re-faced prior to the property being foreclosed upon and the current owners taking title. The numbers listed above represent the total costs of the prior planned renovation.

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Advantages/Disadvantages: The improvements are located at a signalized intersection and have exposure to U.S. Highway 41 and Bonita Beach Road. There are limited large tracts available for additional commercial development. There are no significant disadvantages associated with the subject property.

Special Considerations: None

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SUBJECT PROPERTY EXHIBITS

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SUBJECT AERIAL

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SUBJECT ELEVATIONS

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SITE PLAN

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ZONING AND LAND USE MAP

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CENSUS TRACT MAP

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FLOOD MAP

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Exterior Views

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Exterior Views

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Exterior Views

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Exterior Views

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Exterior Views

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Exterior Views

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Exterior Views

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Exterior Views

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Interior Views

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Interior Views

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Interior Views

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Interior Views

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Autozone Outparcel

Signage

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New Palms

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Bonita Beach Boulevard – East View

Bonita Beach Boulevard – West View

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Tamiami Trail – North View

Tamiami Trail – South View

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HIGHEST AND BEST USE

Highest and best use is the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and results in the highest value.

The estimation of highest and best use results from the appraiser's judgment and analytical skill. The ultimate determination of highest and best use is shaped by market forces and may change over time.

The first step is to analyze the vacant site and determine the highest and best use. Sometimes that use will differ from the existing use, if the property is improved. Next, the property is analyzed, as improved, to see if the improvements measure up to the ultimate or most probable concept of highest and best use. If land value, as vacant, exceeds the property value, as improved, the improvements are no longer the highest and best use and may be an interim use until it is prudent to redevelop the property.

In the analysis of the subject, consideration has been given to the physical characteristics of the site including size, shape, location, access to transportation arteries, and the availability of utilities. Furthermore, consideration was given to existing zoning, possible zoning changes, surrounding land uses, and demand for various types of uses.

The following sections discuss the elements of highest and best use as vacant and improved. Included in these aspects are the legally permissible, physically possible, financially feasible, and maximally productive considerations of developing real estate.

“As Vacant” Analysis Legally Permissible

The subject property is zoned CG & CC, “General Commercial & Community Commercial”, by City of Bonita Springs. Uses permitted within this category include various commercial and residential uses. The subject is also situated within the General Commercial land use district, which is similar to and consistent with the surrounding zoning.

In addition to zoning and land use requirements, a vacant site must also satisfy concurrency requirements. In this instance, there is sufficient capacity for water and sewer services, as well as traffic capacity, within the subject neighborhood. Concurrency would not impede development of the subject site.

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Physically Possible

The subject property comprises 30.994 net acres located at the northwest corner of U.S. Highway 41 and Bonita Beach Road. There are no physical constraints that would inhibit typical multifamily development allowed under the CG & CC zoning. Given the shape, frontage, and location of the subject, it appears that most of the uses under the subject’s zoning are physically possible including neighborhood shopping centers, retail, office, etc. Financially Feasible

The financial feasibility of any given project is inherently related to supply/ demand characteristics, costs, financing, and overall market conditions. The development of a new retail center on the subject site would attract national tenants to the area, as demographic information indicates an adequate economic base. New shopping centers in this market are primarily developed once substantial pre-leasing occurs, including the securing of a major anchor tenant. Major anchors in this region would be in the form of grocery store users and/or national “Big Box” users. Once anchor tenants are secured, marketing begins to local tenants to lease the property to stabilization. Development of a shopping center could be feasible on the subject site due to the frontage along U.S. Highway 41 and Bonita Beach Road. The subject site is well-suited for neighborhood shopping center development as large vacant commercial tracts are primarily non-existent proximate to the subject.

However, according to the 1st quarter 2010 Southwest Florida Retail Market

Overview prepared by Colliers Arnold, the shopping center submarket for Bonita Springs had a vacancy rate of 9.7% in the first quarter with a negative Y/Y absorption and quoted rates were $14.62 per square foot. All indicators illustrate a weak retail market. With the overall economic slump, the retail market has softened considerably for the past several months. Conversations with local brokers confirm that this market slowdown is continuing into the current quarter with few signs of recovery on the horizon. While vacancy seems to be stabilizing, market rents are down and absorption is slow; it appears those trends will continue in the near term. Considering the foregoing, while the subject property is a prime location for shopping center development, the overall economic slowdowns, as well as the local economy, dictate that construction of an anchored retail shopping center would not be feasible at this time.

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Maximally Productive

Based upon the three previous criteria inherent in the Highest and Best Use, we are of the opinion that the maximally productive development of the subject property is for development of a neighborhood shopping center when demand dictates.

“As Improved” Analysis

The subject is a community shopping center that comprises 287,277 square feet of rentable area and the improvements are of average quality and are in average condition for their age. The shopping center anchor tenants account for 62% of the rentable area, while the local tenants total 109,298 square feet, or 38% of the center. The construction quality and design is typical of similar vintage community shopping centers in Lee County. The FAR and parking ratio are within market parameters. The subject was partially re-faced in 2009 and the new owners plan to complete the re-facing of the remainder of the center. Based on the foregoing, we believe completion of the renovation of the subject property and lease up of the vacant space to economic stabilization is considered the highest and best use of the property “As Improved”.

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VALUATION PROCEDURE

The valuation of income producing real estate lends itself to application of the three traditional approaches to value; i.e., the Cost Approach, Sales Comparison Approach and Income Capitalization Approach. All of these techniques are market oriented, being premised upon actions and attitudes of typical market participants.

The Cost Approach analyzes the relationship between value and cost as perceived by the investor. By applying this technique, the appraiser estimates the difference in worth to a buyer between the property under appraisement and a property with similar utility. The application of this approach involves estimating a number of individual components such as land value, reproduction or replacement cost, entrepreneurial profit, and the amount of accrued depreciation. This technique is most applicable when appraising relatively new or proposed construction with a limited amount of accrued depreciation; however, it is also useful (but less effective) when appraising older structures.

The Sales Comparison Approach involves a detailed analysis and comparison of like properties, which were recently sold, contracted, or listed in the same or competitive market. When reduced to an appropriate unit of comparison, these transactions can be adjusted for pertinent differences such as, market conditions, financing, location and/or physical characteristics. If a sufficient number of sales are available, the resultant value indication is a reflection of the price the subject could command, recognizing the principle of substitution. The interpretation of a number of indications of market price should lead to a logical opinion of market value.

The Income Capitalization Approach is typically the most reliable technique in valuing income-producing property because income considerations are the primary decision making parameter of market participants. In formulating a value opinion via this technique, consideration is given to potential income, expenses and the rate of return required by an investor in the prevailing market. Once the net income is established, it is then converted to value via the capitalization process. This technique analyzes the future benefits of ownership.

The remaining step in the valuation process is to analyze the results of each approach by re-evaluating all pertinent data to arrive at a final conclusion of value. Although each of the techniques produces an independent indication of value, they are interrelated and integrated techniques, which are dependent upon the operation of market forces.

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Valuation Methodology

We have employed the Sales Comparison and Income Capitalization Approaches to provide market value opinions for the subject. The Cost Approach was not utilized as market participants and professional peers do not employ this approach when valuing properties of similar vintage to the subject property. In addition, a ground lease valuation has been included for the subject’s Autozone outparcel ground lease.

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OUTPARCEL VALUATION

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AUTOZONE OUTPARCEL VALUATION

The subject has a ground lease with Autozone Inc. on an outparcel. The Autozone ground lease rate is currently $116,400 per year with a triple net lease whereby the tenant is responsible for all expenses related to the outparcel and pays a CAM reimbursement. The terms of the Autozone ground lease along with ground lease comparables are summarized below:

GROUND LEASE SUMMARY Property Type Name Year Location Lease Term (Yrs) Rate/S.F.

Retail Autozone 2010 Center of Bonita Springs 20 with 3, 5 Yr Options $2.29 Retail Kauffman Tire 2011 Proposed Wal-Mart Outparcel, Wesley Chapel 20 with 6, 5 Yr Options $1.67 Retail 7 Eleven 2010 South Pasadena, Florida 10 with 4, 5 Yr Options $1.80 Retail CVS 2008 Southbay Plaza, Nokomis 20 with 5, 5 Yr Options $3.11 Bank Regions Bank 2009 U.S. 19 & Berkely Manor, Spring Hill 20 with 4, 5 Yr Options $1.50 Bank American Momentum Bank 2008 E/s CR 951 & Rattlesnake Hammock Rd, Naples 20 with 4, 5 Yr Options $3.26 Bank SunTrust 2008 Target at the Forum, Ft. Myers 20 with 4, 5 Yr Options $4.30 Bank Wachovia 2008 Shoppes at Pelican Preserve, Ft. Myers 15 with 3, 5 Yr Options $4.09 Gas Station Exxon Mobil 2008 Shoppes at Pelican Preserve, Ft. Myers 15 with 3, 5 Yr Options $3.30 Bank Chase 2009 Michigan Ave & Osceola Parkway, Kissimmee 10 with 5, 5 Yr Options $2.91 Restaurant Outback Steakhouse 2007 Shoppes at Pelican Preserve, Ft. Myers 10 with 4, 5 Yr Options $7.00 Bank Wachovia 2007 Sandhill Crossings Shopping Center Port Charlotte 20 with 4, 5 Yr Options $3.11 Bank AmSouth 2007 Freedom Square, Naples 20 with 4, 5 Yr Options $2.34 Big Box Store Belk 2007 Shops at Surfside, Cape Coral 20 with 4, 5 Yr Options $4.95

The ground leases for single tenant buildings; i.e., banks, CVS, Walgreen’s, fast-food

restaurants, etc., typically indicate land sizes ranging from 0.50 to 2.00 acres with terms ranging from 10 to 60 years. The ground lease rental rates typically range from $70,000 to $280,000 per year, or $2.00 to $6.00 per square foot. The ground lease comparables have rental rates ranging from $1.50 to $7.00 per square foot with an overall average of $3.33 per square foot. According to brokers familiar with the subject market, ground lease rates have declined during the recent economic downturn. The Autozone ground lease rate is at the low end of the comparables. Overall, the subject’s current ground lease rate is considered to be at market compared to the rent comparables and has been utilized in our analysis.

As a result, we have utilized the current rental rate of $116,400 per year in our

analysis. Absorption

The subject is a single tenant retail site; therefore, no absorption is required.

Potential Base Rental Revenue (Direct Capitalization Method) As we are valuing the leased fee market value, we have utilized the going forward 12 month rental stream. The current lease rate is $116,400 per year through the initial 20 year lease term, and increases only upon the execution of options. Thus, the potential base rental revenue equates to $116,400 for year 1 of our analysis.

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Expense Reimbursement Revenue The subject’s lease is structured on an absolute net basis whereby the tenant will pay all operating expenses plus a CAM contribution for the center which is reimbursed; thus, the only reimbursement revenue is that of the CAM contribution. According to Bill Hoolihan at Terranova Corp, Autozone’s estimated CAM contribution for 2010 is $20,000.

Total Potential Gross Revenue The total potential gross revenue is $136,400.

Vacancy and Collection Loss The subject is a single tenant site with long-term lease options in place and no vacancy and collection loss is applicable.

Effective Gross Revenue

The effective gross revenue is $136,400.

Explanation of Expenses

The subject is an absolute net ground lease site, and there is no historical operating data to analyze as it is the income only. The subject is currently encumbered by a lease that commenced in April 2010. The lease was originally a 20-year lease term with three, five-year option periods. The three option periods remaining in the lease could extend the lease through February 2045. The lease is structured as an absolute net lease with the tenant paying all operating expenses. As of the date of inspection, Autozone had completed construction of their building. Any charges associated with the structure are the responsibility of the tenant.

Expenses incurred with the operation of ground leased outparcels include ground rent, real estate taxes, insurance, utilities, and maintenance. The lessees will be responsible for all expenses.

Summary of Expenses

The subject is leased on an absolute net basis whereby the tenant is responsible for all operating expenses. The landlord incurs no expenses.

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Net Operating Income The net operating income (NOI) is $136,400 for the forthcoming 12 month period. The pro forma is presented on the following page.

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AUTOZONE OUTPARCEL “AS IS” PRO FORMA – DECEMBER 2010-NOVEMBER 2011

Potential Rental Revenue $116,400 PLUS: Expense Reimbursement Revenue $20,000 Potential Gross Income $136,400 LESS: Vacancy & Collection Loss $0 Effective Gross Revenue $136,400 LESS: Expenses:

Fixed: $/S.F. Totals Real Estate Taxes Tenant Paid Insurance Tenant Paid

Total Fixed Expenses Variable:

CAM Tenant Paid Management/Admin. Tenant Paid Structural Reserves Tenant Paid

Total Variable Expenses Total Expenses $0 NET OPERATING INCOME $136,400

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Capitalization Analysis

Capitalization analysis is the focal point of the Income Capitalization Approach, because it is this process that converts net income to value. Direct capitalization is the primary capitalization technique. Direct Capitalization In direct capitalization methodology a single year’s income expectancy is converted into a value indication. This conversion is accomplished by dividing the income estimate (NOI) by the appropriate conversion factor, namely, the overall capitalization rate (OAR). Given a subject’s NOI, the appropriate OAR must first be derived in order to make the calculation.

There are several ways to derive a capitalization rate. Deriving capitalization rates from comparable sales with support from secondary methods, is the preferred approach when sufficient data on sales of similar, competitive properties is available. The market extracted capitalization rates are summarized below.

MARKET EXTRACTED OVERALL RATES

Ground Lease Sales

Tenant Location (Florida) Date Type Overall Rate Size (Acres) Term (Yrs.)

Chase Bank Kissimmee Dec-09 Sale 6.40% 1.00 10

Regions Bank Spring Hill Aug-10 Sale 6.75% 1.18 20

Washington Mutual Jupiter Oct-09 Sale 6.50% 1.35 25

Wells Fargo Ft. Myers Aug-09 Sale 6.75% 1.64 20

7-Eleven Cape Coral Jun-09 Sale 6.50% 1.30 20

Fifth Third Bank Altamonte Springs Jun-09 Sale 8.00% 1.00 20

Bank of America Homestead Jun-09 Sale 7.50% 0.90 20

CVS Port Charlotte Jun-09 Sale 7.00% 1.57 20

Burger King Orlando Mar-09 Sale 6.90% 0.64 15

Wachovia Bank Port Charlotte Aug-08 Sale 6.13% 1.81 20

Burger King Orlando Aug-08 Sale 6.35% 0.82 15

Taco Bell Orlando Aug-08 Sale 6.35% 0.89 20

Bank Atlantic Largo Jul-08 Sale 6.25% 0.93 20

Regions Bank Palm Beach Gardens May-08 Sale 5.40% 0.74 20

Min/Max 5.40%/8.00% 0.74/1.81 10/25

Average 6.63% 1.13 18.93

As previously mentioned, we have spoken to several brokers from the Southwest and

West Central Florida market areas and nationally that specialize in ground leased sites. The surveyed broker’s indicated overall capitalization rates ranging from 6.50% to 7.50% for retail ground leases; taking into consideration the quality of the tenant and the lease terms

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remaining, the middle of the range is considered applicable. It is noted that the capitalization rate risk is somewhat alleviated by the fact that the tenant has provided a corporate guarantee for the payment of the lease, and the improvements on site were recently constructed by the tenant (showing commitment to the location). Autozone Inc. is rated Baa2 with a stable outlook by Moody’s and BBB with a stable outlook by Standard and Poor’s.

As an improved property, it is our opinion that lease rates would support a similar

income stream as that found in the initial term of the current tenant. Considering the foregoing and current market conditions, the surveyed opinions support a capitalization rate between 6.50% and 7.50%.

Further, we have analyzed Realty Rates Investor Survey for capitalization rate data.

The retail tenant land lease capitalization rates range from 2.90% to 12.19% with an average of 7.38%.

These published rates are national historical rates and do not directly represent Florida nor the subject’s submarket. However, these surveys serve to illustrate trends in capitalization rates, and we offer them as additional support for our conclusion for the subject.

Our selection of a capitalization rate considers the subject's retail tenant, their upcoming renewal options, the location, average condition, and the current submarket economics. Placing primary weight on the surveyed broker opinions with strong support from the survey publications and comparable sales, we have concluded to an overall rate of

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7.25% for the subject property. Income can be capitalized to value by using the simplistic formula of:

V = I / R

Where V = Value, I = Income, and R = Rate

$136,400 / 0.0725 = $1,881,379 AUTOZONE OUTPARCEL RETROSPECTIVE MARKET VALUE “AS IS” OPINION VIA INCOME CAPITALIZATION APPROACH (December 2010) (RD.) $1,880,000

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SHOPPING CENTER VALUATION

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SALES COMPARISON APPROACH

The Sales Comparison Approach involves a detailed comparison of the subject

property to similar properties, which have recently sold in the same or competitive market. This approach is based primarily on the Principle of Substitution, which states that when several commodities or services with substantially the same utility are available, the lower price attracts the greatest demand and widest distribution. In other words, a prudent investor/purchaser would not pay more to acquire a given property in the market, considering that an alternative property may be purchased for less.

The procedure used in the Sales Comparison Approach is as follows:

1. Research the market to obtain information relative to transactions (listings, sales, etc.) of properties similar to the subject.

2. Qualify the data as to terms, motivating forces, or bona fide nature.

3. Determine the relevant units of comparison, price per square foot, per unit,

etc.

4. Compare the comparables to the subject and make adjustments to the comparable prices (or per unit prices) to account for differences such as location, physical characteristics, etc.

5. Reconcile between the value indications from the various comparables and

analysis techniques to conclude a value indication for the subject.

We have gathered comparables sales of shopping centers from throughout Florida. Sales of similar quality retail centers in the subject’s market area were limited so we have extended our search to nearby markets. Those sales considered most pertinent to the valuation of the subject property are included on the following pages along with an identifying photograph. A summary and adjustment grid follows the sales.

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IMPROVED COMPARABLE NO. 1 17476

SHOPS AT VERANDAH 11821 Palm Beach Boulevard Ft. Myers, Florida

Date: 12/2010

Recording Data: O.R. # 2010000316322

Grantor: The Shops at Verandah Ltd

Grantee: 11821 Palm Beach LLC

Section/Township/Range: 36/43/25 (Lee County) Folio/Parcel #36-43-25-05-0000A.0000

Sale Price: $9,500,000

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Financing: Cash Improvement Data: The improvements consists of a 72,795 S. F. anchored

retail center. The improvements are constructed of concrete block with siding, stucco, and decorative stone finish. The roof is pitched with an asphalt shingle finish. Interior buildout is typical of retail space, with painted drywall, recessed lighting, drop ceilings and common fixtures.

Building Size (S.F.): 72,795

Year Built: 2006

Occupancy: 92%

Exposure Time: None

Site Data (Acres)/SF: 9.89 Acres

Density: 0.17FAR

Parking Ratio: 504 total spaces, 6.92 spaces per 1,000 S.F. Financial Information: Per S.F.Gross Income: N/AVacancy: N/AEGI: N/AExpenses: N/ANOI: $712,500 Units of Comparison: Adjusted Price/S.F.: $130.50 OAR: 7.50% EGIM: N/A EDR: N/A NIM: 13.33

Comments: This sale consists of a 72,795 S.F. anchored retail center located at the southwest corner of Palm Beach Boulevard and S.R. 31 in Ft. Myers, Lee County, Florida. The property is anchored by Publix Supermarkets. Tenants included Principal Life, Allstate,

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Beef O Brady's, ReMax, and H & R Block. According to the buyer's broker, the buyer approached the seller; the property was not listed for sale on the market. The buyer owns several retail centers in southwest Florida and was adding to its portfolio with the addition of this center.

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PLEASANT HILL COMMONS 3307 S. Orange Blossom Trail Kissimmee, Florida

Date: 2/2010

Recording Data: O.R. Book 3954, Page 1074

Grantor: MCP Retail LLC

Grantee: Inland Diversified Kissimmee Pleasant Hill

Section/Township/Range: 32/25/29 (Osceola County) Folio/Parcel #32-25-29-4659-0001-0020

Sale Price: $12,375,000

Financing: Cash to Seller

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Improvement Data: The improvements consist of a 70,642 S.F. neighborhood shopping center of masonry construction with a painted stucco exterior and built-up roof with a rigid insulation on a metal deck. The anchor tenant is Publix (45,600 S.F.). The local space totals 25,042 S.F., or 35% of the center. The site has approximately 600' of frontage on S. Orange Blossom Trail.


Year Built: 2008

Occupancy: 98%/95% local

Exposure Time: N/A

Site Data (Acres)/SF: 11.43 Acres; 497,890 S.F.

Density: 0.14 FAR

Parking Ratio: 5.15 spaces per 1,000 S.F. / 364 Total Spaces Financial Information: Per S.F.Gross Income: N/AVacancy: N/AEGI: $1,419,710 $20.10Expenses: 309,012 4.37NOI: $1,110,698 $15.72 Units of Comparison: Adjusted Price/S.F.: $175.18 OAR: 8.98% EGIM: 8.70 EDR: 14.37% NIM: 11.13

Comments: Pleasant Hill Commons is located at the northwest corner of S. Orange Blossom Trail and Pleasant Hill Road in Kissimmee, Osceola County, Florida. The base rent for the Publix is $10.00/S.F. The Publix lease is a 20 year level term expiring July 31, 2028, with seven 5-year options which automatically renew unless notice is given otherwise within 6 months of

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the then applicable expiration date. In-line tenant rents ranged from $25.00 to $35.00/S.F., T-net. Pleasant Hill Commons has 17 in-line tenants. Some of the more noteworthy in-line tenants include Subway, Jackson Hewitt, Tijuana Flats, Bon Worth, Metro PCS, Trustco Bank and Fantastic Sam's. There is one 1,200 S.F. vacant space available. The EDR was calculated with a 75% LTV with a 6% interest rate amortized for 30 years. Average daily traffic counts for S. Orange Blossom Trail are 42,500.

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SOUTH POINT COMMONS 5995-5999 South Pointe Boulevard Ft. Myers, Florida

Date: 8/2009

Recording Data: OR Number 2009000224254

Grantor: Hep-2-Col LC

Grantee: 5999 South Point LLC

Section/Township/Range: 16/45/24 (Lee County) Folio/Parcel #16-45-24-43-00000.0010


Financing: Market financing


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Improvement Data: This grocery anchored shopping center contains 58,670 S.F. of net rentable area and is constructed of concrete block with painted stucco finish. The roof is flat, with a built up tar and gravel finish. The improvements are sprinklered. Site improvements include a lighted, striped, asphalt finished parking lot.


Year Built: 1999

Occupancy: 97%

Exposure Time: N/A

Site Data (Acres)/SF: 334,221 S.F.; 07.67 Acres

Density: 0.18 FAR

Parking Ratio: 4.91 per 1,000 S.F. Financial Information: Per S.F.Gross Income: N/AVacancy: N/AEGI: N/AExpenses: N/ANOI: N/A Units of Comparison: Price/S.F.: $126.13 OAR: N/A EGIM: N/A EDR: N/A NIM: N/A

Comments: This property is located on the northwest corner of South Pointe Boulevard and College Parkway in Ft. Myers, Lee County, Florida. This property is a Publix anchored neighborhood shopping center. Publix occupies 44,270 S.F., with 14,400 S.F. of local space occupied by tenants such as GNC, Papa John's, and Blockbuster. At the time of sale, one 1,800 S.F. suite was available resulting in a local occupancy of 88%


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and an overall occupancy of 97%. Additional financial details were not disclosed. Parties to the transaction cited a confidentiality agreement with the seller, who is a fund advised by Prudential Real Estate Investors.


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PLANT CITY CROSSINGS 2515 Thonotosassa Road Plant City, Florida

Date: 7/2009

Recording Data: O.R. Book 19346 Page 485

Grantor: DDR Southeast Plant City LLC

Grantee: Fraga Plant LLC

Section/Township/Range: 30/28/22 (Hillsborough County) Folio/Parcel #P-30-28-22-ZZZ-000006-04210.0

(10 parcels total)


Financing: Conventional, same as cash

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Improvement Data: Improvements consist of an 85,252 square foot neighborhood shopping center anchored by Publix (37,860 S.F.). Local space totals 47,392 square feet, or 56% of the total. Construction is concrete block with a painted stucco and brick facade exterior. Storefronts feature fixed plate glass windows and doors in metal frames. The roof is flat built-up tar and gravel. Interior buildout is typical retail and consists of drywall partitions, carpeting and/or vinyl flooring, acoustical hung ceiling tiles and recessed fluorescent lighting. Tenant bays include restroom facilities with porcelain fixtures and ceramic or vinyl tile flooring. Included in the improvements is an outparcel (1 Acre) currently offered for ground lease at $100,000 per year. Site improvements consist of asphalt paved parking areas, grassed islands, landscaping and sprinkler system and overhead lighting.


Year Built: 2001

Occupancy: 95%

Exposure Time: 6 mos.

Site Data (Acres)/SF: 11.14 net acres/485,258 net S.F.

Density: 0.18 as improved

Parking Ratio: 3.79 spaces per 1000 S.F. Financial Information: Per S.F.Gross Income: N/AVacancy: N/AEGI: N/AExpenses: N/ANOI: $838,200 $9.83 Units of Comparison: Price/S.F.: $111.73 OAR: 8.80% EGIM: N/A EDR: 12.45% NIM: 11.36

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Comments: This center is located at the southwest corner of Interstate 4 and Thonotosassa Road in Plant City, Hillsborough County, Florida. The property was built in 2001 and contains an undeveloped outparcel in the sale with an allocated price of $200,000. Without the outparcel in the sale, the overall cap rate would have been 8.99%. The developed space was reportedly 95% occupied at the time of sale. The vacant local space is being offered at $20/S.F. Financial information was based on actual income in place at the time of sale The EDR was derived using a 75% LTV with a 6.5% interest rate. The last recorded sale of this property was in December 2002 for $10,750,000.

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IMPROVED COMPARABLES SUMMARY- “AS IS”

Subject 1 2 3 4 Property:

Center of Bonita Springs

Shops at Verandah

Pleasant Hill Commons

South Point Commons

Plant City Crossings

County: Lee Lee Osceola Lee Hillsborough City: Bonita Springs Ft. Myers Kissimmee Ft. Myers Plant City Date of Sale: December-10 December-10 February-10 August-09 July-09 Year Built: 1988/2010R 2006 2008 1999 2001 Effective Age at Sale: 15 4 2 10 8 Occupancy at Time of Sale (Overall/Local): 74%/33% 92%/88% 98%/95% 97%/88% 95% Nearest AADT Traffic Count: 53,500 29,500 42,500 33000 20500 Rentable Area (S.F.): 287,277 72,795 70,642 58,670 85,252 Land Area, Ac.: 30.99 9.89 11.43 7.67 11.14 Density (FAR): 0.21 0.17 0.14 0.18 0.18 Sale Price: N/A $9,500,000 $12,375,000 $7,400,000 $9,525,000 Price/S.F.: N/A $130.50 $175.18 $126.13 $111.73 NOI/S.F.: N/A $9.79 $15.72 N/A $9.83 EGIM: N/A N/A 8.70 N/A N/A NIM: N/A 13.33 11.13 N/A 11.36 OAR: N/A 7.50% 8.98% N/A 8.80% Adjustments: Property Right Conveyed: Leased Fee Leased Fee Leased Fee Leased Fee 0.00% 0.00% 0.00% 0.00% Financing: Market Market Market Market 0.00% 0.00% 0.00% 0.00% Conditions of Sale: Arm's Length Arm's Length Arm's Length Arm's Length 0.00% 0.00% 0.00% 0.00% Total Adjustments: 0.00% 0.00% 0.00% 0.00% Time Elapsed (months): 0 10 16 17 Annualized Adjustment: -5% -0.000% -4.167% -6.667% -7.083% Total Adjustments: -0.000% -4.167% -6.667% -7.083% Adj. Price/S.F.: $130.50 $167.88 $117.72 $103.81 Location: Average Inferior Similar Inferior Inferior 10% 0% 10% 20% Exposure/Traffic Volume: 53,500 29,500 42,500 33,000 20,500 10% 5% 10% 15% Traffic Light: Yes Similar Similar Inferior Similar 0% 0% 5% 0% Corner: Yes Similar Similar Similar Inferior 0% 0% 0% 5% Site Access: Average Similar Similar Similar Similar 0% 0% 0% 0% Neighborhood Access: Average Similar Similar Similar Similar 0% 0% 0% 0% Contamination: No Similar Similar Similar Similar 0% 0% 0% 0% Size (S.F.) 287,277 72,795 71,441 58,670 85,252 -5% -5% -5% -5% Age/condition: Average Superior Superior Superior Superior -15% -20% -5% -10% Quality/Design: Average Superior Superior Similar Similar -5% -5% 0% 0% Density (FAR): 0.21 0.17 0.14 0.18 0.18 0% -5% 0% 0% Parking Ratio per 1,000 S.F.: 3.92 6.92 5.15 4.91 3.79 -5% -5% -5% 0% Occupancy (Overall/Local): 77%/40% 92%/88% 98%/95% 97%/88% 95% -20% -20% -20% -20% Tenancy: Publix/Big K Publix Publix Publix Publix 0% 0% 0% 0% Gross % Adjustment: 70% 65% 60% 75% Net % Adjustment: -30% -55% -10% 5% Adjusted Price/S.F.: $91.35 $75.55 $105.95 $109.00

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IMPROVED COMPARABLES MAP

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Analysis of Improved Comparables

We have utilized the price per square foot method of comparison. Prior to adjustments, the comparables ranged from $111.73 to $175.18 per square foot.

We have analyzed the comparable properties for the following characteristics:

location, exposure/traffic volume, traffic light, corner influence, site access, neighborhood access, contamination, net rentable area, age/condition, quality/design, density, parking ratio, occupancy at the time of sale, and tenancy.

After adjustments, the comparables ranged from $75.55 to $109.00 per square foot

and averaged $95.46 per square foot. We have placed the greatest weight on Comparable No. 1. The market therefore supports an indicated value of $90.00 per square foot. The Retrospective market value “As Is” of the subject property is calculated as follows: 287,277 S.F. x $90.00/S.F. = $25,854,930 INDICATED RETROSPECTIVE MARKET VALUE “AS IS” VIA SALES COMPARISON APPROACH (RD.) $25,855,000

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INCOME CAPITALIZATION APPROACH

The Income Capitalization Approach is typically the most heavily emphasized

valuation technique for the appraisal of income producing real estate. This technique consists of five steps, which are listed below.

1. Estimate gross income for the subject through a market analysis of competitive properties.

2. Estimate vacancy loss and expenses.

3. Determine net operating income by subtracting the vacancy loss and

expenses from gross income.

4. Determine the appropriate capitalization technique and gather market supported data for its application.

5. Capitalize net income to value.

The first step in the Income Capitalization Approach is to estimate gross income. We

have surveyed several projects that were sufficiently comparable to the subject to be used in our analysis of economic or market rents. Information on those projects, along with an identifying photograph, can be found on the following pages.

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SUBJECT 13622

CENTER OF BONITA SPRINGS 3300 Bonita Beach Road Bonita Springs, Florida

Section/Township/Range: 33/47/25 (Lee County) Folio/Parcel #33-47-25-B3-00270.0000 &

00291.0000

Year Built: 1988

Size (S.F.): 287,277 (Total) 177,979 (Anchor) 109,298 (Local)

Quoted Street Rents: $14.00-$20.00/S.F., Triple Net

Effective Rent: $14.00-$20.00/S.F., Triple Net

Occupancy Overall/Local: 74%/33%

Escalators: 3%-5%

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Pro Rata Expenses: $4.25/S.F. (includes R.E. Taxes, Insurance, Management and CAM).

Concessions: N/A

Parking Ratio: 4.04 spaces 1,000 S.F. / 1,158 Total Spaces

Turnover/Renewal Ratio: 20%/80%

Length of New Leases: 3-5 Years

Months Vacant Between Leases: N/A

Finish Allowance on Renewals: Minimal

Finish Allowance on New Leases: Up to $5.00/ S.F.

Percent Brokerage on Renewals: 2%-4%

Percent Brokerage on New Leases: 6%

Comments: The improvements are located at the northwest corner of U.S. Highway 41 and Bonita Beach Road. The current anchor tenants are Big K (86,479 S.F.), Bealls (35,500 S.F.), and Publix (56,000 S.F.). This property underwent half of a $4,750,000 (Rd.)/$16.24/S.F. renovation. Half way through renovation, the former property owner was foreclosed upon. The current owners are contemplating the next steps to the renovation of the center and the possible relocation of the Publix. Currently, 76% of the local space is available. A large portion of this space is

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vacant due to the previous owners plan to relocate Publix and buy out the remainder of the Beall’s lease. During this time, several tenants were relocated or allowed to expire and not renewed to make room for the new proposed Publix. Subsequently, due to the uncertainty surrounding the foreclosure and the resulting lack of leasing emphasis, coupled with the current market downturn, occupancy within the center has suffered.

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RETAIL RENT COMPARABLE NO. 1 13623

SPRINGS PLAZA 8951 Bonita Beach Road Bonita Springs, Florida

Section/Township/Range: 4/48/25 (Lee County) Folio/Parcel #04-48-25-B2-00027.0120

Year Built: 1974/1982/2003/2004/2008R





Escalators: Varies ; 3% Annually to $1.00 per S.F. per year

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Pro Rata Expenses: $3.24/SF (includes R.E. Taxes, Insurance, CAM and Management)

Concessions: Negotiable on a case by case basis

Parking Ratio: 5.05 spaces per 1,000 S.F. / 981 Total Spaces



Months Vacant Between Leases: 3-6 Months

Finish Allowance on Renewals: Negotiable

Finish Allowance on New Leases: Negotiable, owner prefers to give free rent

Percent Brokerage on Renewals: None


Comments: The improvements are located at the southeast corner of U.S. Highway 41 and Bonita Beach Road. The anchor tenants include Sweetbay (44,196 S.F.), LA Fitness (45,000 S.F.), Beall's Outlet (23,795 S.F.) and Goodwill (16,967 S.F.) This center was originally constructed between 1974 and 1982 and was renovated in 2003/04. The center was expanded/renovated with completion of LA Fitness in April 2008. There is approximately 47,524 S.F. available in bays ranging in size from 1,000 S.F. to 11,000 S.F.

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BAY LANDING 27241-27251 Bay Landing Dr.

Bonita Springs, Florida

Section/Township/Range: 33/47/25 (Lee County) Folio/Parcel #33-47-25-B2-03305.0000 &

03304.0000

Year Built: 1998





Escalators: CPI or Step

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Pro Rata Expenses: $5.43/S.F. (includes R.E. Taxes, Insurance, and CAM).

Concessions: Available, See Comments

Parking Ratio: 4.33 spaces 1,000 S.F. / Total Spaces



Months Vacant Between Leases: 2 months


Finish Allowance on New Leases: Up to $10.00/ S.F.

Percent Brokerage on Renewals: None


Comments: The improvements are located at the southeast corner of South Tamiami Trail (U.S. Highway 41) and Bay Landing Drive in Bonita Springs, Lee County, Florida. The anchor tenants include Fresh Market (30,015 S.F.) and Office Depot (21,684 S.F.) The property currently has approximately 7,290 square feet available within 6 bays ranging in size from 1,202 to 1,280 S.F. Currently the property is offering $5.00/S.F. triple net rent for the first year, with the subsequent years increasing to at least $10.00/S.F., triple net, with the exact escalator clause negotiable. No T.I. are provided to recipients of the current special.

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BONITA BAY PLAZA 26831 South Tamiami Trail


Section/Township/Range: 28/47/25 (Lee County) Folio/Parcel #28-47-25-B3-01900.0100,

.0090, .0020, .0010

Year Built: 1998


Quoted Street Rents: $18.00/S.F., Triple Net

Effective Rent: $18.00/S.F., Triple Net


Escalators: CPI or Step

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Pro Rata Expenses: $7.00/S.F. (includes taxes, insurance, CAM).

Concessions: None

Parking Ratio: 4.24 spaces/1,000 S.F. (226 Total)

Turnover/Renewal Ratio: N/A


Months Vacant Between Leases: N/A


Finish Allowance on New Leases: Up to $3.00/S.F.

Percent Brokerage on Renewals: 2%


Comments: Bonita Bay Plaza is located at the northeast corner of U.S. Highway 41 and West Terry Street. This project comprises Office Max (23,500 S.F.) and local space located between and abutting the Target store (103,600 S.F.) and Publix (53,319 S.F.). These tenants own their pads. The entire shopping center comprises 210,194 S.F. The center has a total of 1,003 parking spaces, or 4.60 spaces per 1,000 S.F. There is approximately 9,600 S.F. available within two bays ranging in size from 4,300 S.F to 5,300 S.F. These bays are divisible to 1,500 and 2,300 S.F. respectively.

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THE PRADO AT SPRING CREEK 25141-191 Chamber of Commerce Drive


Section/Township/Range: 21/47/25 (Lee County) Folio/Parcel #21-47-25-B2-03204.0010

& .0000

Year Built: 2000


Quoted Street Rents: $12.00/S.F.-$19.00/S.F., Triple Net

Effective Rent: $12.00/S.F.-$19.00/S.F., Triple Net


Escalators: CPI & Step

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Concessions: Negotiable

Parking Ratio: Adequate


Length of New Leases: minimum 1 year


Finish Allowance on Renewals: Negotiable.

Finish Allowance on New Leases: Negotiable



Comments: The improvements are located at the southeast corner of U.S. Highway 41 and Pelican's Nest Drive. The anchor tenants include Steinmart (28,000 S.F.). Recently, a 44,200 S.F. anchor space became available when Regal Cinemas closed. There is approximately 25,806 S.F. of local space available in 8 bays and one outparcel.

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SHOPPES AT PELICAN LANDING 24600 South Tamiami Trail


Section/Township/Range: 16/47/25 (Lee County) Folio/Parcel #16-47-24-21-0000D.0000

Year Built: 1997


Quoted Street Rents: $12.00/S.F., Triple Net

Effective Rent: $12.00/S.F., Triple Net


Escalators: 3-5% annually

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Concessions: Available in current market

Parking Ratio: 5 spaces/1,000 S.F. (406 Total)




Finish Allowance on Renewals: $0

Finish Allowance on New Leases: Negotiable



Comments: The improvements are located at the northwest corner of U.S. Highway 41 and County Road 887. This shopping center is anchored by Publix (37,887 S.F.) which currently has 4 years remaining on their lease. There is a total of 8,000 square feet available and is currently being marketed at $12.00/S.F. The broker stated that the currently, free rent is negotiable and that the property owner would prefer to give free rent to secure a quality tenant over providing a T.I. allowance, though both are negotiable.

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RENT COMPARABLES SUMMARY

Name

Year Built

Size: Total Anchor Local

Occupancy Overall Local

Quoted

Rental Rates

Escalators

Length of New Leases

Concessions

Pro Rata Expenses

Turnover/ Renewal

Ratio

Finish Allowance/S.F.

on Renewals

Finish Allowance/S.F. on New Leases

% Brokerage Renewal

% Brokerage New Leases

CENTER OF BONITA SPRINGS (Subject)

1988 287,277 177,979 109,298

74% 33%

$14.00-$20.00/S.F., Triple Net

3%-5% 3-5 Years N/A $4.25/S.F. (includes R.E.

Taxes, Ins., Mgmt. & CAM)

20%/80% Minimal Up to $5.00

2%-4% 6%

SPRINGS PLAZA

1974/82 03/04/

08

199,932 138,504 61,428

76% 23%

$10.00-$17.00/S.F., Triple Net

Varies; 3% annually up

to $1.00/S.F./ annum

3-5 Years Negotiable

on a case by case basis

$3.24/SF (includes R.E. Taxes, Ins., CAM &

Mgmt.) 90%/10% Negotiable

Negotiable, owner prefers to

give free rent None 6%

BAY LANDING 1998 70,502 51,699 18,803

90% 61%

$5.00-$10.00/S.F., Triple Net

CPI or Step 3-5 Years $5.00/S.F. , triple net,

first year rent

$5.43/S.F. (includes R.E. Taxes, Ins., & CAM)

30%/70% Minimal

Up to $10.00, none

with special rent rate

0% 6%

BONITA BAY PLAZA

1998 53,275 23,500 29,775

100% $18.00/S.F., Triple Net

CPI or Step 3-5 Years None $7.00/S.F. (includes R.E. taxes, insurance, CAM).

N/A Minimal Up to

$3.00/S.F. 2% 5%

THE PRADO AT SPRING CREEK

2000 152,000 81,170 70,830

54% 64%

$12.00-$19.00/S.F., Triple Net

CPI & Step Minimum

1 year Available

$4.84/SF (includes R.E. Taxes, Ins., CAM &

Mgmt.) 20%/80% Negotiable. Negotiable 0% 5%

SHOPPES AT PELICAN LANDING

1997 86,262 37,887 48,375

91% 83%

$12.00/S.F., Triple Net

3%-5% Annually

1-5 Years Available $6.09/S.F. (includes R.E.

Taxes, Ins., CAM & Mgmt.)

40%-60% $0 Negotiable None 5%

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RENT COMPARABLES MAP

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Analysis of Local Space Rent Comparables

The foregoing rent comparables were surveyed to determine a market or economic rent for the subject’s local space. The rent comparables represent multi-tenant facilities generally similar to the subject. The majority of the facilities are quoted on a triple net basis whereby the tenant is responsible for real estate taxes, insurance, utilities, common area maintenance, management, and administrative.

Comparable No. 1, Springs Plaza, is an anchored shopping center containing 199,932 square feet and was constructed in 1974/82, renovated in 2003/04 and expanded in 2008. The current overall occupancy is 76%, with a local occupancy of 23%. The current quoted rental rate at this comparable for the local space ranges from $10.00 to $17.00 per square foot, triple net. The expense pass-throughs are estimated at $3.24 per square foot. Overall, this comparable is considered slightly inferior to the subject, thus, the subject’s rental rates should be above what is indicated by this comparable. Comparable No. 2, Bay Landing, is an anchored shopping center containing 70,502 square feet and was developed in 1998. The current overall occupancy is 90%, with a local occupancy of 61%. The current quoted rental rate at this comparable for the local space range from $5.00-$10.00 per square foot, triple net. Overall, this comparable is considered inferior and would expect the subject’s rental rates to be above this comparable. Comparable No. 3, Bonita Bay Plaza, is an anchored shopping center containing 53,275 square feet and was developed in 1998. The current overall occupancy is 100%, with a local occupancy of 100%. The current quoted rental rate at this comparable for the local space is $18.00 per square foot, triple net. The expense pass-throughs are estimated at $7.00 per square foot. Overall, this comparable is considered similar, thus, subject’s rental rates should be near those of this comparable. Comparable No. 4, The Prado at Spring Creek, is an anchored shopping center containing 152,000 square feet and was constructed in 2000. The current overall occupancy is 54%, with a local occupancy of 64%. The current quoted rental rates at this comparable for the local space range from $12.00- $19.00 per square foot, triple net with expense pass-throughs of $4.84 per square foot. Overall, this comparable is considered similar and would expect the subject’s rental rates to be in line with this comparable. Comparable No. 5, The Shoppes at Pelican Landing, is an anchored shopping center containing 86,262 square feet and was constructed in 1997. The current overall occupancy is 91%, with a local occupancy of 83%. The current quoted rental rates at this comparable for the local space are $12.00 per square foot, triple net with expense pass-throughs of $6.09 per square foot. Overall, this comparable is considered similar and would expect the subject’s rental rates to be in line with this comparable.

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We have interviewed property owners and brokers active in the Bonita Springs market and the overall consensus is that vacancies are on the rise and rental rates are decreasing. The weakening in the retail market can be attributed to over supply, employment losses, decline in leasing activity and the current condition of the overall economy.

The quoted rates above are negotiable and merely represent a starting point for conversation. Brokers indicated that sublease space, second generation space and newly negotiated direct deals have effective rental rates ranging from $5.00 to $16.00 per square foot, triple net. Based on the rent comparables, the market supports an effective rent of $14.00 per square foot, on average, for the subject’s local tenant space.

In addition to the rent comparables, we have also analyzed the subject’s rent roll

which is presented on the following pages.

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Analysis of Subject Rent Roll Local Space The subject has 109,298 square feet of local space. A summary of the most recent executed leases is as follows:

RECENTLY EXECUTED LEASES/ RENEWALS/LOI’s

Tenant S.F. Lease Term Rental Rate/S.F. Rental Rate Increases Renewal Options T.I.'s

Capri Pizza 1,545 11/10-10/15 $19.00, Triple Net Varies year to year,

$1/S.F. year 2, 19% increase year 3, 4% per annum thereafter

None None

Home Of Sushi Thai 2,700 05/09-04/19 $23.69,Triple Net 4% annually None None

China Wok (Renewal) 1,285 11/09-10/14 $20.69,Triple Net 4% annually 1, 5 yr None

Microware Inc.

1,0500 01/09-12/13 $12.00, Triple Net Varies year to year, 60% yr 1, 17%

yrs., decreasing as term extends 1, 5 yr None

Friendly Frank’s Liquors(Renewal) 1,050 06/08-05/13 $30.56, Triple Net 5% Annually None None

Kast Insurance(Renewal) 900 01/09-12/11 $20.70,Triple Net 5% Annually None None

The current leases in place for the local space range from $16.50 to $40.00 per square foot. The subject’s current leases in-place are considered to be in line with the market and are typical of similar vintage shopping center in the area. The tenant improvement allowance on the recent leases is minimal. Upon completion of the re-facing, the exterior will be of similar quality/appeal of recently renovated shopping centers. The redevelopment plan is to lease the current vacant space and leases that will expire without options at rental rates comparable to recently completed shopping centers in the area. Additionally, the owners have a signed Letter of Intent for Chase Bank to ground lease an outparcel for 20 years at a market rent. Coupled with the recently constructed Autozone outparcel, this activity illustrates the subject’s appeal, and prime location within the area. Based on the subject’s current rent roll, the subject’s most recent leasing activity and the market comparables, it appears the market supports an average rental rate for the local space of $14.00 per square foot on a triple net basis with 5 year terms and 3% annual increases. The TI allowances were estimated at $2.00 per square foot for new leases and $0.50 per square foot for renewals. Anchors – Grocery The subject’s grocery anchor is a 56,000 square foot Publix Supermarket. The lease originally commenced in May 1988. Publix is in its first option period with the ability to extend the lease to the year 2028 (3 additional, 5 year options). The current lease is $6.50 per square foot, which is fixed throughout the 20-year term and the option periods. Publix pays pro-rata share of real estate taxes and CAM. Publix does not reimburse for insurance or management. On the following page is a list of typical Publix lease terms in Florida.

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GROCERY ANCHORS

Name Location Size (S.F.) Rent/S.F. Lease Type

Lease Start

Term (Years) Escalation

Publix Bonita Springs 56,000 $6.50 T-Net 1988 20 Fixed

Publix Venice 45,600 $10.95 T-Net 2007 20 Fixed

Publix West Palm Beach 44,840 $9.65 T-Net 2005 20 Fixed

Publix Boynton Beach 55,341 $13.00 T-Net 2005 20 Fixed

Publix Green Acres 54,379 $14.80 T-Net 2002 20 Fixed

Publix West Palm Beach 44,840 $14.35 T-Net 2003 20 Fixed

Publix Hialeah 61,100 $18.10 T-Net 2003 20 Fixed

Publix Deerfield Beach 54,000 $12.99 T-Net 2002 20 Fixed

Publix Palm Harbor 44,840 $15.61 T-Net 2003 20 Fixed

Publix Largo 44,841 $13.80 T-Net 2006 20 Fixed

Publix Sarasota 44,840 $18.00 T-Net 2003 20 Fixed

Publix Cooper City 51,420 $14.00 T-Net 2002 20 Fixed

Publix Venice 51,420 $9.25 T-Net 2002 20 Fixed

Publix Tampa 44,840 $9.65 T-Net 2003 20 Fixed

Publix Clearwater 44,271 $9.50 T-Net 2002 20 Fixed

Publix Pinellas Park 54,340 $9.50 T-Net 2002 20 Fixed

Publix Seminole 22,880 $8.60 T Net 2001 20 Fixed

Publix Gainesville 44,270 $8.90 T-Net 2000 20 Fixed

Publix Sun City Center 51,420 $8.90 T-Net 2000 20 Fixed

Publix Destin 51,240 $9.00 T-Net 1999 20 Fixed

Publix Tallahassee 44,840 $9.95 T-Net 2002 20 Fixed

The anchor lease rates range from $8.60 to $18.10 per square foot with an average of $12.11 per square foot. All of the leases are on a triple net basis with 20 year terms at fixed rates. The subject’s current Publix lease rate of $6.50 per square foot is well below market. We would expect Publix to keep exercising options at such a low rental rate. Therefore, the aforementioned lease terms have been utilized in our analysis. Anchors – Big Box/Large Tenants The subject has two retail anchors and their lease rates along with big box comparables are summarized below.

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BIG BOX / LARGE ANCHORS Tenant Location Size (S.F.) Rent/S.F. Comments Big K Bonita Springs, FL 86,479 $5.60 Triple Net Beall's Bonita Springs, FL 35,500 $5.25 Triple Net Bealls Brandon, FL 41,425 $5.20 Triple Net Bealls Wesley Chapel, FL 55,400 $8.00 Triple Net Lifestyle Family Fitness Lutz, FL 48,890 $13.30 Triple Net Big K Lutz, FL 86,479 $5.40 Triple Net Marshalls Wesley Chapel, FL 30,000 $7.95 Triple Net Best Buy Tampa, FL 55,000 $13.52 Triple Net Best Buy Sanford, FL 30,767 $21.50 Triple Net Best Buy Miami, FL 45,000 $14.81 Triple Net Best Buy Jacksonville, FL 45,802 $22.25 Triple Net Best Buy Aventura, FL 45,720 $15.00 Triple Net Sports Authority Miami, FL 45,249 $17.50 Triple Net Sports Authority Jacksonville, FL 40,000 $15.30 Triple Net Ross Orlando, FL 30,187 $11.00 Triple Net Ross Pinellas Park, FL 30,180 $11.00 Triple Net Ross Clearwater, FL 30,187 $12.50 Triple Net Ross Lady Lake, FL 30,187 $9.75 Triple Net Bed Bath & Beyond Pinellas Park, FL 25,000 $10.50 Triple Net Bed Bath & Beyond Jacksonville, FL 25,000 $12.00 Triple Net LA Fitness Orlando, FL 37,500 $15.80 Triple Net LA Fitness West Palm Beach, FL 40,737 $17.81 Triple Net LA Fitness Casselberry, FL 45,000 $18.00 Triple Net Bally Total Fitness Clearwater, FL 31,000 $17.49 Triple Net PetsMart Ocoee, FL 23,764 $13.90 Triple Net PetsMart Clearwater, FL 19,107 $14.75 Triple Net PetsMart Tampa, FL 32,000 $20.50 Triple Net PetsMart Naples, FL 19,147 $15.75 Triple Net Petco Orlando, FL 15,000 $16.00 Triple Net Petco Port Charlotte, FL 15,257 $21.50 Triple Net Petco Pinellas Park, FL 14,000 $16.89 Triple Net Staples Tampa, FL 20,338 $13.25 Triple Net Staples Lady Lake, FL 14,600 $12.00 Triple Net Office Depot Wesley Chapel, FL 20,337 $12.50 Triple Net Office Depot Pinellas Park, FL 25,000 $15.00 Triple Net Books A Million Palm Harbor, FL 20,000 $11.50 Triple Net Barnes & Noble Clearwater, FL 28,000 $18.50 Triple Net Barnes & Noble Tampa, FL 30,000 $15.00 Triple Net Barnes & Noble Tampa, FL 21,120 $19.19 Triple Net Borders Books Tampa, FL 25,200 $20.75 Triple Net Borders Books Clearwater, FL 23,000 $16.50 Triple Net Old Navy Pembroke Pines, FL 14,000 $18.76 Triple Net Old Navy Sanford, FL 13,000 $11.50 Triple Net Old Navy Miami, FL 18,000 $36.00 Triple Net Michael’s Crafts Kendall, FL 19,998 $17.00 Triple Net Michael’s Crafts Naples, FL 23,824 $13.50 Triple Net Michael’s Crafts Ocoee, FL 19,136 $12.00 Triple Net Michael’s Crafts Orlando, FL 23,800 $11.75 Triple Net Pier One Clearwater, FL 10,808 $20.00 Triple Net Pier One Tampa, FL 10,000 $18.50 Triple Net Pier One Tampa, FL 10,669 $21.50 Triple Net Pier One Lady Lake, FL 10,800 $14.94 Triple Net Pier One St. Petersburg, FL 10,560 $18.00 Triple Net Famous Footwear Orlando, FL 8,350 $17.00 Triple Net Famous Footwear Clearwater, FL 10,000 $18.00 Triple Net

As indicated above, the big box comparables have rental rates ranging from $5.20 to

$36.00 per square foot, with an average of $15.52, on a triple net basis. The subject’s retail anchors have rental rates ranging from $5.25 to $5.60 per square foot which is at the extreme low end of the range of the comparables. Big K has 10, 5 year options to renew.

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Considering the aforementioned, we have utilized the current contract rental rate of Big K in our analysis.

Beall’s is in the first of two, five year options to renew. Due to the low rent paid by Beall’s, we would expect Beall’s to exercise their remaining option and remain in the center and therefore have utilized the both the current option and the remaining option in our analysis. Following the expiration of the second option, the market supports a rental rate of $12.00 per square foot, triple net and for the Beall’s space.

Rental Rate Growth Rates

According to the national survey, growth rates for rental rates range from 0.00% to 3.00%. Historical market rent growth rates are summarized below:

Recent market surveys as well as local leasing agents indicated a negative rental

change rate over the last year. However, several multi-year leases have been signed in the past year indicating the market may be stabilizing. Based on the aforementioned, we have estimated a rental growth rate of 0.00% for year 1; 1% for year 2, 2% for year 3, and 3% for the remainder of the holding period.

Quoted vs. Effective Rental Rates

While we have estimated a market asking rental rate, we must consider the effective

rental rates in the subject’s market. Free rent is present in the current market, which indicates a net effective rent lower than current asking rents. Nearly all of the market participants we interviewed would agree that free rent was negotiable on a case-by-case basis, but few would divulge exactly what rental concessions were in place at the properties they manage. However, due to these conversations with local brokers, we can ascertain that free rent generally ranges from 1 to 6 months. Many leases are structured whereby a new tenant receives a free month rent for every year of the lease (term length equals months free) at the beginning of the lease. Based on the aforementioned, we have estimated 3 months free rent

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for year 1; 2 month for year 2, 1 month for year 3 and no free rent for the remainder of the holding period.

Months Vacant/Down Time

We must also estimate down time between a vacancy and a new lease. Upon expiration of a lease, there is “down time” whereby a new tenant may require tenant alterations and /or the vacated space may sit on the market for a period of time. Tenant alterations on second generation space typically take 30 to 90 days depending on how long it takes to bid the job, approve the permits, and completion of the construction. In the current environment, vacated space typically sits on the market for 1 to 12 months. Based on the aforementioned information, “down time” has been estimated at 3 months in year 1; 2 months in year 2, 1 month in year 3; and 0 months for the remainder of the holding period.

Absorption

The subject property as of December 31, 2010 had approximately 73,324 square feet available within 29 bays. As of the effective date of the appraisal, the subject had an overall occupancy of 74% and a local occupancy of 33%. It should be noted that at least 19,106 S.F. of vacant space is a direct result of the previous owner’s redevelopment plan, in which tenants were allowed to leave at expiration, or were relocated, to make way for the proposed new Publix. Additionally, tenants were lost as the property went through foreclosure, no active marketing of the vacant space was underway, and uncertainty rose within the tenant base as to the future of the center. The comparables have overall occupancies ranging from 54% to 100%. Retail occupancies have been negatively impacted as a result of the current recession, and are expected to continue to rise in the short term. Based on conversations with retail brokers, investors and developers state that 80% to 90% local occupancies are the “new norm” and do not anticipate any substantial increases from these levels in the foreseeable future. It should be noted that only approximately 12,000 S.F. of local space was absorbed in the Bonita/Estero submarket in the 1st Quarter of 2010, causing vacancy in the submarket to drop from 10.0% to 9.7%. The recent positive absorption was the third time growth occurred in the submarket since 2009. Our cash flow analysis begins to absorb the subject’s vacant space in January 2011 and absorbs approximately 4,500 S.F. per quarter. We project that the property will reach a local occupancy of 90% by March 2013.

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ESTIMATED ABSORPTION SUMMARY For the Years Ending Nov-2011 Nov-2012 Nov-2013 Nov-2014 Nov-2015 Percentage Occupancy December 76.04% 81.92% 88.57% 94.84% 100.00% January 75.73% 82.31% 88.57% 94.84% 100.00% February 76.04% 82.31% 88.57% 94.84% 100.00% March 77.61% 83.87% 90.14% 96.41% 100.00% April 77.61% 83.87% 90.14% 96.41% 100.00% May 77.61% 83.87% 90.14% 96.41% 100.00% June 79.18% 84.59% 91.71% 97.97% 100.00% July 78.25% 85.44% 91.71% 97.97% 100.00% August 79.18% 85.44% 91.71% 97.97% 100.00% September 80.74% 87.01% 93.27% 99.54% 100.00% October 80.74% 86.56% 93.27% 99.54% 100.00% November 80.11% 87.01% 93.27% 99.54% 100.00% Average Occupancy for the Year 78.24% 84.52% 90.92% 97.19% 100.00%

Miscellaneous Income/Percentage Rent

Retail buildings typically have miscellaneous income for a variety of instances such as ground leases, outdoor patios, cell tower, etc. The subject does not indicate any miscellaneous income from any of these sources. Publix and Beall’s pay percentage rent based on gross sales. The 2007 percentage rent for Publix totaled $63,959 and Bealls totaled $45,825. Detailed annual gross sales figures and historical percentage rent payments were requested, but never provided. Additionally, 2008 percentage rent totals for Publix and Beall’s were requested but not provided. In 2009, Publix percentage rent totaled only $3,795 and Beall’s did not pay any percentage rent. Based on the aforementioned, we have not included any percentage rent in our analysis.

Expense Reimbursement Revenue

The tenant leases are structured on a triple net basis. Under the triple net scenario, the majority of local tenants reimburse the landlord for real estate taxes, insurance, utilities CAM, and management/administrative fees. Publix CAM expense is capped at $1.50/S.F. for years 1 – 5 and the cap increases 10% every five years.

Vacancy and Collection Loss

The rent comparables have occupancies ranging from 54% to 100%, with an average of 82%. These factors indicate a weak retail market. According to Colliers Arnold’s SW Florida retail Market Overview, vacancy increased for shopping centers in the SW Florida market between the first quarter of 2009 to the first quarter 2010, from 9.9% to 13.1%. The Bonita/Estero submarket where the subject is located had a vacancy rate of 9.7% and the neighboring Naples submarket had a vacancy rate of 11.1% in the 1st Quarter 2010. It should be noted that only approximately 12,000 S.F. of local space was absorbed in the Bonita/Estero submarket in the 1st Quarter of 2010, causing vacancy in the submarket to

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drop 9.70%. The recent positive absorption was the third time growth occurred in the submarket in 2010. The Colliers 1st Quarter 2010 report is the most recently published market report available for the subject’s submarket. Conversations with local brokers indicate that the trend of increasing vacancy continued throughout 2009 but has perhaps begun to stabilize. While rents have continued to fall, falling rent has led to more space being absorbed in the market through 2010. Due to the subject’s location on a prime corner, we have utilized a 10% vacancy and collection loss for the local space, which excludes Publix, Big-K, and Beall’s.

Explanation of Expenses In the operation of retail buildings such as the subject, landlords incur a variety of expenses, including real estate taxes, insurance, common area maintenance, management/administrative and reserves. We have analyzed expense information on a number of retail buildings similar to the subject and the expense comparables are located following the pro forma in this section of the report. We have analyzed the subject’s historical expenses, as well as its Year-end 2010 Income Statement. It should be noted that due to the foreclosure action, there is a gap in the historic numbers. The current owners were never provided the income/expense numbers regarding the time (during 2009) of the foreclosure proceedings, and the former owners will not provide those numbers; therefore the 2009 data we analyzed are annualized figures, not actual 2009 YTD figures. We have placed primary weight on our knowledge of the subject’s historical operating history and the retail expense comparables in our estimates of the subject’s operating expenses. The developer has indicated that leases will be on a triple net basis with the local tenants paying their share of all operating expenses, including real estate taxes, insurance, common area maintenance, and management/administrative expenses with Publix paying everything except insurance and management/administrative expenses. The following is a description of the fixed and variable expenses of the subject.

Fixed Expenses

Real estate taxes – The 2010 assessed value and gross taxes for the subject as well as the surveyed comparables are summarized below:

2010 ASSESSMENT & GROSS TAXES

Name

Year Built

Size

Total Assessment

$/S.F.

% Change 2009

Total Gross Taxes

$/S.F.

% Change

2009 Center at Bonita Springs 1988/08 Renovated 287,277 $13,773,540 $47.95 -27.25% $232,982 $0.81 -22.81% Springs Plaza 1974/07Renovated 199,932 $12,984,664 $64.95 10.00% $245,378 $1.23 29.76% Bay Landing 1998 70,502 $5,528,903 $78.42 -6.37% $93,189 $1.32 -0.01% Bonita Bay Plaza 1998 53,275 $7,485,210 $140.50 N/A $123,762 $2.32 N/A The Prado at Spring Creek 2000 152,000 $13,509,310 $88.88 -29.58% $301,688 $1.48 -25.54% Shoppes at Pelican Landing 1997 86,262 $8,468,700 $98.17 -19.83% $140,475 $1.63 -15.45%

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The tax comparables have 2010 assessed values ranging from $64.95 to $140.50 per square foot and with an average of $94.18 per square foot. The subject’s 2010 assessment is representative of the market. The tax comparables have 2010 total gross taxes ranging from $1.23 to $2.32 per square foot, with an average of $1.60 per square foot. The decrease in assessed values from 2009 range from 6.37% to 29.58% for the comparables. The subject’s 2010 total gross taxes are representative of the market. It should be noted that the tax estimate does not include the Autozone outparcel as Autozone is responsible for the taxes on their parcel under the terms of the ground lease.

We have utilized the gross tax liability of $233,000 in year one of our analysis. The

expense was escalated 3% per annum.

Insurance – Insurance can vary depending on the quality and location of the building. The expense comparables are summarized as follows:

INSURANCE COMPARABLES

High Low Ave Appraiser's Estimate

$0.67 $0.32 $0.42 $0.50

The expense comparables indicated insurance premiums ranging between $0.32 and

$0.67 per square foot with an average of $0.42 per square foot. A 2010/2011 insurance quote for the subject was requested, but not provided. However, the developer did provide a 2010 Income Statement which indicates that $154,812 was spent for 2010 insurance expenses. The 2010 amount equates to $0.54 per square foot. We have estimated the subject’s estimated insurance expense at $0.50 per square foot. This equates to $143,639 in year 1 of our analysis. The insurance expense has been escalated at 3% per annum throughout the 10 year cash flow.

Variable Expenses

In addition to taxes and insurance, the subject has operating or variable expenses, including common area maintenance, management/administrative fees and reserves.

Common Area Maintenance (CAM) expense includes utilities, electricity, building

maintenance, ground and parking lot maintenance, security, etc. The retail tenants reimburse the landlord for their pro rata share of CAM expenses. The following table illustrates the expense comparables’ CAM expense:

CAM COMPARABLES


$2.71 $0.64 $1.71 $1.25

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The comparables display a range of CAM values from $0.64 to $2.71 per square foot, with an average of $1.71 per square foot. The subject’s 2010 CAM expense was $210,108 or $0.73 per square foot, however, this is not reflective of a stabilized property. CAM is reimbursed by both the local and anchor tenants. We have estimated the subject’s CAM expense at $1.25 per square foot, which equates to $359,096 in year 1 of our analysis. The CAM expense has been escalated at 3% per annum throughout the 10 year cash flow.

Management/Administrative expenses include office supplies, postage, telephone,

management fess, etc. Management/Administrative fees are typically 3% to 5% of effective gross income (EGI) based on quotes by the local management companies including Advantis, Courtelis, and Crescent Resources. The expense comparables are summarized below:

MANAGEMENT COMPARABLES


$1.01 $0.29 $0.67 $0.34

10.00% 4.07% 6.10% 4.00%

The expense comparables indicated management/administrative fees ranging from

4.07% to 10.00% with an average of 6.10% of EGI. The subject’s 2010 Management/Administrative expense was 4.00% of EGI. According to the developer, the current management contract for the property is 4% of EGI. Based on the aforementioned, the market supports a management/administrative expense of 4% in year 1 of our analysis. This equates to an annual total in year 1 of $98,486.

Structural Reserves is a category where the landlord supposedly escrows a certain amount of operating income each year to defray non-recurring structural and mechanical repairs and/or replacements. These expenses are usually incurred on a pay as you go basis and they vary widely over the term of ownership. As mentioned, typically this is an expense incurred by the landlord; however the tenant will be responsible for all operating expenses including reserves. According to the 4th Quarter 2010 Korpacz Real Estate Investor Survey, reserves for institutional investors range $0.10 to $2.00 per square foot. We have estimated reserves at $0.25 per square foot. The expense was escalated 3% per annum.

Summary of Expenses

Our analysis of comparable retail rentals shows the following:

SUMMARY


$5.42 $2.24 $4.20 $3.15

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The expense comparables indicated total expenses ranging from $2.24 to $5.42 per square foot with an average of $4.20 per square foot. The total estimated expenses in year 1 equate to $906,040 or $3.15 per square foot in the stabilized year of our analysis. Our estimate of total expenses is in-line with the market comparables.

Expense Growth Rates According to the national survey, growth rates for operating expenses range from 1.00% to 4.00%. Historical expense change growth rates are summarized below:

Local leasing agents indicated an expense growth rate of approximately 3.00%. Based on the aforementioned, we have estimated an average annual growth rate of 3.00% for expenses for the 10-year holding period. Local management companies, investors, and historical operating expenses support the growth rate assumptions.

Net Operating Income

Subtracting the total expenses from the effective gross revenue, results in a net

operating income of $1,556,106 or $5.42 per square foot in year 1 of our analysis. The subject’s income pro forma beginning December 2010 is presented on the following page.

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“AS IS” INCOME PRO FORMA – December 2010-November 2011

Potential Base Rental Income $2,946,767

PLUS: Miscellaneous Income/Percentage Rent $0

PLUS: Expense Reimbursement Revenue $616,264

Total Potential Gross Income $3,563,031

LESS: Vacancy and Collection Loss ($1,100,885)

Effective Gross Income $2,462,146

LESS: Expenses

Fixed Expenses $/S.F. Total

Real Estate Taxes $0.81 $233,000

Insurance $0.50 $143,639

Total Fixed Expenses $1.31 $376,639

Variable Expenses

CAM $1.25 $359,096

Management/Admin. $0.34 $98,486

Reserves $0.25 $71,819

Total Variable Expenses $1.84 $529,401

Total Expenses ($906,040)

NET OPERATING INCOME $1,556,106

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RETAIL EXPENSE COMPARABLE SUMMARY

Year of Expenses

Comparable #858 2009

Comparable #849 2009 Ann.

Comparable #835 9 mos 2009 – 3 mos Budget

Comparable #826 2009 6 mos Act.+ 6mos Budget

Comparable #821 2009 Budget

County Pasco Pinellas Lee Sarasota Sarasota

Year Built 1991 1982 1982 1983 1978 Size (S.F.) 184435 96871 171921 93157 96575

Base Rental Income Per S.F. Ten. Contributions Per S.F. % Rental Income Other Income

$1,854,398 10.05 361942 1.96 19.52 95768

$1,094,319 11.30 187279 1.93 17.11 144965

$1,830,967 10.65 0 0.00 0 0

$692,840 7.44 243647 2.62 35.17 0

$497,771 5.15 190222 1.97 38.21 0

Eff. Gross Income Per S.F.

$2,312,108 12.54

$1,426,563 14.73

$1,830,967 10.65

$936,487 10.05

$687,993 7.12

Less Expenses Fixed

R.E. Taxes Per S.F.

$125,077 0.68

$221,108 2.28

$241,250 1.40

$121,665 1.31

$88,644 0.92

Insurance Per S.F.

$58,178 0.32

$65,341 0.67

$62,043 0.36

$37,498 0.40

$34,065 0.35

Ground Lease Per S.F.

$0 0.00

$0 0.00

$0 0.00

$0 0.00

$0 0.00

Total Fixed Exp. Per S.F.

$183255 0.99

$286449 2.96

$303293 1.76

$159163 1.71

$122709 1.27

Utilities Per S.F. Water Sewer Electric Trash Removal

$0 0.00 0 0 0 0

$43931 0.45 0 0 0 0

$90299 0.53 0 0 0 0

$0 0.00 0 0 0 0

$0 0.00 0 0 0 0

CAM Per S.F. Security Per S.F. Grounds Maint Building Maint.

$118,079 0.64 0 0.00 0 0

$79,669 0.82 0 0.00 0 0

$307,398 1.79 0 0.00 0 0

$252,257 2.71 0 0.00 0 0

$153,498 1.59 0 0.00 0 0

Reserves Per S.F.

$0 0.00

$0 0.00

$75,000 0.44

$0 0.00

$0 0.00

Management/Admin. Per S.F. % of EGI

$112,586 0.61 4.87

$66,265 0.68 4.65

$126,717 0.74 6.92

$93,691 1.01 10

$27,975 0.29 4.07

Total Variable Exp. Per S.F.

$230665 1.25

$189865 1.96

$599414 3.49

$345948 3.71

$181473 1.88

Total Expenses Per S.F. % of EGI

$413920 2.24 17.9

$476314 4.92 33.39

$902707 5.25 49.3

$505111 5.42 53.94

$304182 3.15 44.21

N.O.I. Per S.F.

$1898188 10.29

$950249 9.81

$928260 5.40

$431376 4.63

$383811 3.97

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SUBJECT HISTORICAL OPERATING DATA

Year of Expenses 2010

Occupancy Overall/Local 74/33

Base Rental Income Per S.F. Ten. Contributions Per S.F. % Rental Income Other Income

$2,127,159 7.40 346767 1.21 16.3 -216762

Eff. Gross Income Per S.F.

$2,257,164 7.86

Less Fixed Expenses:

R.E. Taxes Per S.F.

$242,277 0.84

Insurance Per S.F.

$154,812 0.54

Ground Lease Per S.F.

$0 0.00

Total Fixed Exp. Per S.F.

$397089 1.38

Less Variable Expenses

Utilities Per S.F. Water Sewer Electric Trash Removal

$81096 0.28 0 0 0 0

CAM Per S.F. Security Per S.F. Grounds Maint Building Maint.

$129,012 0.45 198 0.00 0 0

Reserves Per S.F.

$0 0.00

Management/Admin. Per S.F. % of EGI

$199,142 0.69 8.82

Total Variable Exp. Per S.F.

$409250 1.42

Total Expenses Per S.F. % of EGI

$806339 2.81 35.72

N.O.I. Per S.F.

$1450825 5.05

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Discounted Cash Flow Analysis

In the discounted cash flow analysis (DCF), income and expenses are analyzed for each year of the projection period and the net income is discounted to a present value indication by applying an appropriate yield rate (discount factor). The value for the subject is estimated by summing the present values of the cash flows during the projection period and the present value of the reversion at the end of the holding period (less typical sales cost). We have utilized the Argus Analysis software to perform our discounted cash flow analysis.

As in direct capitalization, the most difficult part of this analysis is selecting an

appropriate discount rate (yield rate). The discount rate in this instance is the property discount (yield) rate as opposed to the equity yield rate, which is the return on and of equity to the equity investor. In other words, the equity yield rate is the annualized rate of return on equity capital, including the full effect of any gain or loss from resale at the termination of the investment; i.e., the internal rate of return (IRR) to the equity investment. The property discount rate is a function of the mortgage and equity components or essentially a weighted rate. In the case of unleveraged transactions, the property discount rate may be equivalent to the equity yield rate. However, they are not synonymous terms.

It is more difficult to quantitatively establish a discount rate than the capitalization rate because the capitalization rate can be analyzed in the present time frame; i.e., it addresses a single stabilized operating income. The discount rate addresses future expectations; hence, it will not actually be known until the property is sold. Past trends can be observed, but due to changing conditions in the marketplace, future target rates by investors are the best measure of deriving discount rates.

The national survey indicates discount rates ranging from 6.00% to 12.50% with average of 8.88%. Discount rates can vary greatly primarily due to the quality and location of the improvements, as well as tenant composition. The national surveys primarily tract institutional grade properties held within large portfolios. Based on this information, it is our opinion that an applicable discount for the subject would be approximately 10.00%. This

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also assumes that turnover costs such as brokerage commissions, retrofit, etc., are deducted from the cash flow. There are certain other assumptions that must be made in constructing a discounted cash flow analysis, such as vacancy rates, growth rates for income and expenses, turnover costs, as well as a terminal capitalization rate (capitalization rate of the reversion), and selling costs. Turnover Expenses Generally, turnover costs result when a tenant's lease expires. Expenses associated with lease expiration include tenant alterations (improvements) and leasing commissions. The following chart summarizes the turnover expenses for anchored shopping centers located in similar surrounding areas.

TURNOVER RATIOS Property Turnover/Renewal Ratio

Center at Bonita Springs 20%/80% Springs Plaza 10%/90% Bay Landing 30%/70% Bonita Bay Plaza N/A The Prado at Spring Creek 20%/80% Shoppes At Pelican Landing 40%/60%

The 4th Quarter 2010 Korpacz Real Estate Investor Survey indicates tenant retention

at 50% to 75% based on national surveys of strip shopping centers. Based on the rent comparables and due to the nature of the subject's submarket, we anticipate that 65% of the leases will renew; thus, 35% will not.

Tenant alterations represent the cost of retrofitting the space upon lease expiration to accommodate changing needs or tenants. The following chart summarizes the tenant improvements for the rent comparables.

TENANT ALTERATION COSTS Property Alteration Costs New Alteration Costs Renewals Center at Bonita Springs Up to $5.00/S.F. Minimal Springs Plaza Negotiable Negotiable Bay Landing Up to $10.00/S.F. Minimal Bonita Bay Plaza Up to $3.00/S.F. Minimal The Prado at Spring Creek Negotiable Negotiable Shoppes At Pelican Landing Negotiable $0

Based on the rent comparables, the market shows a limited amount of alteration costs

allowed for tenants. Analysis of the additional rent comparables along with our experience in the subject market it is our opinion the market supports a $2.00 per square foot alterations cost for new tenants for refitting existing space and $0.50 per square foot for renewals.

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Leasing fees represent the commissions to staff and outside brokers for procuring new tenants and the renewal of existing tenants. The rent comparables are summarized below.

LEASING FEES

Property % Broker Renewal % Brokerage New Leases

Center at Bonita Springs 2%-4% 6%

Springs Plaza None 6%

Bay Landing 0% 6%

Bonita Bay Plaza 2% 5%

The Prado at Spring Creek None 5%

Shoppes At Pelican Landing None 5%

We have estimated 6% commission for new leases and 2% for renewals.

Sales Expenses - includes a provision for brokerage commissions (at sale), title fees,

and other expenses associated with the sale of the property at reversion. The 4th Quarter 2010 Korpacz Real Estate Investor Survey indicates that sales expenses range from 0.5% to 3.0%. The estimated sales expense is 3%.

Direct and Terminal Capitalization Rates

In direct capitalization there are several ways to determine the capitalization rate. We have first employed market extraction, which involves deriving capitalization rates directly from properties, which were recently sold. In the Sales Comparison Approach section of this report, we have presented sales with overall rates that bracket the parameters applicable to the property under appraisement. Those capitalization rates are recapitulated as follows:

MARKET EXTRACTED OVERALL RATES Property Sale Date Year Built Size % Occ. OAR

Center of Bonita Springs Dec-10 1988/2010R 287,277 97%/90%(Stab) N/A Shops at Verandah Dec-10 2006 72,795 92%/88% 7.50% Pleasant Hill Commons Feb-10 2008 70,642 98%/95% 8.98% South Point Commons Aug-09 1999 58,670 97%/88% N/A Plant City Crossings Jul-09 2001 85,252 95% 8.80%

ADDITIONAL MARKET EXTRACTED OVERALL RATES

Property Sale Date Year Built Size Anchor % Occ. OAR

Keystone Crossing Apr-10 2002 47,817 Sweetbay 100%/100% 8.80% Publix Shopping Center Feb-10 2008 70,642 Publix 98%/95% 8.70% Sweetbay Center Nov-09 2003 56,097 Sweetbay 100%/100% Mid-9% Plaza 66 Aug-09 1985 95,320 Sweetbay 91% 9.45% Western Way Shopping Center Mar-09 1982 142,968 Sav-A-Lot 90% 9.34% Arbor Square at Connerton Dec-08 2007 84,453 Publix 95% 7.70% Average 8.75%

The foregoing sales represent capitalization rates for generally comparable facilities

with overall rates ranging from 7.50% to 9.50% with an average of 8.75%. According to Jim

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Michalak of Plaza Advisors and other specialists in retail brokerage in general and Public anchored centers in particular, a Publix anchored shopping center such as the subject should have a capitalization rate ranging from 7.50% to 8.50%. Considering these factors, we believe the market supports a capitalization rate in that range.

Additional support is provided from the national surveys summarized below:

Korpacz is a national survey and not location or property specific; however it does show a trend in capitalization rates, which indicate a decrease of approximately 90 basis points since the 4th quarter 2009.

Band of Investment

An alternate method of calculating the capitalization rate for the income approach is

the Band of Investment Technique. The Income Approach to value is based on the premise that a direct relationship exists between the value of a property and the amount of income it is capable of generating. Capitalization is the process of converting a stabilized income stream into an estimate of value and is obtained by dividing net operating income before debt service by an "overall rate." This overall rate is built-up after taking into consideration requirements of the mortgage as well as a return on the equity investment.

The Band of Investment Technique is based on the premise that investments in income producing properties are typically financed with a mortgage, and that an equity investor will seek the best available loan terms in order to take advantage of the benefits of leverage. An overall rate must reflect the complete cash flow requirements of an investment. The derivation of this rate by the Band of Investment method develops a weighted average of the mortgage constant and a competitive equity dividend rate necessary to compensate for alternative investments. According to mortgage brokers, loan terms for retail buildings feature 5 to 10-year balloons, 25 to 30-year amortizations, 50% to 75% loan-to-values, and interest rates of 250 to 300 basis points over prime. Factors that influence the interest rate are the loan-to-value

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ratio, the credit worthiness of the borrower, and the potential for turnover within the building. In our Band of Investment analysis, we are using the terms of 6.00% with a 65% loan-to-value ratio and a 30-year amortization.

EQUITY DIVIDEND RATE

Property Sale Date Year Built Size Occupancy EDR

Center of Bonita Springs Dec-10 1988/2010R 295,514 97%/90% N/A

Shops at Verandah Dec-10 2006 72,795 92%/88% N/A

Pleasant Hill Commons Feb-10 2008 70,642 98%/95% 14.37%

South Point Commons Aug-09 1999 58,670 97%/88% N/A

Plant City Crossings Jul-09 2001 85,252 95% 12.45%

Average 13.41%

The reported and extracted equity dividend rates range from 12.45% to 14.37% with

an average of 13.41%. Based on the above market data and the opinions of brokers we interviewed, the market supports an EDR of 9.00%.

The Band of Investment parameters are summarized as follows.

BAND OF INVESTMENT PARAMETERS

Interest Rate 6.00%

Loan-to-Value Ratio 65%

Amortization Period 30 Years

Equity Dividend Rate 9.00%

BAND OF INVESTMENT CALCULATIONS

Loan-to-Value Ratio x Mortgage Constant = Mortgage Interest

Equity-to-Value Ratio x Equity Dividend Rate = Equity

Total Overall Rate

0.65 x 0.07195 = 0.04676

0.35 x 0.09000 = 0.03150

Total 0.07826

Overall Rate (Rounded) 7.80%

The Band of Investment calculations indicate a capitalization rate of approximately

7.80%. Our selection of a capitalization rate considers the subject’s location, current leases, annual escalations, and the current market conditions.

Based on conversations with retail brokers, investors and developers, the overall

consensus is that capitalization rates are on the decline. This is a result of the current low interest rate environment. We have placed primary weight on the improved sales with support from the Band of Investment as well as conversations with brokers active in the current market and concluded to an overall rate of 7.75% for the subject property under current market conditions.

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Terminal Capitalization Rates are typically 0 to 100 basis points above “going in”

capitalization rate. We have referred to national surveys for estimating a terminal capitalization rate.

The national survey has an average terminal capitalization rate approximately 63

basis points higher than the average “going in” rates. We have estimated a “going in” capitalization rate of 7.75%. Based on this analysis, an 8.25% terminal capitalization rate is applicable for the subject property. It should be noted that within our reversion calculations, we capitalized the net operating income and deducted for selling costs to arrive at a net reversion.

The DCF parameters are summarized as follows:

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DCF PARAMETERS

Discount Rate 10.00%

Effective Market Rental Rate $14.00/S.F., Triple Net – Local Space

Growth Rates Income 0%-yrs 1

1% - yr 2 2%- yr 3 3% - yrs 4-10

Expense 3%

Vacancy and Collection Loss 10% - Stabilized March 2013

Turnover Probability 35%/65%

Alterations) $2.00/S.F. - New Tenant (2nd Generation) $0.50/S.F. - Renewal

Tenant Alteration Escalation 3.00% Down Time 3 months – Yr. 1

2 months – Yr 2 1 month – Yr 3 0 months – Yrs. 4-10

Free Rent 3 months – Yr. 1

2 months – Yr 2 1 month – Yr 3 0 months – Yrs. 4-10

Leasing Commissions

New Leases 6%

Renewals 2%

Terminal Capitalization Rate 8.25%

Sales Expense 3%

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“AS IS” CASH FLOW EXCLUDING RENOVATION COSTS AND ENTREPRENEURIAL INCENTIVE

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“AS IS” PRESENT VALUE TABLE EXCLUDING RENOVATION COSTS AND ENTREPRENEURIAL INCENTIVE

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Summary The indicated value for the Discounted Cash Flow Analysis is illustrated as follows Yield Capitalization $26,949,000

It should be noted that this value excludes the entrepreneurial incentive that must be considered in taking the property from its current vacant state to a “Stabilized” level and the remaining costs to re-face the center. MARKET VALUE OPINION EXCLUDING RENOVATION COSTS AND ENTREPRENEURIAL INCENTIVE (RD.) $26,950,000

Market Value “As Is” Opinion Analysis

We were requested by the client to provide a Market Value “As Is” opinion for the subject. To determine the “As Is” value, deductions from the market value excluding renovation costs and entrepreneurial incentive are required. The subject is currently undergoing a renovation of on of the outparcel buildings and the re-facing of approximately half the center is scheduled for the near future. Deductions are necessary for the renovation costs as well as for the necessary profit required by an investor to take the property to a stabilized level.

We must estimate a profit amount for a prudent investor to take the property through the remaining stabilization period. Given that as of the date of this appraisal, 68,587 S.F. is vacant storefront with common areas in place, we must estimate a profit for taking the subject building from where it is today, leasing it up to a stabilized level. In a normalized market, the total profit required by an investor to take a project this size through absorption to a stabilized occupancy would generally range from 5% to 15%. Given the current market and the circumstances including the building’s prime location and anchor tenants, we have estimated the profit amount of approximately 5%, or $1,345,000 (rounded).

We have been provided with an old budget for completing the renovation of the

subject property. The exterior of the property was previously partially re-faced by the former owner prior to foreclosure. The current owners plan to finish the re-facing work.

We have not been provided new cost figures for the complete job, however we have

been provided with a current cost budget for the renovation of the exterior of one of the outparcel buildings. That current cost budget is summarized below:

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CENTER OF BONITA SPRINGS Outparcel 1 - Exterior Renovations - PHASE 1

8,046 S.F. Roofing (New Canopy) $7,600 $0.94 Stucco (Exterior E. & N. Walls) $15,658 $1.95 Storefront $21,500 $2.67 Canopy/Clock Framing-Labor-Mat. $23,550 $2.93 Demolition Exterior (Walls, Staircase, Ext. Doors) $29,250 $3.64 Concrete Form Work/Storefront Wall $17,425 Painting Exterior $4,500 $0.56 Electrical W/Fixtures Allowance $2,500 $0.31 Dumpsters Allowance $3,500 $0.43 Permits Allowance $4,500 $0.56 Subtotal: $129,983 $16.15

Contingency 3.5% $4,549 $0.57 General Contractor Fee 12% $16,144 $2.01 Subtotal $150,676 $18.73 Misc. Site Work - Phase 1 $10,640 Total Phase 1 Exterior $161,316 $20.05

According to the owner’s representatives, the majority of the soft costs were paid by

the former owners and as such the primary costs to finish the renovations are the hard costs. Excluding costs related to demolition, the exterior clock, and new wall construction, re-facing the outparcel would cost approximately $8.50 per square foot. The old cost numbers we were provided with totaled approximately $6.00 per square foot to finish re-facing the remainder of the center. We have applied $6.00, due to the size of the job and economies of scale, to the approximate remaining square footage of the center to be re-faced (163,954 S.F.) to estimate a total cost to complete the re-facing of the center. The amount still needed to be refaced, 163,954 S.F., multiplied by $6.00, equals a total re-facing cost of $983,724. Added to the cost of the Outparcel 1 renovation of $161,316, the total cost of renovating the remainder of the center is estimated at $1,145,000 (rounded).

Market Value “As Is” excluding Entrepreneurial Incentive $26,950,000 LESS: Renovation Costs ($1,145,000)LESS: Profit ($1,345,000)Market Value “As Is” $24,460,000

INDICATED RETROSPECTIVE MARKET VALUE “AS IS” OPINION VIA INCOME CAPITALIZATION APPROACH $24,460,000

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RECONCILIATION AND FINAL VALUE OPINIONS

We have used the two of the three traditional approaches to value the subject property, which resulted in the following value indications.

Retrospective Market Value “As Is” Opinion – Autozone

Outparcel

Retrospective Market Value “As

Is” Opinion –Shopping Center

SALES COMPARISON APPROACH N/A $25,855,000

INCOME CAPITALIZATION APPROACH $1,880,000 $24,460,000

The Cost Approach estimates value by analyzing comparable land sales and estimating the current cost of constructing the improvements, less any applicable depreciation. The Cost Approach is a reliable technique when appraising properties that are relatively new or proposed construction. Market participants and professional peers do not typically employ this approach when valuing properties similar in vintage to the subject, thus the Cost Approach was not used in our analysis. The Sales Comparison Approach is considered a reliable technique, as a number of comparable anchored shopping centers have recently sold. This approach involved comparing the subject property with the comparables and adjusting the comparables for varying physical and locational characteristics. This approach was given secondary weight. The Income Capitalization Approach is considered to be the most reliable indicator of value, as many investors look toward the Income Capitalization Approach in their purchasing decisions. The Income Capitalization Approach utilizes an analysis of the subject property’s projected income and expenses relative to the market and converts cash flows to value via direct capitalization and discounted cash flow analysis. Good market information was available with respect to comparable rental projects, and income and expense comparables, as well as capitalization rates. A Discounted Cash Flow analysis was used as this is the most applicable method used by investors of this type property and was given primary weight in our analysis.

Considering the foregoing commentary, and assuming a 12 month or less marketing period, it is our opinion the indicated market values of the property under appraisement, as of December 31, 2010, are summarized as follows.

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This value opinion reflects the occupancy and condition of the shopping center (287,277 S.F. of net rentable area) as of the effective date of appraisal, December 31, 2010, and represents the leased fee interest. The market data indicated exposure time of 12 months or less. Based on current conditions, we have estimated a marketing time of 12 months or less.





($1,880,000)

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A D D E N D A

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LEGAL DESCRIPTION

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SHOPPING CENTER

AUTOZONE

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INDIVIDUAL TENANT CASH FLOWS

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ENGAGEMENT LETTER/APPRAISAL GUIDELINES

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HENDRY REAL ESTATE

Advisors, Inc. APPRAISERS ● BROKERAGE ● CONSULTANTS

PROPERTY MANAGEMENT

OFFICES ● TAMPA ● MIAMI ● FORT MYERS

Haynes T. Hendry, MAI, President 1102 W. Cass Street [email protected] Tampa, Florida 33606 Florida Certified General Appraiser #RZ839 (813) 209-9616, Ext. 229 Georgia Certified General Appraiser #C004163 (813) 209-9515 (Fax) Florida Real Estate Broker #BK3008283 (813) 731-2812 (Cell) Captain’s License (OUPV)–Mariner #2797306 (305) 423-9616 (Miami) Mr Eyal Bartov, CFO February 28, 2011 Aviv Arlon Ltd. 7 Jabotinsky St. Ramt Gan Israel RE: Appraisal for the Center of Bonita Springs To Whom It May Concern:

We understand that the appraisal carried out by our firm dated February 3, 2011 will be used by Aviv Arlon Ltd. (“Aviv Arlon”) for the preparation of its annual financial statements 2010.

We consent to the use of our Appraisal report in Aviv Arlon financial statements.

Respectfully submitted,

HENDRY REAL ESTATE ADVISORS, INC.

Haynes T. Hendry, MAI President State-Certified General Appraiser #RZ839

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QUALIFICATIONS OF HAYNES T. HENDRY, MAI EDUCATION:

Emory at Oxford University, Georgia - 1981 Florida State University, Tallahassee, Florida -1985 B.S., Real Estate Appraisal Institute-continuous classes

DESIGNATIONS:

MAI Member, Appraisal Institute Currently certified, Member no. 8682

LICENSES:

Florida Real Estate Broker #BK3008283 Florida Real Estate Broker #BK3002402 Florida Certified General Appraiser #RZ839 Georgia Certified General Appraiser #C004163

Captain’s License (OUPV) - Mariner #2797306 MEMBERSHIPS:

Appraisal Institute, West Coast Florida Chapter Regional Ethics and Counseling Panel International Council of Shopping Centers

Commercial REO Brokers Association Real Estate Investment Council Greater Tampa Association of Realtors Salvation Army - Chairman of the Property Committee COURT TESTIMONY/EXPERT WITNESS:

Hillsborough County Circuit Court U.S. Bankruptcy Court (Middle District) State Court (Hillsborough, Pasco, Inverness, Sarasota, Palm Beach Counties)

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EXPERIENCE:

Analysis and appraisal of residential, commercial, industrial and special purpose properties; including condominiums, fractured condominiums, apartments, subdivisions, hotels, shopping centers, office buildings, warehouses, mobile home parks, warehouses, marinas, restaurants, car washes, concrete batch facilities, vacant land tracts 1 to 14,000 acres, etc., throughout the United States. Experience also includes market studies, discounted cash flow analysis, leasehold and leased fee interests, highest and best use studies, investment analysis, and litigation support.

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QUALIFICATIONS OF STEPHEN H. MCGUCKEN JR. EDUCATION University of Florida, Gainesville, FL 1997 Jesuit High School, Tampa, FL 1992 REAL ESTATE COURSES

Cooke School of Real Estate, Tampa, FL 2002 Salesperson Licensing Course Bob Hogue School of Real Estate, Tampa, FL 2003 Continuing Education for Salesperson Licensing Bob Hogue School of Real Estate, St. Petersburg, FL 2006 Course AB1 - Fundamentals of Real Property Appraisal Bob Hogue School of Real Estate, St. Petersburg, FL 2007 Course AB2 - Fundamentals of Real Property Appraisal

PROFESSIONAL LICENSES State of Florida Sales Associate SL3035248 State of Florida Registered Trainee Appraiser RI21382 EMPLOYMENT HISTORY

Hendry Real Estate Advisors, Inc., Tampa, Florida August 2006 to Present Registered Trainee Appraiser Prudential CRES of Tampa Bay, Inc

July 2002 to August 2006 Commercial real estate sales associate

Kay J. McGucken P.A. Law Clerk/Research Assistant January 1998 to July 2002

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EXPERIENCE Analysis of residential, commercial, and industrial properties, including multifamily

developments, shopping centers, office buildings, warehouses, and all types of vacant land. Experience also includes leasehold and leased fee interests, highest and best use studies, investment analysis and other similar assignments.