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Home My WebLink About17 - Establishing the Fair Market Value Per Acre for Assessing In Lieu Park Dedication FeesQ SEW Pp�T CITY OF z NEWPORT BEACH c�<,FORN'P City Council Staff Report October 8, 2024 Agenda Item No. 17 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Seimone Jurjis, Assistant City Manager/Community Development Director - 949-644-3232, sjurjis@newportbeachca.gov PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator - 949-644- 3236, Iwooding@newportbeachca.gov TITLE: Resolution No. 2024-75: Establishing the Fair Market Value Per Acre for Assessing In Lieu Park Dedication Fees ABSTRACT: Pursuant to Section 19.52.070 of the Newport Beach Municipal Code, the City of Newport Beach requires a subdivider of residential land projects containing 50 lots or less to either: (1) dedicate parkland as part of the development; (2) pay an in -lieu fee equal to the value of land required for parkland; or (3) a combination of the two. A fair market value update to the parkland in -lieu fee (Park In -Lieu Fee) was last approved by the City Council in 2020 under Resolution No. 2020-95. An update to the fair market value appraisal has been performed and an updated Park In -Lieu Fee was calculated. For the City Council's consideration is a resolution to approve an updated Park In -Lieu Fee. RECOMMENDATIONS: a) Find the adoption of this resolution is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment); and b) Adopt Resolution No. 2024-75, A Resolution of the City Council of the City of Newport Beach, California, Establishing the Fair Market Value Per Acre to be Used in Assessing In Lieu Park Dedication Fees Pursuant to Section 19.52.070 (Fee In Lieu of Dedication) of the Newport Beach Municipal Code and Rescinding Resolution No. 2020-95. DISCUSSION: Title 19 (Subdivisions) of the Newport Beach Municipal Code (NBMC) outlines the City's compliance with the Subdivision Map Act (Division 2 of Title 7 of the California Government Code), for the purpose of adopting tract and parcel maps while implementing the City's General Plan. Chapter 19.52 (Park Dedications and Fees) provides for the dedication of land, the payment of fees in lieu of dedication, or a combination of both, for park and recreational purpose in relation to residential developments in the City. 17-1 Resolution No. 2024-75: Establishing the Fair Market Value Per Acre for Assessing In Lieu Park Dedication Fees October 8, 2024 Page 2 Under Section 19.52.070 (Fee in Lieu of Dedication) of the NBMC, the required fee is applied to projects on a "per new residential unit" basis and is computed by multiplying the acreage of required parkland by the fair market value per acre. To help ensure this Park In -Lieu Fee maintains parity with current property valuations and appreciation, the fair market value per acre is to be established by a periodic appraisal prepared by the City. The City Council most recently approved an adjustment to the Park In -Lieu Fee in 2020, which established the current fee of $38,400 per new residential unit. Assessing and Calculating Fees In Lieu of Dedication California Government Code Section 66477 (the "Quimby Act") establishes the methodology for assessing and calculating parkland dedication and in -lieu fee requirements. Consistent with the Quimby Act, Title 19 of the NBMC requires park dedication, and/or payment of Park In -Lieu Fees, for residential subdivisions resulting in additional dwelling units. Park In -Lieu Fees are assessed as a condition to the approval of a tentative map or parcel map, and they are used to help fund the City's acquisition or rehabilitation of parkland to meet the park and recreational demands of new residential development. In accordance with the Quimby Act, if a proposed subdivision contains 50 parcels or fewer, the subdivider may pay an in -lieu fee equal to the value of parkland that would otherwise be required for dedication. If a proposed subdivision contains 50 parcels or more, the decision -making body shall determine whether land dedication, in -lieu fees, or a combination of the two shall be required. Pursuant to Title 19 of the NBMC, the following factors are to be used in the calculation of parkland dedication and fee requirements: • The City's established parkland dedication ratio of five acres of parkland per 1,000 people expected to reside in a subdivision, or 0.005 acres per person. • The average number of persons per household in the city based on data from the most recent available federal or state census, currently 2.23 persons per unit. • The per -acre value of land in the city as established by periodic appraisal. Using the factors listed above, the Park In -Lieu Fee per new residential unit can be calculated as follows: Park In -Lieu Fee Calculation Methodology = 0.005 acres per person X 2.23 persons per unit = 0.01115 acres of park land dedication per unit = 0.01115 acres of park land dedication X fair market land value per acre = Park In -Lieu Fee per unit 17-2 Resolution No. 2024-75: Establishing the Fair Market Value Per Acre for Assessing In Lieu Park Dedication Fees October 8, 2024 Page 3 The fee collected is based on the number of "for sale" residential units that have been added above what is currently existing. For example: an existing single-family dwelling is torn down and replaced with a two -unit condominium. The project applicant would pay a Park In -Lieu Fee equivalent to the one added unit. raisal to Determine Fair Market Land Value Per Acre Since 1979, the City has used an appraisal of Eastbluff Park to establish the fair market land value per acre to be used in setting the Park In -Lieu Fees. In 2006, the City appraised Eastbluff Park as well as a second park site, Bob Henry Park, to set the Park In -Lieu Fees. Consistent with the previous appraisals, the properties were appraised by CBRE Valuation & Advisory Services (CBRE) on July 30, 2024, assuming the sites had the following characteristics: • Multifamily residential zoning with no entitlements; • Maximum density of 14 dwelling units per acre; • Utilities available to the developments; • Sites assumed to be vacant and unimproved; • Sites assumed to have relatively level topography; and • Sites assumed to have no view potential. Since the subject fee applies to only residential subdivisions, multifamily residential use of the properties is assumed to establish the fair market value of vacant, residentially zoned land in the city. In preparation of this latest Park In -Lieu Fee update, staff considered which areas of the city were likely to be selected for new park sites. Staff determined West Newport and the Airport Area were appropriate given the limited existing park resources in these areas. Two additional sites were identified and appraised by CBRE to reflect the land values in these areas: • West Newport —An appraisal was prepared on August 7, 2024, based on the most likely property type to be acquired, a hypothetical industrially zoned property of 20,000 square feet. The appraisal assumes the site is to be acquired by the City to create a new park resource for the underserved area. • Airport Area — An appraisal was prepared August 13, 2024, based on the most likely property type to be acquired, a hypothetical mixed -use zoned property of 66,969 square feet with a maximum floor area ration of 0.5 and maximum residential density of 50 units per acre. The site characteristics were based on the average size and predominant land use in the Airport Area. Use of four appraised sites provides a more accurate representation of the average land values in different areas of the city. Table 1 on the next page contains the results of all four appraisals, and Table 2 shows the adjusted Park In -Lieu Fee if the appraisal results are used to establish fair market land value using the Park In -Lieu Fee Calculation Methodology outlined in the section above. 17-3 Resolution No. 2024-75: Establishing the Fair Market Value Per Acre for Assessing In Lieu Park Dedication Fees October 8, 2024 Page 4 Table 1 Appraisal Results Property Total FMV Cost Per Acre Eastbluff Park (13.87 acres) $82,450,000 $5,944,486 Bob Henry Park (4.80 acres) $30,150,000 $6,281,250 Hypothetical West Newport Industrial $1,900,000 $4,138,200 Property (0.46 acres) Hypothetical Airport Area Mixed -Use $7,700,000 $5,008,466 Property (1.54 acres) Average (4 sites) $5,343,100 Table 2 Park In -Lieu Fee Calculation 0.005 acres per person X 2.23 persons per unit = 0.01115 acres of park land dedication per unit 0.01115 acres X $5,343,100 FMV per acre _ $59,575.57 $59,575 (rounded) Park In -Lieu Fee per unit The proposed Park In -Lieu Fee of $59,575 per unit equates to an approximately 45% increase over the current fee of $38,400 per unit, established by the City Council in November 2020, or roughly an 11.25% increase per year. City Council Study Session and BIA Outreach During a City Council study session on Development Impact Fees on August 27, 2024, staff presented the proposed increase to the Park In -Lieu Fee. The Orange County Chapter of the Building Industry Association (BIA) of Southern California was also informed of the proposed update. While the BIA's feedback was generally positive, they expressed concerns about the significant 45% increase and requested that the City consider phasing in the fee over the next year. In response, staff proposes an incremental fee increase: raising the fee to $48,987 six months after the resolution is adopted and then to $59,575 one year after adoption. 17-4 Resolution No. 2024-75: Establishing the Fair Market Value Per Acre for Assessing In Lieu Park Dedication Fees October 8, 2024 Page 5 Park Fee Comparisons Staff conducted a survey of surrounding cities to analyze how parkland dedications and in -lieu fees are determined and to identify the current fee structures. It was noted that many of the cities surveyed prior to the 2020 fee adjustment have not updated their fees in recent years. Similar to the City of Newport Beach, the cities of Yorba Linda, Orange, Irvine, and Garden Grove establish their park in -lieu dedication fees based on the fair market value of land. • The City of Yorba Linda last updated its park in -lieu dedication fees in 2017. They are based on a fair market land value per acre, and the fee per single family unit is $16,716, and the fee per multifamily unit is $10,718. • The City of Orange calculates the fair market land value at the time a project is processed, using a formula of 3.0 acres per 1,000 residents to determine the required parkland dedication per unit. • Similarly, the City of Irvine requires a subdivider to obtain an appraisal at the time of their application, and the fee is based on the fair market land value of the property they are developing, their proposed density, and a factor of 2.0 acres per 1,000 people to determine the per unit requirement. • The City of Garden Grove also requires a fee reflecting the estimated cost of land acquisition required for park and recreation purposes, and as of February 12, 2019, the fee per single-family unit is $11,794, and the fee per multifamily unit is $9,804. Other cities like Costa Mesa and Los Angeles base their park dedication fees on projected demographic growth, and future demand for park and recreation facilities as the population increases. Development Agreements and Housing Accountability Act If the resolution is adopted, the amount of annual Park In -Lieu Fees collected would increase for those projects that are not approved under an existing development agreement or have not had their preliminary applications for residential development deemed complete. Development agreements can lock in the Park In -Lieu Fee rate at the time the agreements are approved. Under the Housing Accountability Act, developers can submit a preliminary application to lock in established fees in effect at the time a complete application is submitted; however, increases are allowed resulting from an automatic annual adjustment based on an independent public cost index that is referenced in the ordinance or resolution establishing the fee. 17-5 Resolution No. 2024-75: Establishing the Fair Market Value Per Acre for Assessing In Lieu Park Dedication Fees October 8, 2024 Page 6 FISCAL IMPACT: The amount of Park In -Lieu Fees collected fluctuates year to year. It is anticipated the amount of Park In -Lieu Fees collected will go up over the next few years, but it is difficult to estimate the amount. The fees are posted to the Facilities Financing Plan Fund (Fund 513, ORG 51303), and into a Park Fee Zone account (zones 1-12) based on the location of the particular project. Park In -Lieu Fee payments for large projects are budgeted by the Community Development Department each fiscal year, and revenues from smaller projects are also received throughout the year. The Park In -Lieu Fee program has funded the development of many parks, such as Grant Howald Park, Sunset View Park, and Marina Park. ENVIRONMENTAL REVIEW: Staff recommends the City Council find adoption of the resolution is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). ATTACHMENTS: Attachment A — Resolution No. 2024-75 Attachment B — CBRE Appraisal Report — Eastbluff Park, dated July 30, 2024 Attachment C — CBRE Appraisal Report — Bob Henry Park, dated July 30, 2024 Attachment D — CBRE Appraisal Report — Hypothetical Property in West Newport, dated August 7, 2024 Attachment E — CBRE Appraisal Report - Hypothetical Property in Airport Area, dated August 13, 2024 17-6 Attachment A Resolution No. 2024-75 17- 7 RESOLUTION NO. 2024- 75 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, ESTABLISHING THE FAIR MARKET VALUE PER ACRE TO BE USED IN ASSESSING IN LIEU PARK DEDICATION FEES PURSUANT TO SECTION 19.52.070 (FEE IN LIEU OF DEDICATION) OF THE NEWPORT BEACH MUNICIPAL CODE AND RESCINDING RESOLUTION NO. 2020-95 WHEREAS, Chapter 19.52 (Park Dedications and Fees) of the Newport Beach Municipal Code ("NBMC") establishes a parkland dedication standard of five acres per thousand population expected to reside in new residential subdivisions in the City of Newport Beach ("City"); WHEREAS, Section 19.52.050(B) (Determination of Land or Fee — In Lieu Fee) of the NBMC requires the subdivider pay an in lieu fee equal to the value of land required for dedication for subdivisions containing 50 lots or less; WHEREAS, Section 19.52.050(C) (Determination of Land or Fee — Both Dedication and Fee) of the NBMC allows the decision -making body to require land dedication, an in lieu fee, or a combination of the two for subdivisions containing more than 50 lots; WHEREAS, Section 19.52.070 (Fee in Lieu of Dedication) of the NBMC establishes that when a fee is required to be paid in lieu of land dedication, that fee shall be equal to the acreage of land which would otherwise be required to be dedicated, multiplied by the fair market value per acre as established by periodic appraisal prepared by the City ("In Lieu Park Dedication Fee"); WHEREAS, the City has retained a qualified appraiser to update and establish the fair market value per acre; WHEREAS, the results of the appraisals of two park sites, one commercial industrial property, and one mixed -use property in the City have established an average value of $5,343,100 as the fair market value per acre; WHEREAS, said fair market value would establish an In Lieu Park Dedication Fee of $59,575.57 per new residential unit created by an approved subdivision; 17-8 Resolution No. 2024- Page 2 of 3 WHEREAS, Resolution No. 2020-95 previously established the fair market value per acre to be used in computing In Lieu Park Dedication Fee, and said Resolution is to be hereby superseded and rescinded; and WHEREAS, the City Council has reviewed the appraisal reports and determines the average fair market cost per acre to be appropriate. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The amount of $5,343,100 is the fair market value per acre to be used in assessing In Lieu Park Dedication Fee pursuant to Chapter 19.52 (Park Dedications and Fees) of the NBMC. Section 2: The amount of $59,575 per new residential unit created by an approved subdivision is the fair market value in assessing In Lieu Park Dedication Fee pursuant to Chapter 19.52 (Park Dedications and Fees) of the NBMC. Section 3: The In Lieu Park Dedication Fee established herein shall be set at $59,575 per unit following approval of this resolution. Section 4: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. This resolution supersedes and replaces Resolution No. 2020-95 and any other resolution that conflicts with the fee amount and adjustments provided in the previous sections. Section 5: The City Council finds the adoption of this resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. 17-9 Resolution No. 2024- Page 3 of 3 Section 6: If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 7: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 8th day of October, 2024. Will O'Neill Mayor ATTEST: Leilani I. Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE '0 . Aar n C. Harp City Attorney 17-10 Attachment B CBRE Appraisal Report — Eastbluff Park, dated July 30, 2024 17-11 CBRE Valuation & Advisory Services Appraisal Report EASTBLUFF PARK 2555 Vista del Oro Newport Beach, California 92660 Prepared for: City of Newport Beach Date of Report: July 30, 2024 CBRE File No.: CB24US044895-2 cbrexom/valuation 17-12 CBRE Valuation & Advisory Services CBRE 5921 Owensmouth Avenue Woodland Hills, CA 91367 T (818)251-3600 www.cbre.com/valuation Date of Report: July 30, 2024 Ms. Lauren Wooding Whitlinger Real Property Administrator CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 RE: Appraisal of: Eastbluff Park 2555 Vista del Oro Newport Beach, Orange County, California CBRE File No.: CB24USO44895-2 Dear Ms. Wooding Whitlinger: At your request and authorization, CBRE, Inc. has prepared an appraisal of the fair market value of the referenced property. Our analysis is presented in the following Appraisal Report. The subject is currently improved with Eastbluff Park and contains an area of 13.87 acres or 604,177 square feet. The property is zoned PR, Parks and Recreation. We have been instructed by our client to assume the site is vacant and zoned for multifamily residential with a maximum density of 14 dwelling units per acre. Therefore, none of the park equipment or improvements were considered in this analysis. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. Based on the analysis contained in the following report, the fair market value of the subject is concluded as follows: FAIR MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $82,450,000 Compiled by CBRE This Appraisal Report is subject to Extraordinary Assumptions and/or Hypothetical Conditions; please refer to the Executive Summary section of this report for further discussion and analysis. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. CBRE VALUATION & ADVISORY SERVICES 1 © 2024 CBRE, INC 17-13 CBRE Valuation & Advisory Services The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non -intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof). It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES ";W 2ZL__ Tom Richardson, MAI Title: VAS - Vice President Phone: (818) 251-3643 Email: Tom. Richardson1@cbre.com License No. & State: 3004940 CA Beth Finestone, MAI, AI-GRS, FRICS, CRE Title: VAS - Executive Vice President Phone: (818) 251-3669 Email: Beth.Finestone@cbre.com License No. & State: AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-14 Certification Certification We certify to the best of our knowledge and belief: 1 . The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have not provided any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. We completed an appraisal of the subject in August 2019. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our 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. 8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice. 9. Tom Richardson has made a personal inspection of the property that is the subject of this report. Beth Finestone, MAI, AI-GRS, FRICS, CRE has not made a personal inspection of the property that is the subject of this report. 10. No one provided significant real property appraisal assistance to the persons signing this certification. 11. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have completed the continuing education program for Designated Members of the Appraisal Institute. Tom Richardson, MAI Certified General 3004940 CA Beth Finestone, MAI, AI-GRS, FRICS, CRE Certified General AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-15 Subject Photographs Subject Photographs CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-16 r of _'• i �� • �il o •'�Y . � _ � ;... ✓ , ETELUFF ')ARK _ a d �' •a View of park Looking west from middle of subiect. I Looking west from eastern portion of subject. ter, 'a -' 4 4} i ffi Looking east from middle of su Vista Del Oro looking south. ■Vista Del Oro looking north. Executive Summary Executive Summary Property Name Eastbluff Park Location 2555 Vista del Oro Newport Beach, Orange County, CA 92660 Parcel Number(s) 440-161-01 Client City of Newport Beach Highest and Best Use As If Vacant Multifamily use Property Rights Appraised Fee Simple Estate Date of Inspection July 23, 2024 Estimated Exposure Time 6 - 12 Months Estimated Marketing Time 6 - 12 Months Primary Land Area 13.87 AC 604,177 SF Zoning PR, Parks and Recreation Buyer Profile Developer CONCLUDED FAIR MARKET VALUE Appraisal Premise Interest Appraised Date of Value Value Fair Market Value Fee Simple Estate July 23, 2024 $82,450,000 Compiled by CBRE Strengths, Weaknesses, Opportunities and Threats (SWOT) Weaknesses/ Threats • Commercial real estate market conditions have deteriorated at the macro level. The significant recent increase in the cost of capital and reduced volume of transaction activity is impacting price discovery and creating an increase in uncertainty. Increasing interest rates and subdued economic growth will continue to weigh on commercial real estate fundamentals and investment transaction volumes. This creates a higher degree of uncertainty in general, though the impacts may vary by market and asset class/type. Market Volatility We draw your attention to a combination of inflationary pressures (leading to higher interest rates) and recent failures/stress in banking systems which have significantly increased the potential for constrained credit markets, negative capital value movements and enhanced volatility in property markets over the short -to -medium term. Experience has shown that consumer and investor behavior can quickly change during periods of such heightened volatility. Lending or investment decisions should reflect this heightened level of volatility and the potential for deteriorating market conditions. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-18 Executive Summary It is important to note that the conclusions set out in this report are valid as of the valuation date only. Where appropriate, we recommend that the valuation is closely monitored, as we continue to track how markets respond to evolving events. Extraordinary Assumptions An extraordinary assumption is defined as "an assignment -specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions." 1 • The subject Eastbluff Park is a highly irregularly shaped parcel. The irregular shape could impact its development potential. Because the intended use of this appraisal is to set park in -lieu fees, we have not considered the shape of the subject when adjusting the comparables. Hypothetical Conditions A hypothetical condition is defined as "a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results but is used for the purposes of analysis." 2 • The client requested that the subject property be appraised assuming the site were vacant unimproved residential land at a density of 14 units per acre. Therefore, none of the park equipment or improvements were considered in this analysis. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. The use of this hypothetical condition may have affected the assignment results. Ownership and Property History The subject is owned by the City of Newport Beach. CBRE is unaware of any arm's length ownership transfers of the property within three years of the date of appraisal. Further, the property is not reportedly being offered for sale as of the current date. Exposure/Marketing Time Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. The following table presents our estimates. 1 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) 2 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) CBRE VALUATION & ADVISORY SERVICES v © 2024 CBRE, INC 17-19 Executive Summary EXPOSURE/MARKETING TIME DATA Exposure/Mktg. (Months) Investment Type Range CBRE Exposure Time Estimate 6 - 12 Months CBRE Marketing Period Estimate 6 - 12 Months Various Sources Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES vi © 2024 CBRE, INC 17-20 Table of Contents Table of Contents Certification........................................................................................................................................................................ i SubjectPhotographs...................................................................................................................................................... ii ExecutiveSummary....................................................................................................................................................... iv Tableof Contents..........................................................................................................................................................vii Scopeof Work....................................................................................................................................................................1 AreaAnalysis....................................................................................................................................................................5 NeighborhoodAnalysis..................................................................................................................................................7 SiteAnalysis......................................................................................................................................................................9 Zoning.................................................................................................................................................................................13 Taxand Assessment Data..........................................................................................................................................15 MarketAnalysis..............................................................................................................................................................16 Highestand Best Use....................................................................................................................................................21 LandValue.......................................................................................................................................................................22 Reconciliationof Value................................................................................................................................................27 Assumptions and Limiting Conditions...................................................................................................................28 ADDENDA A Land Sale Data Sheets B Qualifications CBRE VALUATION & ADVISORY SERVICES vii © 2024 CBRE, INC 17-21 Scope of Work Scope of Work This Appraisal Report is intended to comply with the real property appraisal development and reporting requirements set forth under Standards Rule 1 and 2 of USPAP. The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered, and analysis is applied. Intended Use Of Report The intended use of the appraisal is to assist the City of Newport Beach in establishing Park In -Lieu fees and no other use is permitted. Client The client is the City of Newport Beach. Intended User Of Report This appraisal is to be used by the City of Newport Beach. No other user(s) may rely on our report unless as specifically indicated in this report. Intended users are those who an appraiser intends will use the appraisal or review report. In other words, appraisers acknowledge at the outset of the assignment that they are developing their expert opinions for the use of the intended users they identify. Although the client provides information about the parties who may be intended users, ultimately it is the appraiser who decides who they are. This is an important point to be clear about: The client does not tell the appraiser who the intended users will be. Rather, the client tells the appraiser who the client needs the report to be speaking to, and given that information, the appraiser identifies the intended user or users. It is important to identify intended users because an appraiser's primary responsibility regarding the use of the report's opinions and conclusions is to those users. Intended users are those parties to whom an appraiser is responsible for communicating the findings in a clear and understandable manner. They are the audience. 3 Reliance Language Reliance on any reports produced by CBRE under this Agreement is extended solely to parties and entities expressly acknowledged in a signed writing by CBRE as Intended Users of the respective reports, provided that any conditions to such acknowledgement required by CBRE or hereunder have been satisfied. Parties or entities other than Intended Users who obtain a copy of the report or any portion thereof (including Client if it is not named as an Intended User), whether as a result of its direct dissemination or by any other means, may not rely upon any opinions or conclusions contained in the report or such portions thereof, and CBRE will not be responsible for any unpermitted use of the report, its conclusions or contents or have any liability in connection therewith. 3 Appraisal Institute, The Appraisal of Real Estate, 151h ed. (Chicago: Appraisal Institute, 2020), 40. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-22 Scope of Work Purpose of the Appraisal The purpose of this appraisal is to develop an opinion of the fair market value of the land associated with the subject, assuming it is vacant, unimproved land as of the effective date of the appraisal. Definition of Fair Market Value "Fair Market Value", as defined pursuant to Part 3, Title 7, Chapter 9, Article 4, of the California Code of Civil Procedure, entitled: Eminent Domain Law, is as follows: Fair Market Value ... Article 4. Measure of Compensation for Property Taken. 1263.320 (a) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (b) The fair market value of the property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method valuation that is just and equitable. 1263.330 The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: (a) The project for which the property is taken. (b) The eminent domain proceeding in which the property is taken. (c) Any preliminary actions of the plaintiff relating to the taking of the property. Interest Appraised The value estimated represents Fee Simple Estate as defined below: Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. 4 Extent to Which the Property is Identified The property is identified through the following sources: • Postal address • Assessor's records • Legal description 4 Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022), 73. CBRE VALUATION & ADVISORY SERVICES 2 © 2024 CBRE, INC 17-23 Scope of Work Extent to Which the Property is Inspected Tom Richardson, MAI conducted an on -site inspection of the subject, as well as its surrounding environs on the effective date of appraisal. This inspection was considered adequate and is the basis for our findings. Type and Extent of the Data Researched CBRE reviewed the following: • Applicable tax data • Zoning requirements • Flood zone status • Demographics • Comparable data Type and Extent of Analysis Applied CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. For vacant land, the sales comparison approach has been employed for this assignment. Statement of Competency The appraisers have the appropriate knowledge, education, and experience to complete this assignment competently. Appraisal Methodology In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. Depending on a specific appraisal assignment, any of the following four methods may be used to determine the market value of the fee simple interest of land: • Sales Comparison Approach; • Income Capitalization Procedures; • Allocation; and • Extraction. The following summaries of each method are paraphrased from the text. The first is the sales comparison approach. This is a process of analyzing sales of similar, recently sold parcels in order to derive an indication of the most probable sales price (or value) of the property being appraised. The reliability of this approach is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data regarding size, price, terms of sale, etc., (c) the degree of comparability or extent of adjustment necessary for differences between the subject and the comparables, and (d) the absence of nontypical conditions affecting the sales price. This is the primary and most reliable method used to value land (if adequate data exists). The income capitalization procedures include three methods: land residual technique, ground rent capitalization, and Subdivision Development Analysis. A discussion of each of these three techniques is presented in the following paragraphs. CBRE VALUATION & ADVISORY SERVICES 3 © 2024 CBRE, INC 17-24 Scope of Work The land residual method may be used to estimate land value when sales data on similar parcels of vacant land are lacking. This technique is based on the principle of balance and the related concept of contribution, which are concerned with equilibrium among the agents of production--i.e. labor, capital, coordination, and land. The land residual technique can be used to estimate land value when: 1) building value is known or can be accurately estimated, 2) stabilized, annual net operating income to the property is known or estimable, and 3) both building and land capitalization rates can be extracted from the market. Building value can be estimated for new or proposed buildings that represent the highest and best use of the property and have not yet incurred physical deterioration or functional obsolescence. The subdivision development method is used to value land when subdivision and development represent the highest and best use of the appraised parcel. In this method, an appraiser determines the number and size of lots that can be created from the appraised land physically, legally, and economically. The value of the underlying land is then estimated through a discounted cash flow analysis with revenues based on the achievable sale price of the finished product and expenses based on all costs required to complete and sell the finished product. The ground rent capitalization procedure is predicated upon the assumption that ground rents can be capitalized at an appropriate rate to indicate the market value of a site. Ground rent is paid for the right to use and occupy the land according to the terms of the ground lease; it corresponds to the value of the landowner's interest in the land. Market -derived capitalization rates are used to convert ground rent into market value. This procedure is useful when an analysis of comparable sales of leased land indicates a range of rents and reasonable support for capitalization rates can be obtained. The allocation method is typically used when sales are so rare that the value cannot be estimated by direct comparison. This method is based on the principle of balance and the related concept of contribution, which affirm that there is a normal or typical ratio of land value to property value for specific categories of real estate in specific locations. This ratio is generally more reliable when the subject property includes relatively new improvements. The allocation method does not produce conclusive value indications, but it can be used to establish land value when the number of vacant land sales is inadequate. The extraction method is a variant of the allocation method in which land value is extracted from the sale price of an improved property by deducting the contribution of the improvements, which is estimated from their depreciated costs. The remaining value represents the value of the land. Value indications derived in this way are generally unpersuasive because the assessment ratios may be unreliable and the extraction method does not reflect market considerations. For the purposes of this analysis, we use only the sales comparison approach in developing an opinion of value for the subject. This approach is applicable to the subject because there is an active market for similar properties, and sufficient sales data is available for analysis. The cost approach is not applicable because we have been instructed to value the site as if it is vacant land and therefore, we do not consider any of the improvements. The income approach is not applicable because the subject is not likely to generate rental income in its current state. CBRE VALUATION & ADVISORY SERVICES 4 © 2024 CBRE, INC 17-25 Area Analysis Area Analysis hawinorne Norwalk Compton Fullerton Torrance Carson Anaheim f L M7 GB Orange Long Beach qW Westminster Santa Ana � v Huntington Irvine Beach Newport Beach O IBlawdbo: 71 Corona Lak Lake Forest Mission Viejo 74 74 Laguna Niguel San Mateo Canyon Wilderness San Clemente I Map[— rC�enS[reef Map The subject is located in Orange County. Key information about the area is provided in the following tables. Population The area has a population of 3,171,875 and a AREA POPULATION BYAGE median age of 40, with the largest population 500,000 group in the 20-29 age range and the smallest 400,000 00,000 population in 80+ age range. 300,000 100,000 I ' 0 Source: ESRI 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80+ Population has increased by 161,664 since 2010, POPULATION BY YEAR reflecting an annual increase of 0.4%. Population 4,000,000 is projected to decrease by 2,549 between 2024 3,000,000 and 2029, reflectinga 0.0% annual population P p 2,000,000 decline. 1,000,000 0 Source: ESRI 2010 Source: ESRI, downloaded on Jul, 25 2024 CBRE VALUATION & ADVISORY SERVICES 5 2024 2029 © 2024 CBRE, INC 17-26 Area Analysis Income The area features an average household income of $157,826 and a median household income of $112,796. Over the next five years, median household income is expected to increase by 15.0%, or $3,394 per annum. Education A total of 46.2% of individuals over the age of 24 have a college degree, with 29.2% holding a bachelor's degree and 16.9% holding a graduate degree. Employment MEDIAN INCOME BY YEAR $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Source: ESRI 2024 2029 POPULATION BY DEGREE ■ Bachelor's Degree ■ Graduate Degree ■ Other Source: ESRI Health Care/Social Assistance Manufacturing Prof/Scientific/Tech Services Retail Trade Educational Services Accommodation/Food Services Construction Finance/Insurance Other Services (excl Publ Adm) Admin/Support/Waste Mgmt Srvcs Source: ESRI 0% 2% 4% 6% 8% 10% 12% 14% The area includes a total of 1,627,211 employees. The top three industries within the area are Health Care/Social Assistance, Manufacturing and Prof/Scientific/Tech Services, which represent a combined total of 35% of the workforce. Source: ESRI, downloaded on Jul 25, 2024; BLS.gov dated Jan 0, 1900 In summary, the area is forecasted to experience a decrease in population and an increase in household income. CBRE VALUATION & ADVISORY SERVICES 6 © 2024 CBRE, INC 17-27 Neighborhood Analysis Neighborhood Analysis Adams Ave John Wayne Airport ryy' SANTAANA COUNTRY SAN JOAOUIN + Costa Mesa CLUB O + MARSH UNIVERS PARK Fairview QC, UCI Medical Center- Developmental UPPER BAY Irvine - North Campus ; Center Thurin Santa Ana TURTLE Victoria St Heights ROCK VISI y c?� UNIVERSITY OF CALIFORNIA p W 19th St n �. ° D CPm T U F o '9�d2i Sr e ©,TBLUFF 73 RC OAP PSds �PJ o gfh Sf f ,\C eserve D O DOVER BONITA o 55 aft SHORES CANYON A( R010,6 TURTLE HARBOR tiPiL RIDGE COas�H HEIGHTS ;HARBOR BIG CANYON �o hY !0 COVE HABOR VIEW O d CLIFF HAVENBAYSIDE NEWPORT HARBOR 6NEWPORT portBeach ""VILLAGE NEWPORT HILLS RIDGE', o CENTER ILLAGE San Joaquin Hills BALBOA TESORO weay'4te ISLAND ©Mapbox. ©OpenStreetMap Location The subject is in the city of Newport Beach and is considered a suburban location. The city of Newport Beach is situated in southern Orange County. Boundaries The subject is located in a primarily residential area within the City of Newport Beach. This area is generally delineated as follows: North: Upper Newport Bay South: West Coast Highway / State Route 1 East: MacArthur Boulevard West: Upper Newport Bay Land Use In the immediate vicinity of the subject, land uses include a mix of residential and commercial. Access Primary access to the area is provided by Jamboree Road and MacArthur Boulevard, major arterials that cross Orange County in a north/south direction. Access to the subject from Jamboree Road is provided CBRE VALUATION & ADVISORY SERVICES 7 © 2024 CBRE, INC 17-28 Neighborhood Analysis by Eastbluff Drive. Access to the subject from MacArthur Boulevard is provided by University Drive, which becomes Eastbluff Drive at Jamboree Road. Overall, vehicular access is average. Public transportation is provided by Orange County Transportation Authority. The nearest bus stop is located at the intersection of Eastbluff Drive and Vista Del Sol, approximately 500 feet east of the subject. The local market perceives public transportation as average compared to other areas in the region. However, the primary mode of transportation in this area is the automobile. John Wayne Airport is located about three miles northeast from the property. Demographics Selected neighborhood demographics in 1-, 3- and 5-mile radius from the subject are shown in the following table: SELECTED NEIGHBORHOOD DEMOGRAPHICS 2555 Vista del Oro 1 Mile Radius 3 Mile Radius 5 Mile Radius California Orange County Newport Beach, CA 92660 Population 2029 Total Population 10,764 152,360 353,590 39,717,178 3,169,326 2024 Total Population 10,828 151,301 347,686 39,530,491 3,171,875 2010 Total Population 10,656 141,406 322,406 37,253,959 3,010,211 2000 Total Population 9,600 132,419 298,017 33,871,651 2,846,214 Annual Growth 2024 - 2029 -0.12% 0.14% 0.34% 0.09% -0.02% Annual Growth 2010 - 2024 0.11 % 0.48% 0.54% 0.42% 0.37% Annual Growth 2000 - 2010 1.05% 0.66% 0.79% 0.96% 0.56% Households 2029 Total Households 5,015 63,493 143,923 13,903,885 1,123,363 2024 Total Households 4,913 61,200 136,878 13,641,471 1,090,541 2010 Total Households 4,922 57,790 124,666 12,577,497 992,769 2000 Total Households 4,723 52,917 114,690 11,502,868 935,264 Annual Growth 2024 - 2029 0.41 % 0.74% 1.01 % 0.38% 0.59% Annual Growth 2010 - 2024 -0.01 % 0.41 % 0.67% 0.58% 0.67% Annual Growth 2000 - 2010 0.41 % 0.88% 0.84% 0.90% 0.60% Income 2024 Median Household Income $152,459 $123,456 $118,322 $97,646 $112,796 2024 Average Household Income $213,313 $183,072 $171,903 $139,308 $157,826 2024 Per Capita Income $97,473 $74,230 $67,907 $48,206 $54,311 2024 Pop 25+ College Graduates 5,833 65,335 144,683 10,659,207 1,035,382 Age 25+ Percent College Graduates - 2024 71.4% 61.7% 59.2% 38.8% 46.2% Source: ESRI Conclusion In keeping with the principle of conformity, we expect neighborhood land uses to continue to be suburban, similar to the present use. A generally negative population growth rate is expected in the near future. This is a negative indicator for real estate demand. However, the limited supply of available property combined with macroeconomic conditions will continue to bolster the local real estate market. CBRE VALUATION & ADVISORY SERVICES 8 © 2024 CBRE, INC 17-29 Site Analysis Site Analysis The following chart summarizes the salient characteristics of the subject site. SITE SUMMARY AND ANALYSIS Physical Description Gross Site Area Net Site Area Primary Road Frontage Shape Topography Parcel Number(s) Zoning District Flood Map Panel No. & Date Flood Zone Utilities Water Sewer Natural Gas Electricity Telephone/Cable/Internet Mass Transit Various sources compiled by CBRE Location 13.87 Acres 604,177 Sq. Ft. 13.87 Acres 604,177 Sq. Ft. Vista Del Oro 1,192 Feet Irregular Level, At Street Grade 440-161-01 PR, Parks and Recreation 06059CO269K 21-Mar-19 Zone X(Unshaded) Availability Comments Yes City of Newport Beach Yes City of Newport Beach Yes Southern California Gas Company Yes Southern California Edison Yes Various Yes OCTA The subject is on the west side of Vista Del Oro at its intersection with Vista Del Sol. Land Area The land area size was obtained via the Orange County Assessor's plat map. The site is considered adequate in terms of size and utility. There is no unusable, excess or surplus land area. Shape and Frontage The site is a highly irregularly shaped parcel with frontage along one thoroughfare. The irregular shape could impact its development potential. However, because the intended use of this appraisal is to set park in -lieu fees, we have not considered the shape of the subject when adjusting the comparables. Ingress/Egress Ingress and egress are available to the subject from three curb cuts along Vista Del Oro. Vista Del Oro, at the subject, is a north/south street that has a dedicated width of 60 feet and is improved with one lane of traffic in each direction. Street improvements include asphalt paving and concrete curbs, gutters and sidewalks, and street lighting. Street parking is permitted. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-30 Site Analysis Topography and Drainage The site is generally level and at street grade. The topography of the site is not seen as an impediment to the development of the property. During our inspection of the site, we observed no drainage problems and assume that none exist. Soils A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soils report, it is a specific assumption that the site has adequate soils to support the highest and best use. Easements and Encroachments We were not provided a current title report to review. There are no known easements or encroachments impacting the site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision. Covenants, Conditions and Restrictions There are no known covenants, conditions or restrictions impacting the site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a copy of the current covenants, conditions and restrictions, if any, prior to making a business decision. Utilities and Services The site includes all municipal services, including police, fire and refuse garbage collection. All utilities are available to the site in adequate quality and quantity to service the highest and best use. Environmental Issues Although CBRE was not provided an Environmental Site Assessment (ESA), a tour of the site did not reveal any obvious issues regarding environmental contamination or adverse conditions. Adjacent Properties The adjacent land uses are summarized as follows: North: Multifamily residential and Eastbluff Elementary School South: Multifamily residential East: Mix of commercial and multifamily residential West: Upper Newport Bay State Marine Conservation Area Conclusion The subject is irregularly shaped and narrow in the middle of the site, however, we assume that this would not impact the development of the site to a density of 14 units per acre. We are not aware of any other particular restrictions on development. CBRE VALUATION & ADVISORY SERVICES 1( © 2024 CBRE, INC 17-31 Site Analysis mat neap pS WP WAS PPEPAPEO EOP OPANGE COIINiT SSESSOP OEPT. PUPPOSFSONLY. THE ASEES 440— SOP WNES XO GUAPAMTEE ASTOPSACCUPACY XOP ASSUYESAMY LIABIffY FOPOMEP USES PAGE I OF 4 �OV�FIGM O�PAX�GEEWUNrvP�S'SE OPFPVEC. PEL Bp�SA VISTA 22 N /RV/NE OI<�+s iaaa O V/STA EASTBLOFF PARK 8 OEL $OL O SLK. 52 /3.BT AC. PoR. LOT 223 BTREET A t°^' TRACT 161 O LOTRi 9 4, SEE PAGE P SUB. =1 4 N0. 6230 E Jlsrps 6 33 32 MARCH /969 /RV/NE SUB. M. M. /-88 NOTE - ASSESSOR'S BLOCK 8 ASSESSOR'S MAP TRACT N0. 6230 MM. 245-10 TO/3/NC. PARCEL NUMBERS BOOK440PAGE 16 O SHOWN IN CIRCLES COUNTY OF ORANGE CBRE VALUATION & ADVISORY SERVICES 11 C 2024 CBRE, INC 17-32 Site Analysis rivva ruin avid National Flood Hazard Layer FIRMette ;FF.MA I I =ssl rv, ss-,asvry 0 260 600 1.000 1.600 2.000 V V axwRx �� aow�p: uacs rJx�w m w rasa Legend xs�xa�r �s<FHaa Dcwran fe Fq 5R ML FL D YNJ'BFEe.byN �,tc,tox=.uc wa Nla]p.RDAREAS H—o Cl" Al —I CM.— Fkea 4anr0. 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THs FENAY utMoeas rer Jae emu• d oi$�al Need pa ps i+eisna wia es acvai Fsw Fsdew Tlt baswvpsNown mr'ciicsrdN FENAY bascpap Tlt naea w,a�a Mreanarien is aad,� aE�ar+A�,lt o��Nona�x 4 FN i wds scrntcs po.ioca lsr FENA TNa n5op was spenca v� "fY15 rA01 et Ye8"N ero Hats na. ralc[a H-WH ercwiaagxns abscoo-arw J�'saax caa pc. TXc 4 FH F oro crccoix inro�moron par d'arrYc v lScwMc wperscom Er ncwoow THs papipa Yc is.va T rR opt v morc or.}c rolHwi�y pap de�enm oe Her rxxw: eaurxe ipa�rr. naeo Ana lebds Ic W smlc 1pap 4care.owc oero'wmArr ioarNcr; F IFH pond nrpixr, Fna FIR H crccoix Dort. Nopipags ror .�rwpxo rno rnpcocA.co a�cas an�ar be rsco+or �nwrr y,rpas�. CBRE VALUATION & ADVISORY SERVICES 12 © 2024 CBRE, INC 17-33 Zoning Zoning The subject is currently zoned PR, Parks and Recreation. However, we have been instructed by our client to assume the site is vacant and zoned for multifamily residential with a maximum density of 14 dwelling units per acre. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. The following chart summarizes the subject's zoning requirements. ZONING SUMMARY Current Zoning PR, Parks and Recreation Legally Conforming Yes Zoning Change Yes Category Zoning Requirement Minimum Lot Size None specified Minimum Lot Width None specified Maximum Height None specified Maximum Density Assume 14 dwelling units per acre Source: Newport Beach Planning and Zoning Dept. Conclusion Additional information may be obtained from the appropriate governmental authority. For purposes of this appraisal, CBRE has assumed the information obtained is correct. CBRE VALUATION & ADVISORY SERVICES 13 © 2024 CBRE, INC 17-34 Zoning Zoning Map Layers ❑CaMldzlnctz .r �?��9� y� "N.f � Y�, avcna��5x> fig.. �� ❑ Enxronm-Wyareas > a, .,q lil+/`//•r�a.u'i;J Ir + D FiM VUMir PoaE ROB O R.y $ $ p � fbotl zara ElNatia+CeRz �'Y.,) , R \VV/ � 9ry h ❑ una v:e man u.m. om bF' � � LeM Blower Fxmp[ > /OS F A> �°➢ ... O 2 o _ omn st a' El snort -re— Wsire es 0sron �e� �i�ad+3 � :5 aa� m3 a„ $a os E VI SlwMine HegM limitation s O-ntlmak p zoning man � �� -la + p Wt E�eaaa wentaorvar N w+ � `�/�-/`j1J'� p .rest Mave,fos CBRE VALUATION & ADVISORY SERVICES 14 © 2024 CBRE, INC 17-35 Tax and Assessment Data Tax and Assessment Data In California, privately held real property is typically assessed at 100% of full cash value (which is interpreted to mean market value of the fee simple estate) as determined by the County Assessor. Generally, a reassessment occurs only when a property is sold (or transferred) or when new construction occurs (as differentiated from replacing existing construction). In the case of long-term ground leases, the general rule is that a reassessment is made at the time of assigning or terminating a lease where the remaining term is more than 35 years. For reassessment purposes, the lease term includes all options to extend. Assessments for properties that were acquired before the tax year 1975-1976 were stabilized as of the tax year 1975-1976. Property taxes are limited by state law to 1 % of the assessed value plus voter - approved obligations and special assessments. If no sale (or transfer) occurs or no new building takes place, assessments may not increase by more than 2% annually. The subject property is owned by the City of Newport Beach and therefore it is not subject to real estate taxes. It is located in tax rate area 07-042 which carries a 2023-2024 base tax rate of 1.04830%. Conclusion If the subject sold for the value estimate in this report, a reassessment at that value would most likely occur, with tax increases limited to two percent annually thereafter until the property is sold again. CBRE VALUATION & ADVISORY SERVICES 15 © 2024 CBRE, INC 17-36 Market Analysis Market Analysis The subject is located along the west side of Vista Del Oro, at its intersection with Vista Del Sol, in a residential area of the City of Newport Beach. Given prevailing land use patterns and our client's instruction that the subject be analyzed as vacant land with a maximum density of 14 dwelling units per acre, the most likely use is multifamily residential. As such, we have included a multifamily market analysis. Newport Beach Submarket Important characteristics of the Newport Beach apartment market are summarized below: NEWPORT BEACH APARTMENT SUBMARKET Year Ending Inventory Completions Occupied Stock Occupancy Asking Rent Asking Rent Net Absorption (Units) (Units) (Units) ($/Unit / Mo.) Change (Units) 2014 8,908 0 8,491 95.3% $2,393 4.02% 95 2015 8,854 -54 8,473 95.7% $2,503 4.57% -19 2016 8,854 0 8,346 94.3% $2,551 1.91 % -128 2017 9,405 551 8,747 93.0% $2,567 0.66% 400 2018 9,405 0 8,867 94.3% $2,641 2.87% 120 2019 9,405 0 8,910 94.7% $2,775 5.08% 44 2020 9,291 -114 8,876 95.5% $2,807 1.16% -33 2021 9,291 0 9,203 99.1 % $3,299 17.52% 327 2022 9,291 0 9,098 97.9% $3,305 0.18% 106 ----------------------------------------------------------------------------------------------------------------------------------------------------- Q12023 9,291 0 9,057 97.5% $3,285 -0.62% -41 Q2 2023 9,291 0 9,066 97.6% $3,391 3.24% 9 Q3 2023 9,291 0 9,054 97.5% $3,479 2.60% -12 Q4 2023 9,291 0 9,025 97.1 % $3,548 1.97% -29 ----------------------------------------------------------------------------------------------------------------------------------------------------- 2023 9,291 0 9,025 97.1 % $3,548 7.34% -73 ----------------------------------------------------------------------------------------------------------------------------------------------------- Q12024 9,291 0 8,981 96.7% $3,381 -4.69% -44 Q2 2024" 9,291 0 8,956 96.4% $3,391 0.28% -25 Q3 2024" 9,290 -1 8,951 96.3% $3,415 0.71 % -6 Q4 2024" 9,289 1 8,949 96.3% $3,405 -0.28% -2 ----------------------------------------------------------------------------------------------------------------------------------------------------- 2024' 9,289 -2 8,949 96.3% $3,405 -4.01 % -77 2025' 9,286 -3 8,938 96.2% $3,554 4.37% -11 2026' 9,283 -3 8,938 96.3% $3,689 3.80% 0 2027' 9,279 -4 8,956 96.5% $3,815 3.40% 18 2028* 9,276 -3 8,961 96.6% $3,937 3.22% 4 2029* 9,273 -3 8,957 96.6% $4,065 3.26% -3 "Future Projected Data according to Costar Source: Costar, 1st Quarter 2024 The Newport Beach apartment submarket consists of approximately 9,291 units of apartment space. The current submarket inventory represents approximately 3.7% of the overall market inventory. The following observations were noted from the table above: • As of 1st Quarter 2024, there were approximately 8,981 units of occupied apartment space, resulting in an occupancy rate of 96.7% for the submarket. This reflects a decrease from the previous quarter's occupancy of 97.1 %, and a small decrease from an occupancy rate of 97.1 % from last year. The submarket occupancy is above the 96.0% market occupancy. • The submarket experienced negative 44 units of net absorption for the current quarter. This indicates a decline from the previous quarter's negative 29 units of net absorption, and an improvement from the negative 73 units of net absorption from a year ago. The submarket's CBRE VALUATION & ADVISORY SERVICES 16 © 2024 CBRE, INC 17-37 Market Analysis current net absorption of negative 44 units is below the overall market net absorption of positive 78 units. • The submarket had zero completions for the current quarter, which indicates no change from the previous quarter's zero completions, and no change from the zero completions from last year. • The submarket achieved average asking rent of $3,381 per unit, which indicates a decrease from the previous quarter's asking rent of $3,548 per unit, and a decrease from the asking rent of $3,548 per unit from last year. The submarket's current asking rent of $3,381 per unit compares favorably with the overall market asking rent of $2,613 per unit. Historical Inventory - Submarket INVENTORY: NEWPORT BEACH APARTMENT MARKET 300,000 242,560 243,954 245,477 249,218 250, GM253,778 257,551 258,603 260,967 263,922 267,110 250,000 237,372 224,180 227,096 228,625 233,329 _ _ pool M - W 200,000 150,000 100,000 50,000 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market Submarket Future Projected Cata according to Costar Source Costar; 1st Quarter 2024 Submarket Inventory is projected to be 9,289 units at the end of the current year, which represents a small decrease from the previous year's submarket inventory of 9,291 units. Inventory for next year is projected to be 9,286 units, reflecting a small decrease from the current year. CBRE VALUATION & ADVISORY SERVICES 17 © 2024 CBRE, INC 17-38 Market Analysis Historical Occupancy - Submarket 100.0% 95.0% 98.0% OCCUPANCY: NEWPORT BEACH APARTMENT MARKET 99.1% 97.0% 96.3% 96.2% 953% 96.5% 46.6% 96.5% 96.0% 963% 95.0% 99 7% 94.0% 93.0% 92.0% 91.0% 90.0% 89.0% 2014 2015 2015 2017 2019 2019 2020 2021 2022 2023 2024- 2025- 2026' 2027- 2028' 2029' Market Submarket ' Future Projected Data according to Costar Source: Costar. 1st Quarter 2024 Submarket occupancy is projected to be 96.3% at the end of the current year, which represents a decrease from the previous year's submarket occupancy of 97.1 %. Submarket occupancy for next year is projected to be 96.2%, reflecting a small decrease from the current year. Historical Net Absorption - Submarket a,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 ' Future Projected Data according to Coster Source: Costar. 1st Quarter 2024 NET ABSORPTION: NEWPORT BEACH APARTMENT MARKET 7,126 -1,55b Market —o—submarket Net absorption in the submarket is projected to be negative 77 units at the end of the current year, reflecting a decline from the previous year's net absorption of negative 73 units. Net absorption for next year is projected to be negative 11 units, indicating an improvement from the current year. CBRE VALUATION & ADVISORY SERVICES 1b © 2024 CBRE, INC 17-39 Market Analysis Historical Completions - Submarket 6,000 5,000 4,000 3,000 2,000 1,000 0 ' Future Projected Data according to Costar COMPLETIONS: NEWPORT BEACH APARTMENT MARKET 5,188 Market -o-submarket Source: Costar. 1st Quarter 2024 The submarket is projected to achieve completions of negative 2 units at the end of the current year, which indicates a decline from the previous year's zero completions. The submarket is projecting completions of negative 3 units for next year, which indicates a decline from the current year. Historical Asking Rent - Submarket ASKING RENT: NEWPORT BEACH APARTMENT MARKET $4,500 $4,000 $3,548 $3,554 $4,a6s $3815 $3,937 $3,689 $3,500 $3,299 $3,305 $3,405 $3,000 $2,775 $2,807 $2,503 52,551 $2,567 $2,541 $2,393 $2,500 $2,000 $1,500 981 $3,073 $1,000 $500 $0 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market --Q--Submarkat ' Future Projected Data according to Coster Source_ Costar, 1st Quarter 2024 The submarket is projected to achieve average asking of $3,405 per unit at the end of the current year, which represents a decrease from the previous year's asking rent of $3,548 per unit. The submarket is projected to achieve average asking rent of $3,554 per unit, reflecting an increase from the current year. CBRE VALUATION & ADVISORY SERVICES 19 © 2024 CBRE, INC 17-40 Market Analysis Conclusion Overall, the information on the improved multifamily market shows generally level occupancy rates and increasing rental rates. Net absorption was negative overall in 2023 and there is no new construction activity in the subject submarket. Generally speaking, brokers are reporting that the interest rate increases, and high construction costs have impacted price levels for multifamily land. Overall, the improved multifamily market is performing well and showing positive indicators, but the multifamily land market has remained flat since approximately the end of June 2022. Newport Beach remains a desirable multifamily market due to its location and limited availability of sites for new multifamily development. CBRE VALUATION & ADVISORY SERVICES 20 © 2024 CBRE, INC 17-41 Highest and Best Use Highest and Best Use In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are: • Legally permissible; • Physically possible; • Financially feasible; and • Maximally productive. The highest and best use analysis of the subject is discussed below. As Vacant Legal Permissibility The subject is currently zoned PR, Parks and Recreation. However, we have been instructed by our client to assume the site is vacant and zoned for multifamily residential with a maximum density of 14 dwelling units per acre. Therefore, none of the park equipment or improvements was considered in this analysis. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. Given our client's instructions, only multifamily use is given further consideration in determining the highest and best use of the site as vacant. Physical Possibility The subject site is irregularly shaped and is narrow in the middle of the site, which could impact its development potential. Because the intended use of this appraisal is to set park in -lieu fees, we assume that the shape of the subject would not prohibit development of the subject to a density of 14 units per acre and have not considered the shape of the subject in our determination of highest and best use. The subject is adequately served by utilities, and has an adequate shape and size, sufficient access, etc., to be a separately developable site. There are no known physical reasons why the subject site would not support any legally probable development (i.e. it appears adequate for development). Financial Feasibility Potential uses of the site include multifamily. The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. Based on our analysis of the market, there is currently adequate demand for multifamily development in the subject's area. Therefore, this use is considered to be currently financially feasible. Maximum Productivity - Conclusion The final test of highest and best use of the site as if vacant is that the use be maximally productive, yielding the highest return to the land. Based on the information presented above and upon information contained in the market and neighborhood analysis, we conclude that the highest and best use of the subject as if vacant would be for development of a multifamily property. Our analysis of the subject and its respective market characteristics indicate the most likely buyer, as if vacant, would be a developer. CBRE VALUATION & ADVISORY SERVICES 21 © 2024 CBRE, INC 17-42 Land Value Land Value The following map and table summarize the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the addenda. kl 0 mapbox (o, Mapbox, © OpenStreetMap SUMMARY OF COMPARABLE LAND SALES Transaction Interest Actual Sale Adjusted Sale Size Size Density Allowable Price Per Price Price Per No. Property Location Type Data Transferred Zoning Price Price' (Acres) (SF) (UPA) Units Acre Per SF Bldg Unit 1 Essex and Gage Sale Jun-24 Fee SPA, Beach and $52,000,000 $52,000,000 5.62 244,807 22.95 129 $9,252,669 $21241 $403,101 7225 Edinger Ave. Simple/Freehold Edinger Corridor Huntington Beach, CA 92647 Specific Plan 2 11 Proposed Multifamily Units Sale Nov-22 Fee RM, Multiple $3,700,000 $3,700,000 0,35 15,246 31,43 11 $10,571,429 $242,69 $336,364 1526 Placentia Avenue Simple/Freehold Residential Newport Beach, CA 92663 3 18 Unit Attached Condominium Site Sale Jul-22 Fee R-3 $5,700,000 $5,700,000 0,94 40,946 19.15 18 $6,063,830 $139.21 $316,667 17532 Cameron Lane Simple/Freehold Huntington Beach, CA 92647 4 Detached Condominium Site Sale Sep-21 Fee 1.9 OC Great Park $31,809,500 $31,809,500 6,26 272,612 9.59 60 $5,082,770 $116.68 $530,158 Vicinity of Lynx and Astor Simple/Freehold Irvine, CA 92618 5 Detached Condominium Site Sale Jun-21 Fee 1.9 OC Great Park $19,781,000 $19,781,000 4.39 191,228 843 37 $4,505,923 $103.44 $534,622 NW of Merit and Cadence Simple/Freehold Irvine, CA 92618 6 Mariner Square Sale Dec-19 Fee RM-6000, Multi -unit $58,000,000 $58,000,000 5,83 253,955 15,78 92 $9,948,542 $228,39 $630,435 12441,ine Ave. Simple/Freehold Residential Zone Newport Beach, CA 92660 Subject 2555 Vista del r --- --- PR, Parks and --- --- 13.87 604,177 14.00 194 --- --- --- Newport Beach, CA 92660 Recreation ' Adjustetl sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE The sales utilized represent the best data available for comparison with the subject and were selected from the greater Newport Beach area. We initially searched for sites up to 25 acres but were unable to uncover transactions of sites similar in size to the subject. Due to the lack of recent transactions in Newport Beach that are of similar size and density, we expanded our search to include sites of up to approximately seven acres that closed between Year -End 2019 to the date of value. CBRE VALUATION & ADVISORY SERVICES 2z © 2024 CBRE, INC 17-43 Land Value Discussion/Analysis of Land Sales Conditions of Sale/Financing All sales were indicated to be cash -to -seller transactions or financed by a third party at market terms, and none appeared to occur under duress. As such, no adjustments for cash equivalency were necessary. In addition, the sales reflected arm's length transactions; therefore, no adjustments for conditions of sale were warranted. Details of each of the comparable are located on the data sheets in the addenda of this report. Market Conditions Based on the market data and broker interviews, we have utilized an upward market conditions adjustment of 6% per year through June 2022 for improving market conditions. No adjustment is applied from July 2022 to the date of value, as land values have remained flat. Location Our adjustments are based on the difference between rental rates for multifamily residential units within a one -mile radius of the subject and a one -mile radius of each of the comparable sales. Based on this information, Comparables 1, 2, 3, 4, and 5 required upward adjustments to varying degrees. Frontage/Access The subject has an interior orientation with ingress/egress along one street, Vista Del Oro. Compared to the subject Comparables 4, 5, and 6 required downward adjustments for their superior corner orientations. Size Considers the inverse relationship that often exists between parcel size and unit value. Compared to the subject, each of the sales require a downward adjustment to varying degrees due to economies of scale. Shape We assume that the shape of the subject would not prohibit development of the subject to a density of 14 units per acre, therefore, no adjustments were required. Topography The subject has relatively level topography. Each of the comparables have similar topography and required no adjustments. Zoning/Density Per our client's instructions, we assume the subject has a maximum density of 14 dwelling units per acre. Since we have analyzed the sales on a price per unit basis, the difference in density between the subject and each of the comparables is not a major issue. However, we do apply minor adjustments for their differences. Comparables 4 and 5 were adjusted downward for their lower density. Lower density sites have more land area per unit and typically sell for a higher price per unit. Comparables 1, 2, and 3 were adjusted upward for their higher densities, as higher density sites typically sell for a lower price per unit, due to the lower ratio of land per unit. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-44 Land Value Entitlements Per our client's instruction, we assume the subject is unentitled multifamily residential land. We initially searched for sales of unentitled multifamily residential sites in the vicinity of the subject. Unfortunately, the majority of the comparable data we were able to uncover was entitled, with the exception of Comparable 2. We found that buyers of unentitled land take the land through the entitlement process during escrow and if entitlements are not achieved, the buyer does not close on the transaction. Based on our interviews, the sale price is reflective of an entitled price due to the seller sharing in the risk by having to hold the property for an extended period. Due to the lack of unentitled land sales, we have relied on entitled data and have adjusted for the value of the entitlements as part of the adjustment process. Based on conversations with brokers, an entitled property can command a premium ranging from 20% to 50% over raw, unentitled land. Comparables 1, 3, 4, 5, and 6 sold with entitlements and are adjusted downward. Site Improvements This adjustment accounts for site improvements on a site that require demolition prior to redevelopment. Comparables 1, 2, and 6 had building improvements at their time of sale and required upward adjustments. Views Accounts for any scenic views for the multifamily units that are proposed within the development. No adjustments were required. Summary of Adjustments As in most analyses, each element of comparison is not weighted equally. For example, the location of a property as an element of comparison may outweigh its size, resulting in an overall rating of "inferior" to the subject, though there may be numerically more elements rated as "similar" in the comparison grid. Certain elements balance the effect of other elements in each sale's comparison. Based on our comparative analysis, the following chart summarizes the adjustments warranted to each comparable. CBRE VALUATION & ADVISORY SERVICES 24 © 2024 CBRE, INC 17-45 Land Value LAND SALES ADJUSTMENT GRID Comparable Number 1 2 3 4 5 6 Subject Transaction Type Sale Sale Sale Sale Sale Sale --- Transaction Date Jun-24 Nov-22 Jul-22 Sep-21 Jun-21 Dec-19 --- Interest Transferred Fee Fee Fee Fee Fee Fee Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Zoning SP14, Beach and RM, Multiple R-3 1.9 OC Great 1.9 OC Great RM-6000, Multi- PR, Parks and Edinger Corridor Residential Park Park unit Residential Recreation Actual Sale Price $52,000,000 $3,700,000 $5,700,000 $31,809,500 $19,781,000 $58,000,000 --- Adjusted Sale Price' $52,000,000 $3,700,000 $5,700,000 $31,809,500 $19,781,000 $58,000,000 --- Size (Acres) 5.62 0.35 0.94 6.26 4.39 5.83 13.87 Size (SF) 244,807 15,246 40,946 272,612 191,228 253,955 604,177 Density (UPA) 22.95 31.43 19.15 9.59 8.43 15.78 14.00 Allowable Units 129 11 18 60 37 92 194 Price ($ Per Unit) $403,101 $336,364 $316,667 $530,158 $534,622 $630,435 Property Rights Conveyed 0% 0% 0% 0% 0% 0 Financing Terms' 0% 0% 0% 0% 0% 0 Conditions of Sale 0% 0% 0% 0% 0% 0 Market Conditions (Time) 0.0 % 0.0 % 0.0 % 5.0 % 6.5 % 15.0 Subtotal $403,101 $336,364 $316,667 $556,666 $569,372 $725,000 Location Inferior Inferior Inferior Inferior Inferior Similar Frontage/Access Similar Similar Similar Superior Superior Superior Size Superior Superior Superior Superior Superior Superior Shape Similar Similar Similar Similar Similar Similar Topography Similar Similar Similar Similar Similar Similar Zoning/Density Inferior Inferior Inferior Superior Superior Similar Entitlements Superior Similar Superior Superior Superior Superior Site Improvements Inferior Inferior Similar Similar Similar Inferior Views Similar Similar Similar Similar Similar Similar Overall Comparability Inferior Inferior Inferior Superior Superior Superior ' Adjusted sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE Conclusion Based on the foregoing discussion of comparability, the market data and the subject may be arrayed as shown below: LAND VALUE ARRAY Data No. Overall Comparison Time Adjusted Price Per Unit 6 Superior $725,000 5 Superior $569,372 4 Superior $556,666 SUBJECT PROPERTY 1 Inferior $403,101 2 Inferior $336,364 3 Inferior $316,667 Compiled by CBRE The preceding analysis indicates a value within a range of $316,667 to $725,000 per unit. Based on the analysis of the comparable sales, we have bracketed the subject as inferior to Sale 4 and superior to Sale 1. Comparables 4, 5, and 6 are at the high end of the range and are ranked as superior overall. Comparable 4 has an inferior location but this adjustment is more than offset by its superior frontage/access, size, zoning/density, and entitlements. Comparable 5 has an inferior location but this adjustment is more than offset by its superior frontage/access, size, zoning/density, and entitlements. Comparable 6 has inferior site improvements but this adjustment is more than offset by its superior frontage/access, size, and entitlements. CBRE VALUATION & ADVISORY SERVICES 25 © 2024 CBRE, INC 17-46 Land Value Comparables 1, 2, and 3 are at the low end of the range and are ranked as inferior overall. Comparable 1 has an inferior location, zoning/density, and site improvements and these adjustments are only partially offset by its superior size and entitlements. Comparable 2 has an inferior location, zoning/density, and site improvements and these adjustments are only partially offset by its superior size. Comparable 3 has an inferior location and zoning/density and these adjustments are only partially offset by its superior size and entitlements. Considering this information, the following table presents the valuation conclusion: CONCLUDED LAND VALUE $ Per Unit Subject Units Total $425,000 x 194 = $82,450,000 Indicated Value: $82,450,000 Compiled by CBRE The value equates to approximately $5,944,486 per acre or $136.47 per square foot. After considering the required adjustments, these conclusions are well within the range of our data and the value indications provided by market participants. CBRE VALUATION & ADVISORY SERVICES 26 © 2024 CBRE, INC 17-47 Reconciliation of Value Reconciliation of Value In the sales comparison approach, the subject is compared to similar properties that have been sold recently. The sales used in this analysis are considered comparable to the subject, and the required adjustments were based on reasonable and well -supported rationale. Therefore, the sales comparison approach is considered to provide a reliable value indication. Based on the foregoing, the fair market value of the subject has been concluded as follows: FAIR MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $82,450,000 Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 27 © 2024 CBRE, INC 17-48 Assumptions and Limiting Conditions Assumptions and Limiting Conditions CBRE, Inc. through its appraiser (collectively, "CBRE") has inspected through reasonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters. 1. The report, including its conclusions and any portion of such report (the "Report"), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date. 2. Unless otherwise expressly noted in the Report, CBRE has assumed that: (i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company. (ii) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. (iii) Any proposed improvements, on or off -site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices. (iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property. (vii) 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 readily obtained or renewed for any use on which the Report is based. (viii)The subject property is managed and operated in a prudent and competent manner, neither inefficiently, nor super -efficiently. (ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses. (x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property's compliance with the ADA, notwithstanding any discussion of possible readily achievable barrier removal construction items in the Report. CBRE VALUATION & ADVISORY SERVICES 28 © 2024 CBRE, INC 17-49 Assumptions and Limiting Conditions (xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property, nor reviewed or confirmed the accuracy of any legal description of the subject property. Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE's attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report and any conclusions stated therein. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions. 3. CBRE has assumed that all documents, data and information furnished by or on behalf of the client, property owner or owner's representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report and any conclusions stated therein. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report. 4. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including, without limitation, any termite inspection, survey or occupancy permit. 5. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property. 6. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. This Report has been prepared in good faith, based on CBRE's current anecdotal and evidence -based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this Report, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE's control. In addition, many of CBRE's views are opinion and/or projections based on CBRE's subjective analyses of current market circumstances. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections. Further, other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE's current views to later change or be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change. 7. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE's independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property. 8. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge including, but not limited to, environmental, social, and governance principles ("ESG"), beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters. 9. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. CBRE VALUATION & ADVISORY SERVICES 29 © 2024 CBRE, INC 17-50 Assumptions and Limiting Conditions 10. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user's failure to become familiar with and understand the same. 11. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests. 12. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use. 13. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report. 14. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user. CBRE VALUATION & ADVISORY SERVICES 30 © 2024 CBRE, INC 17-51 Addenda Addenda CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-52 Addenda Addendum A Land Sale Data Sheets CBRE VALUATION & ADVISORY SERVICES 32 © 2024 CBRE, INC 17-53 Property Name Essex and Gage Address 7225 Edinger Ave. Huntington Beach, CA 92647 County Orange Govt./Tax ID 142-072-06 Land Area Net 5.620 ac/ 244,807 sf Land Area Gross 5.620 ac/ 244,807 sf Site Development Status Raw Utilities All to site Max Allow Bldg Units/Density 129 / 22.95 Shape Rectangular Primary Frontage 400 ft on Edinger Ave. Topography Level, At Street Grade Flood Zone Class Zone X (Shaded) Flood Panel No./ Date 06059CO232J/ Dec 2009 Zoning SP14, Beach and Edinger Corridor Specific Plan Entitlement Status Fully Entitled/Planning Permissions Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Sale Fee Simple Conventional Developer Freeway Industrial Park N/A N/A 0144574 Primary Verification Costar, Deed, & Press Release Transaction Date 06/11/2024 Recording Date 06/11/2024 Sale Price $52,000,000 Financing Cash to Seller Cash Equivalent $52,000,000 Capital Adjustment $0 % Interest Purchased 100% Adjusted Price $52,000,000 Adjusted Price / ac $9,252,669 / $212.41 and / sf Adjusted Price/ Unit $403,101 This is the June 2024 sale of a 5.62-acre site on the north side of Edinger Avenue, west of Gothard Street in Huntington Beach. The site was improved with a shopping center containing approximately 71,906 square feet at its time of sale. It sold with entitlements for a 129-unit townhome development known as Essex + Gage. The townhomes will be three-story attached units with 13 of the units for moderate income. B R E17-54 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Max Allow Bldg Units/Density Shape Primary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # 11 Proposed Multifamily Units 1526 Placentia Avenue Newport Beach, CA 92663 Orange 424-161-08 0.350 ac/ 15,246 sf 0.350 ac/ 15,246 sf Finished To Site 11 / 31.43 Irregular 122 ft on Placentia Ave. Level, At Street Grade Zone X (Unshaded) 06059CO268J RM, Multiple Residential None Sale Fee Simple Standard Developer Jerry Poladian 11 Month(s) Jerry Poladian-Owner 2022-000352008 Primary Verification Costar/Deed/Public Record Transaction Date 1 1 /01 /2022 Recording Date 11/01/2022 Sale Price $3,700,000 Financing Market Rate Financing Cash Equivalent $3,700,000 Capital Adjustment $0 % Interest Purchased 100% Adjusted Price $3,700,000 Adjusted Price / ac $10,571,429 / $242.69 and / sf Adjusted Price/ Unit $336,364 This represents the sale of a 15,246-square foot site that was previously developed as a retail storefront in 1966. It is zoned RM, Multiple Residential, per the zoning map. It was marketed by the seller for residential redevelopment for 11 months and sold in November 2022 for $3,700,000. After the sale closed, the buyer submitted plans for an 1 1-unit multifamily development. This indicates a density of 31.43 units per acre. BRE17-55 Property Name 18 Unit Attached Condominium Site Address 17532 Cameron Lane Huntington Beach, CA 92647 County Orange Govt./Tax ID 167-471-02 Land Area Net 0.940 ac/ 40,946 sf Land Area Gross 0.940 ac/ 40,946 sf Site Development Status Semi -Finished Utilities To Site Max Allow Bldg Units/Density 18 / 19.15 Shape Rectangular Topography Level, At Street Grade Flood Zone Class Zone X (Shaded) Flood Panel No./ Date 06059CO253J/ Dec 2009 Zoning R-3 Entitlement Status Fully Entitled Transaction Details Type Sale Primary Verification Interest Transferred Fee Simple Transaction Date Condition of Sale None Recording Date Buyer Type Developer Sale Price Recorded Seller SGV Property Fund LLC Financing Marketing Time N/A Cash Equivalent Listing Broker Amy O'Donnell, Land Advisors Capital Adjustment (949) 656-8018 % Interest Purchased Doc # 0250751 Adjusted Price Adjusted Price / ac and / sf Adjusted Price/ Unit Listing Broker 07/18/2022 07/18/2022 $5,700,000 Cash to Seller $5,700,000 $0 100% $5,700,000 $6,063,830 / $139.21 $316,667 This is the July 2022 sale of a 0.94-acre site on the east side of Cameron Lane, one lot south of Slater Avenue in Huntington Beach. The site was in cleared condition and sold with entitlements for 18 attached 2-story townhomes ranging in size from 1,233 to 1,422 square feet. Two units are designated as "moderate income" affordable units. BRE17-56 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Max Allow Bldg Units/Density Shape Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Detached Condominium Site Vicinity of Lynx and Astor Irvine, CA 92618 Orange 591-563-02, 05, 06, 07, 08 6.258 ac/ 272,612 sf 6.258 ac/ 272,612 sf Semi -Finished All to site 60 / 9.59 Irregular Generally Level Zone X (Unshaded) 06059C0315J/ Dec 2009 1.9 OC Great Park Fully Entitled Sale Fee Simple None Developer Heritage Fields El Toro, LLC N/A N/A 549184 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Adjusted Price/ Unit David Kemnitz - Buyer 09/01/2021 09/01/2021 $31,809,500 Cash to Seller $31,809,500 $0 100% $31,809,500 $8,082,770 / $116.68 $530,158 This is the sale of a 60-unit detached condominium site within the Great Park master -planned community in Irvine. The site is in the vicinity of Lynx and Astor and was delivered to the buyer in semi -finished condition with full entitlements. The property was purchased in September 2021 for $31,809,500. The buyer intends to build detached homes ranging from 2,500 to 2,900 square feet. BRE17-57 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Max Allow Bldg Units/Density Shape Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Detached Condominium Site NW of Merit and Cadence Irvine, CA 92618 Orange 591-553-01, 02, 07, 08, 09, 10 4.390 ac/ 191,228 sf 4.390 ac/ 191,228 sf Semi -Finished All to site 37 / 8.43 Irregular Generally Level Zone X (Unshaded) 06059C0315J/ Dec 2009 1.9 OC Great Park Fully Entitled Type Sale Primary Verification Public Records & Costar Interest Transferred Fee Simple Transaction Date 06/01/2021 Condition of Sale None Recording Date 06/01/2021 Buyer Type Developer Sale Price $19,781,000 Recorded Seller Heritage Fields El Toro, LLC Financing Cash to Seller Marketing Time N/A Cash Equivalent $19,781,000 Listing Broker N/A Capital Adjustment $0 Doc # 355611 % Interest Purchased 100% Adjusted Price $19,781,000 Adjusted Price / ac $4,505,923 / $103.44 and / sf Adjusted Price/ Unit $534,622 This is the sale of a 37 unit detached condominium site within the Great Park master -planned community in Irvine. The property is generally located northwest of Merit and Cadence. The site was delivered in semi -finished condition with full entitlements. The buyer intends to build homes from 2,289 to 2,591 square feet to be priced in the $1.2 million to $1.3 million range. BRE17-58 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Utilities Max Allow Bldg Units/Density Shape Primary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Comments Mariner Square 1244 Irvine Ave. Newport Beach, CA 92660 Orange 425-061-09 5.830 ac/ 253,955 sf 5.830 ac/ 253,955 sf All to site 92 / 15.78 Irregular 518 ft on Irvine Avenue Level, At Street Grade Zone X (Unshaded) 06059CO268J/ Dec. 2009 RM-6000, Multi -unit Residential Zone Fully Entitled/Planning Permissions Sale Fee Simple None Developer Mariner Square 2017 LLC and Mariners Investors, LLC N/A N/A 0550020 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Adjusted Price/ Unit CoStar, Deed, & Public Records 12/31/2019 12/31/2019 $58,000,000 Cash to Seller $58,000,000 $0 100% $58,000,000 $9,948,542 / $228.39 $630,435 The Mariner Square multifamily property sold for land value on December 31, 2019 for $58,000,000, or $228.39 per square foot of land. The property sold fully entitled for 92 attached single-family residential homes to be built on -site, comprised of 56 duplex and quad units built by Shea Homes, and 36 townhomes built by Intracorp Homes. The projects will be contiguous and will share private streets, common areas and open space, recreational facilities, utility trunk lines and other utilities, right-of-way, and streetscape infrastructure. The tenants of Mariner Square were given 60-day notices and the building was 100 percent vacant as of December 15th, 2019. The demolition permit was awarded prior to the close of the sale and the 129,846 square foot multifamily improvements will be razed. BRE17-59 Addenda Addendum B Qualifications CBRE VALUATION & ADVISORY SERVICES 33 © 2024 CBRE, INC 17-60 PROFILES Professional Affiliations / Accreditations - Member: Appraisal Institute - Designation: Appraisal Institute - General Review Specialist (AI-GRS) - Fellow: Royal Institution of Chartered Surveyors - Member: The Counselors of Real Estate - Member: International Right of Way Association - License: California State Certified General Real Estate Appraiser - Certified: Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) Education - M.B.A., Pepperdine University - B.S., Kinesiology, University of California, Los Angeles - Certified by the Appraisal Institute's program of continuing education for its designated members. CBRE VALUATION & ADVISORY SERVICES Beth B. Finestone, MAI, AI-GRS, FRICS, CRE Executive Vice President Los Angeles, CA T +1 818 2513669 E Beth.Finestone@CBRE.com Professional Experience Beth B. Finestone, MAI, AI-GRS, FRICS, CRE, is an Executive Vice President for CBRE's Valuation & Advisory Services (VAS). She has been appraising in Southern California since 1981, specializing in valuation and consulting services related to public agency and right-of-way clients and for major investment -grade commercial properties and special purpose properties. She also has extensive expertise in valuing large tracts of land for conservation, mitigation and other purposes. Ms. Finestone's clients include public agencies, right-of-way firms, lenders, institutional investors, major corporations, law firms, and individual property owners. Her services include a wide range of specialized studies including ground lease rent studies, partial interest acquisitions, value diminution (from both internal and external influences), market demand, feasibility, severance damages and project benefits, investment analysis, assessment allocation, reuse analysis, and the valuation of partial interests including leasehold, leased fee, possessory interests, and minority interests. She is experienced in valuing full and partial acquisitions related to eminent domain actions. These services include the valuation of fee acquisitions, permanent and temporary easements, including the appraisal of railroad and other types of corridors, pipeline easements and transmission line easements. She has been a featured speaker at Appraisal Institute, International Right of Way, and legal functions. She was the 2019 President of the Southern California Chapter of the Appraisal Institute, the largest chapter in the country. Beth was previously a Managing Director for and a principal of Integra Realty Resources - Los Angeles. In addition, she was the Executive Director of Integra Realty Resources - Orange County. During her career, she has held senior positions with Finestone & Associates and Cushman & Wakefield. 92024 CBRE, INC. 17-61 PROFILES Recognition CBRE - Los Angeles Business Journal 2009 Nominee for Executive of the Year - Women Making a Difference, May 2009 - Designated one of Real Estate Southern California's 2006 Women of Influence, October 2006 Seminar Presentations - Corridors, Crops & Condemnation (IRWA National Conference in San Diego, June 2015) - Eminent Domain Appraisals: Pitfalls & Value -Added Services (RICS - Southern California Chapter, CPD Presentation, April 16, 2015) - Government Buildings (Appraisal Institute, Special Purposes Seminar, July 15, 2014) - The Trouble with Ignoring Building Code Violators (SCCAI 43`d Annual Litigation Seminar, Moderator, November 15, 2013) - Conflicting Mandates & Instructions Between USPAP, Yellow Book, & Caltrans Appraisal Guidelines (IRWA Annual Valuation Seminar, April 24, 2012) - Current Issues in Real Estate Appraisal (Lorman Education Services, live audio conference, March 8, 2012) - The Role of the Appraiser in Construction Defect Litigation: Measuring Damages from Construction Defects (MCLE- approved presentation, January 11, 2012, March 4, 2010, and February 10, 2010) Expert Testimony Ms. Finestone has qualified as an expert witness in real estate matters and has testified before: - Superior Courts: Los Angeles and Orange Counties - Arbitration Hearings: Los Angeles County - Tax Appeal Boards: Los Angeles and San Diego Counties Representative Appraisal Assignments - Appraisal of 50+ single-family residences (SFRs) impacted by the 1-405 Widening Project in Costa Mesa. The acquisitions all involve temporary construction easements (TCEs). This assignment required an analysis of temporary severance damages due to impacts to rear yards as well as a valuation of all site improvements in the TCE areas. Appraisal of 50+ commercial properties impacted by various types of partial acquisitions related to the 1-405. Some of the appraisals were extremely complex with significant severance damage studies required. - Multiple appraisal assignments for LACMTA included: - Appraisal of a 1.25-acre parcel improved with a Class A,12-story, medical office building constructed circa 1962, an adjacent one-story bank building and an attached four-story parking structure known as the Westwood Medical Plaza. It is located along the proposed Purple Line Subway Extension Project Corridor, specifically on the northeast corner of Wilshire Boulevard and Westwood Boulevard in the Westwood neighborhood within the City of Los Angeles. As part of this project, LACMTA is seeking acquire various permanent and temporary property interests, and to relocate existing tenants within the subject property. The purpose of this appraisal was to estimate the fair market value of the property interests (Parts Taken) to be acquired from the Larger Parcel and to make a determination as to the impact of the proposed acquisitions on the Remainder Parcel. - Appraisal of Wilshire Federal Building: Appraisal of a deep tunnel easement on the Wilshire frontage of the Federal Building as part of LACMTA's Purple Line extension. Consideration was given to the redevelopment potential of the site and the benefits to the remainder, as well as to the value of the parts taken. - Appraisal involving the valuation of partial acquisitions impacting the Westfield Mall in Century City as part of LACMTA's Purple Line extension. This assignment was challenging with respect to valuing the underlying land associated with the larger parcel. The property is unique due to its location and its size. Complexities involved determining the number of trips allocated to the site as this in part drives land value. Again, consideration was given to damages and benefits, as well as to the value of the parts taken. 02024 CBRE, INC. 17-62 PROFILES CBRE — Appraisal of numerous surface and subsurface acquisitions were required on the Veteran's Administration property for the construction of a subway station and tunnel easements for LACMTA's Purple Line. Significant research was required relative to the VA specific plan and the highest and best use of the property. Consideration was given to damages and project benefits as well as the value of the parts acquired. — Appraisal of 50± miles of pipeline easement running through UPRR and BNSF rail corridors in Urban Los Angeles. — Multiple appraisal assignments for RCTC included: — Appraisal of parcels under more than 50 separate ownerships affected by acquisitions and easements for the SR-91 Corridor Improvement Project through the City of Corona. The complete summary appraisal reports and appraisal summary statements included a valuation of the properties in the before and after condition. Some of the properties had significant severance damage analyses due to loss of building improvements, parking, loading, etc. — City of Riverside 69 kV Electrical Transmission Line Project: Initially valued 22 residential and commercial properties in the City of Riverside. These properties all had a three -foot -wide partial taking along their frontage to accommodate the construction of a 69 kV transmission line. This represented Phase One of this assignment. Phase Two involved the partial taking of land over seven properties owned by JCR for the construction of a transmission line. The final phase involved approximately 100 properties of various types which were impacted by partial acquisitions for the construction of a transmission line. The final phase involved approximately 90 properties of various types which will be impacted by partial takes for the construction of a transmission line. — Appraisal of in excess of 75 private properties on behalf of CHSRA. The property types included agricultural, commercial and residential. Most of the appraisals involved partial acquisitions. In addition, Ms. Finestone completed the appraisal of over 50 railroad corridor properties in conjunction with the high-speed rail project. — Appraisal of the Del Mar Fairgrounds, Racetrack, and Horsepark (450 acres of land and over 1,000,000 square feet in improvements) for the California Department of General Services. — Completed an appraisal of a property that represents one of the largest parcels of undeveloped and unprotected coastal property in Southern California (Banning Ranch). Much of the site had been occupied by oil operations since the 1940's. The appraisal of this property was very complex in that the highest and best use of the property was not clear at the onset of the assignment. This property consists of degraded wetlands, open space, and a small area with the potential for residential development. The goal of this project was to prepare an appraisal for acquisition purposes such that the buyer and seller could agree on a purchase price and put the property under contract. — West Coyote Hills: Appraised Neighborhoods 1 and 3 of Vested Tentative Tract Map (VTTM)17609. This is commonly referred to as Neighborhoods 1 and 3 of the West Coyotes Hills Property. Neighborhood 1 consists of 10.4± acres and was proposed for development with 16 residential units. Neighborhood 3 is 13.7± acres and was proposed for development with 59 residential units. Neighborhoods 1 and 3 were valued separately. The intended users of the report were the California State Coastal Conservancy, City of Fullerton, Wildlife Conservation Board, Rivers and Mountains Conservancy, California Department of Parks and Recreation, California Natural Resources Agency, and the US Fish and Wildlife Service. This report was prepared to Federal Standards in conformance with Yellow Book guidelines and the acquisition was made based on our appraisal. — Appraisal in Fresno County for the State Department of Water Resources, which included 22 permanent flowage easements and three partial fee acquisitions. Some of the proposed flowage easements overlapped existing road and utility easements which had to be considered. Due to the nature of the flowage easements, substantial severance damages accrued to the remainder parcels which had to be considered. This assignment also included the consideration of orchard and crop values. — Multiple appraisal assignments for the U.S. Department of the Interior, Appraisal and Valuation Services Office (AVSO) prepared to Federal Standards in accordance with Yellow Book guidelines. These were for acquisition purposes related to the San Joaquin River Restoration Project and for the acquisition land to be acquired for National Wilderness areas. 02024 CBRE, INC. 17-63 PROFILES VALUATION & ADVISORY SERVICE Thomas G. Richardson, MAI Vice President E tom.richardson1@cbre.com Professional Experience Thomas G. Richardson, MAI is a Vice President for CBRE's Valuation & Advisory Services (VAS). Mr. Richardson began his career in real estate appraisal in 2012. His experience includes consulting and appraisals for improved properties such as single - and multifamily residences, restaurants, shopping centers, office buildings, warehouses, retail and industrial condominiums, mixed -use commercial and residential buildings, religious facilities, and special purpose properties. Pro Affiliations / He has valued various categories of land including agricultural, residential, commercial, open space/recreational, saltwater marshland, solar farm, and mitigation land. His work has Accreditations been utilized by various public agencies, law firms, financial institutions, and property owners for right-of-way, disposition, bond financing, lease negotiations, and in -lieu fees. - Member: Appraisal Institute, His recent appraisal work for right -of -way -related purposes includes assignments for the February 2021 San Juan Creek Bridge Replacement Project, Los Nietos Safe Routes to School Project, - Licensed: California Certified Playa Del Rey Wastewater Line Project, 1-405 Improvement Project, Culver University General Real Estate Appraiser Improvement Project, Regional Connector Transit Project, Century Boulevard Mobility No.3004940 Improvement Project, Riverside Transmission Reliability Project, Centennial Corridor Expires November 2025 Project, California High Speed Rail Authority, Irvine Business Complex Sidewalk Project, and Mid County Parkway Project. Mr. Richardson was previously an Associate Director of Integra Realty Resources - Los Angeles. Education - B.A., History, University of Training / Courses Completed California, Los Angeles Completed the following courses and seminars: — Advanced Concepts & Case Studies — Basic Appraisal Principles — Basic Appraisal Procedures — Business Practices and Ethics — Commercial Appraisal Review — Expert Witness for Commercial Appraisers — General Appraiser Income Approach, Part I — General Appraiser Income Approach, Part II — General Appraiser Market Analysis and Highest & Best Use — Advanced Market Analysis and Highest & Best Use — General Appraiser Report Writing and Case Studies ©2024 CBRE, INC. 17-64 PROFILES General Appraiser Sales Comparison Approach — General Appraiser Site Valuation and Cost Approach — Real Estate Finance, Statistics, and Valuation Modeling — Uniform Standards of Professional Appraisal Practice — Quantitative Analysis — Advanced Income Capitalization ©2024 CBRE, INC. 17-65 Attachment C CBRE Appraisal Report — Bob Henry Park, dated July 30, 2024 17-66 CBRE Valuation & Advisory Services Appraisal Report BOB HENRY PARK 900 Dover Drive Newport Beach, California 92660 Prepared for: City of Newport Beach Date of Report: July 30, 2024 CBRE File No.: CB24US044895-1 cbrexom/valuation 17-67 CBRE Valuation & Advisory Services CBRE 5921 Owensmouth Avenue Woodland Hills, CA 91367 T (818)251-3600 www.cbre.com/valuation Date of Report: July 30, 2024 Ms. Lauren Wooding Whitlinger Real Property Administrator CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 RE: Appraisal of: Bob Henry Park 900 Dover Drive Newport Beach, Orange County, California CBRE File No.: CB24USO44895-1 Dear Ms. Wooding Whitlinger: At your request and authorization, CBRE, Inc. has prepared an appraisal of the fair market value of the referenced property. Our analysis is presented in the following Appraisal Report. The subject is currently improved with Bob Henry Park and contains an area of 4.80 acres or 209,088 square feet. The property is zoned PC-43, Upper Castaways Planned Community. We have been instructed by our client to assume the site is vacant and zoned for multifamily residential with a maximum density of 14 dwelling units per acre. Therefore, none of the park equipment or improvements were considered in this analysis. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. Based on the analysis contained in the following report, the market value of the subject is concluded as follows: MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $30,150,000 Compiled by CBRE This Appraisal Report is subject to Extraordinary Assumptions and/or Hypothetical Conditions; please refer to the Executive Summary section of this report for further discussion and analysis. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. CBRE VALUATION & ADVISORY SERVICES 1 © 2024 CBRE, INC 17-68 CBRE Valuation & Advisory Services The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non -intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof). It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES ";W 2ZL____ Tom Richardson, MAI Title: VAS - Vice President Phone: (818) 251-3643 Email: Tom. Richardson1@cbre.com License No. & State: 3004940 CA WNW11 1.1�11ffa Beth Finestone, MAI, AI-GRS, FRICS, CRE Title: VAS - Executive Vice President Phone: (818) 251-3669 Email: Beth.Finestone@cbre.com License No. & State: AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-69 Certification Certification We certify to the best of our knowledge and belief: 1 . The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have not provided any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. We completed an appraisal of the subject in August 2019. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our 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. 8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice. 9. Tom Richardson has made a personal inspection of the property that is the subject of this report. Beth Finestone, MAI, AI-GRS, FRICS, CRE has not made a personal inspection of the property that is the subject of this report. 10. No one provided significant real property appraisal assistance to the persons signing this certification. 11. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have completed the continuing education program for Designated Members of the Appraisal Institute. I;w Tom Richardson, MAI Certified General 3004940 CA Beth Finestone, MAI, AI-GRS, FRICS, CRE Certified General AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-70 A v� a WAAL as �41+, Aerial View View of park MMA Looking north along Dover Drive. Looking east from northwest corner of subiect. Looking southeast from northern boundary of Looking south from northern boundary of subiect. subiect. Executive Summary Executive Summary Property Name Location Parcel Number(s) Client Highest and Best Use As If Vacant Property Rights Appraised Date of Inspection Estimated Exposure Time Estimated Marketing Time Primary Land Area Zoning Buyer Profile Bob Henry Park 900 Dover Drive Newport Beach, Orange County, CA 92660 117-801-15 City of Newport Beach Multifamily use Fee Simple Estate July 23, 2024 6 - 12 Months 6 - 12 Months 4.80 AC 209,088 SF PC-43, Upper Castaways Planned Community Developer CONCLUDED FAIR MARKET VALUE Appraisal Premise Interest Appraised Date of Value Value Fair Market Value Fee Simple Estate July 23, 2024 $30,150,000 Compiled by CBRE Strengths, Weaknesses, Opportunities and Threats (SWOT) Weaknesses/ Threats • Commercial real estate market conditions have deteriorated at the macro level. The significant recent increase in the cost of capital and reduced volume of transaction activity is impacting price discovery and creating an increase in uncertainty. Increasing interest rates and subdued economic growth will continue to weigh on commercial real estate fundamentals and investment transaction volumes. This creates a higher degree of uncertainty in general, though the impacts may vary by market and asset class/type. Market Volatility We draw your attention to a combination of inflationary pressures (leading to higher interest rates) and recent failures/stress in banking systems which have significantly increased the potential for constrained credit markets, negative capital value movements and enhanced volatility in property markets over the short -to -medium term. Experience has shown that consumer and investor behavior can quickly change during periods of such heightened volatility. Lending or investment decisions should reflect this heightened level of volatility and the potential for deteriorating market conditions. CBRE VALUATION & ADVISORY SERVICES v © 2024 CBRE, INC 17-74 Executive Summary It is important to note that the conclusions set out in this report are valid as of the valuation date only. Where appropriate, we recommend that the valuation is closely monitored, as we continue to track how markets respond to evolving events. Extraordinary Assumptions An extraordinary assumption is defined as "an assignment -specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions." 1 None noted. Hypothetical Conditions A hypothetical condition is defined as "a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results but is used for the purposes of analysis." 2 • The client requested that the subject property be appraised assuming the site were vacant unimproved residential land at a density of 14 units per acre. Therefore, none of the park equipment or improvements were considered in this analysis. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. The use of this hypothetical condition may have affected the assignment results. Ownership and Property History The subject is owned by the City of Newport Beach. CBRE is unaware of any arm's length ownership transfers of the property within three years of the date of appraisal. Further, the property is not reportedly being offered for sale as of the current date. Exposure/Marketing Time Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. The following table presents our estimates. 1 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) 2 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) CBRE VALUATION & ADVISORY SERVICES vi © 2024 CBRE, INC 17-75 Executive Summary EXPOSURE/MARKETING TIME DATA Exposure/Mktg. (Months) Investment Type Range CBRE Exposure Time Estimate 6 - 12 Months CBRE Marketing Period Estimate 6 - 12 Months Various Sources Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES vii © 2024 CBRE, INC 17-76 Table of Contents Table of Contents Certification........................................................................................................................................................................ i SubjectPhotographs...................................................................................................................................................... ii ExecutiveSummary........................................................................................................................................................v Tableof Contents.........................................................................................................................................................viii Scopeof Work....................................................................................................................................................................1 AreaAnalysis....................................................................................................................................................................5 NeighborhoodAnalysis..................................................................................................................................................7 SiteAnalysis......................................................................................................................................................................9 Zoning................................................................................................................................................................................14 Taxand Assessment Data..........................................................................................................................................16 MarketAnalysis...............................................................................................................................................................17 Highestand Best Use...................................................................................................................................................22 LandValue.......................................................................................................................................................................23 Reconciliationof Value................................................................................................................................................28 Assumptions and Limiting Conditions ...................................................................................................................29 ADDENDA A Land Sale Data Sheets B Qualifications CBRE VALUATION & ADVISORY SERVICES viii © 2024 CBRE, INC 17-77 Scope of Work Scope of Work This Appraisal Report is intended to comply with the real property appraisal development and reporting requirements set forth under Standards Rule 1 and 2 of USPAP. The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered, and analysis is applied. Intended Use Of Report The intended use of the appraisal is to assist the City of Newport Beach in establishing Park In -Lieu fees and no other use is permitted. Client The client is the City of Newport Beach. Intended User Of Report This appraisal is to be used by the City of Newport Beach. No other user(s) may rely on our report unless as specifically indicated in this report. Intended users are those who an appraiser intends will use the appraisal or review report. In other words, appraisers acknowledge at the outset of the assignment that they are developing their expert opinions for the use of the intended users they identify. Although the client provides information about the parties who may be intended users, ultimately it is the appraiser who decides who they are. This is an important point to be clear about: The client does not tell the appraiser who the intended users will be. Rather, the client tells the appraiser who the client needs the report to be speaking to, and given that information, the appraiser identifies the intended user or users. It is important to identify intended users because an appraiser's primary responsibility regarding the use of the report's opinions and conclusions is to those users. Intended users are those parties to whom an appraiser is responsible for communicating the findings in a clear and understandable manner. They are the audience. 3 Reliance Language Reliance on any reports produced by CBRE under this Agreement is extended solely to parties and entities expressly acknowledged in a signed writing by CBRE as Intended Users of the respective reports, provided that any conditions to such acknowledgement required by CBRE or hereunder have been satisfied. Parties or entities other than Intended Users who obtain a copy of the report or any portion thereof (including Client if it is not named as an Intended User), whether as a result of its direct dissemination or by any other means, may not rely upon any opinions or conclusions contained in the report or such portions thereof, and CBRE will not be responsible for any unpermitted use of the report, its conclusions or contents or have any liability in connection therewith. 3 Appraisal Institute, The Appraisal of Real Estate, 151h ed. (Chicago: Appraisal Institute, 2020), 40. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-78 Scope of Work Purpose of the Appraisal The purpose of this appraisal is to develop an opinion of the fair market value of the land associated with the subject, assuming it is vacant, unimproved land as of the effective date of the appraisal. Definition of Fair Market Value "Fair Market Value", as defined pursuant to Part 3, Title 7, Chapter 9, Article 4, of the California Code of Civil Procedure, entitled: Eminent Domain Law, is as follows: Fair Market Value ... Article 4. Measure of Compensation for Property Taken. 1263.320 (a) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (b) The fair market value of the property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method valuation that is just and equitable. 1263.330 The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: (a) The project for which the property is taken. (b) The eminent domain proceeding in which the property is taken. (c) Any preliminary actions of the plaintiff relating to the taking of the property. Interest Appraised The value estimated represents Fee Simple Estate as defined below: Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. 4 Extent to Which the Property is Identified The property is identified through the following sources: • Postal address • Assessor's records • Legal description 4 Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022), 73. CBRE VALUATION & ADVISORY SERVICES 2 © 2024 CBRE, INC 17-79 Scope of Work Extent to Which the Property is Inspected Tom Richardson, MAI conducted an on -site inspection of the subject, as well as its surrounding environs on the effective date of appraisal. This inspection was considered adequate and is the basis for our findings. Type and Extent of the Data Researched CBRE reviewed the following: • Applicable tax data • Zoning requirements • Flood zone status • Demographics • Comparable data Type and Extent of Analysis Applied CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. For vacant land, the sales comparison approach has been employed for this assignment. Statement of Competency The appraisers have the appropriate knowledge, education, and experience to complete this assignment competently. Appraisal Methodology In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. Depending on a specific appraisal assignment, any of the following four methods may be used to determine the market value of the fee simple interest of land: • Sales Comparison Approach; • Income Capitalization Procedures; • Allocation; and • Extraction. The following summaries of each method are paraphrased from the text. The first is the sales comparison approach. This is a process of analyzing sales of similar, recently sold parcels in order to derive an indication of the most probable sales price (or value) of the property being appraised. The reliability of this approach is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data regarding size, price, terms of sale, etc., (c) the degree of comparability or extent of adjustment necessary for differences between the subject and the comparables, and (d) the absence of nontypical conditions affecting the sales price. This is the primary and most reliable method used to value land (if adequate data exists). The income capitalization procedures include three methods: land residual technique, ground rent capitalization, and Subdivision Development Analysis. A discussion of each of these three techniques is presented in the following paragraphs. CBRE VALUATION & ADVISORY SERVICES 3 © 2024 CBRE, INC 17-80 Scope of Work The land residual method may be used to estimate land value when sales data on similar parcels of vacant land are lacking. This technique is based on the principle of balance and the related concept of contribution, which are concerned with equilibrium among the agents of production--i.e. labor, capital, coordination, and land. The land residual technique can be used to estimate land value when: 1) building value is known or can be accurately estimated, 2) stabilized, annual net operating income to the property is known or estimable, and 3) both building and land capitalization rates can be extracted from the market. Building value can be estimated for new or proposed buildings that represent the highest and best use of the property and have not yet incurred physical deterioration or functional obsolescence. The subdivision development method is used to value land when subdivision and development represent the highest and best use of the appraised parcel. In this method, an appraiser determines the number and size of lots that can be created from the appraised land physically, legally, and economically. The value of the underlying land is then estimated through a discounted cash flow analysis with revenues based on the achievable sale price of the finished product and expenses based on all costs required to complete and sell the finished product. The ground rent capitalization procedure is predicated upon the assumption that ground rents can be capitalized at an appropriate rate to indicate the market value of a site. Ground rent is paid for the right to use and occupy the land according to the terms of the ground lease; it corresponds to the value of the landowner's interest in the land. Market -derived capitalization rates are used to convert ground rent into market value. This procedure is useful when an analysis of comparable sales of leased land indicates a range of rents and reasonable support for capitalization rates can be obtained. The allocation method is typically used when sales are so rare that the value cannot be estimated by direct comparison. This method is based on the principle of balance and the related concept of contribution, which affirm that there is a normal or typical ratio of land value to property value for specific categories of real estate in specific locations. This ratio is generally more reliable when the subject property includes relatively new improvements. The allocation method does not produce conclusive value indications, but it can be used to establish land value when the number of vacant land sales is inadequate. The extraction method is a variant of the allocation method in which land value is extracted from the sale price of an improved property by deducting the contribution of the improvements, which is estimated from their depreciated costs. The remaining value represents the value of the land. Value indications derived in this way are generally unpersuasive because the assessment ratios may be unreliable and the extraction method does not reflect market considerations. For the purposes of this analysis, we use only the sales comparison approach in developing an opinion of value for the subject. This approach is applicable to the subject because there is an active market for similar properties, and sufficient sales data is available for analysis. The cost approach is not applicable because we have been instructed to value the site as if it is vacant land and therefore, we do not consider any of the improvements. The income approach is not applicable because the subject is not likely to generate rental income in its current state. CBRE VALUATION & ADVISORY SERVICES 4 © 2024 CBRE, INC 17-81 Area Analysis Area Analysis Compton -\� Fullerton Torrance Carson Anaheim f LGB Orange Long Beach Westminster Santa Ana � v Huntington Irvine Beach NewporlQch 0 lina Island Qmopb- Avafnn 71 Corona sie � Lake Forest Mission Viejo Laguna Niguel San Clemente 74 74 San Mateo Can} Wilderness The subject is located in Orange County. Key information about the area is provided in the following tables. Population The area has a population of 3,171,875 and a AREA POPULATION BYAGE median age of 40, with the largest population 500,000 group in the 20-29 age range and the smallest 400,000 00,000 population in 80+ age range. 300,000 100,000 I ' 0 Source: ESRI 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80+ Population has increased by 161,664 since 2010, POPULATION BY YEAR reflecting an annual increase of 0.4%. Population 4,000,000 is projected to decrease by 2,549 between 2023 3,000,000 and 2028, reflectinga 0.0% annual population P p 2,000,000 decline. 1,000,000 0 Source: ESRI 2010 Source: ESRI, downloaded on Jul, 22 2024 CBRE VALUATION & ADVISORY SERVICES 5 2023 2028 © 2024 CBRE, INC 17-82 Area Analysis Income The area features an average household income of $157,826 and a median household income of $112,796. Over the next five years, median household income is expected to increase by 15.0%, or $3,394 per annum. Education A total of 46.2% of individuals over the age of 24 have a college degree, with 29.2% holding a bachelor's degree and 16.9% holding a graduate degree. Employment MEDIAN INCOME BY YEAR $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Source: ESRI 2023 2028 POPULATION BY DEGREE ■ Bachelor's Degree ■ Graduate Degree ■ Other Source: ESRI Health Care/Social Assistance Manufacturing Prof/Scientific/Tech Services Retail Trade Educational Services Accommodation/Food Services Construction Finance/Insurance Other Services (excl Publ Adm) Admin/Support/Waste Mgmt Srvcs Source: ESRI 0% 2% 4% 6% 8% 10% 12% 14% The area includes a total of 1,627,211 employees. The top three industries within the area are Health Care/Social Assistance, Manufacturing and Prof/Scientific/Tech Services, which represent a combined total of 35% of the workforce. Source: ESRI, downloaded on Jul 22, 2024; BLS.gov dated Jan 0, 1900 In summary, the area is forecasted to experience a decrease in population and an increase in household income. CBRE VALUATION & ADVISORY SERVICES 6 © 2024 CBRE, INC 17-83 Neighborhood Analysis Neighborhood Analysis W 18th St a `Sf S �Ps • i a� Fief d' yob_ Upper Newport EASTBL hs� z ady� Bay State Marine ab Conservation Area Trader Joe's/oS c�a Vons Q W 16th St DOVER r /61 SHORES �o+A hxo Ratphs o SUPERIOR p�m - N. HEIGHFS HARBOR HEIGHTS ��` Gracias Madre "1 a� P° North Star Beach HAR B OR wy oP ice COVE WEST o NEWPORT GYCods� CLIFF HAVEN BAYSIDE LN port Beach yy O VILLAGE ISLAND LAGOON NEWPORT Newport Dunes CENTER << BAYSHORES WP0RT�ILLAGE C�dO�s�P Pavilions i NF VNE Doryman's BALBOA R A C E Oceanfront Inn w$at IISLANDOmapbox .CMaP6ox,nUpt l l : Location The subject is in the city of Newport Beach and is considered a suburban location. The city of Newport Beach is situated in southern Orange County. Boundaries The subject is located in a primarily residential area within the City of Newport Beach. This area is generally delineated as follows: North: 19th Street South: West Coast Highway / State Route 1 East: Upper Newport Bay West: Newport Boulevard Land Use In the immediate vicinity of the subject, land uses include a mix of residential, commercial, and religious facilities. CBRE VALUATION & ADVISORY SERVICES 7 © 2024 CBRE, INC 17-84 Neighborhood Analysis Access Primary access to the area is provided by Newport Boulevard (State Route 55), a major arterial that crosses Orange County in a north/south direction. Access to the subject from Newport Boulevard is provided by 16th Street. Overall, vehicular access is average. Public transportation is provided by Orange County Transportation Authority. The nearest bus stops are located at the intersection of 16th Street and Dover Drive and near the northwest corner of the subject. The local market perceives public transportation as average compared to other areas in the region. However, the primary mode of transportation in this area is the automobile. John Wayne Airport is located about four miles northeast from the property. Demographics Selected neighborhood demographics in 1-, 3- and 5-mile radius from the subject are shown in the following table: SELECTED NEIGHBORHOOD DEMOGRAPHICS 900 Dover Drive 1 Mile Radius 3 Mile Radius 5 Mile Radius California Orange County Newport Beach, CA 92660 Population 2028 Total Population 15,835 129,380 264,811 39,717,178 3,169,326 2023 Total Population 15,996 129,541 263,798 39,530,491 3,171,875 2010 Total Population 16,447 130,870 249,224 37,253,959 3,010,211 2000 Total Population 16,137 130,327 236,839 33,871,651 2,846,214 Annual Growth 2023 - 2028 -0.20% -0.02% 0.08% 0.09% -0.02% Annual Growth 2010 - 2023 -0.21 % -0.08% 0.44% 0.46% 0.40% Annual Growth 2000 - 2010 0.19% 0.04% 0.51 % 0.96% 0.56% Households 2028 Total Households 7,266 55,959 107,486 13,903,885 1,123,363 2023 Total Households 7,145 54,623 103,950 13,641,471 1,090,541 2010 Total Households 7,459 53,934 98,691 12,577,497 992,769 2000 Total Households 7,340 54,097 92,663 11,502,868 935,264 Annual Growth 2023 - 2028 0.34% 0.48% 0.67% 0.38% 0.59% Annual Growth 2010 - 2023 -0.33% 0.10% 0.40% 0.63% 0.73% Annual Growth 2000 - 2010 0,16% -0.03% 0,63% 0.90% 0,60% Income 2023 Median Household Income $149,126 $131,689 $122,355 $97,646 $112,796 2023 Average Household Income $217,155 $193,958 $178,550 $139,308 $157,826 2023 Per Capita Income $96,449 $81,867 $70,632 $48,206 $54,311 2023 Pop 25+ College Graduates 8,116 56,695 108,739 10,659,207 1,035,382 Age 25+ Percent College Graduates - 2023 67.3% 58.3% 58.7% 38.8% 46.2% Source: ESRI Conclusion In keeping with the principle of conformity, we expect neighborhood land uses to continue to be suburban, similar to the present use. A generally negative population growth rate is expected in the near future. This is a negative indicator for real estate demand. However, the limited supply of available property combined with macroeconomic conditions will continue to bolster the local real estate market. CBRE VALUATION & ADVISORY SERVICES 8 © 2024 CBRE, INC 17-85 Site Analysis Site Analysis The following chart summarizes the salient characteristics of the subject site. Physical Description Gross Site Area Net Site Area Primary Road Frontage Secondary Road Frontage Shape Topography Parcel Number(s) Zoning District Flood Map Panel No. & Date Flood Zone SITE SUMMARY AND ANALYSIS 4.80 Acres 209,088 Sq. Ft. 4.80 Acres 209,088 Sq. Ft. Dover Dr. 577 Feet 16th St. 321 Feet Irregular Level, At Street Grade 117-801-15 PC-43, Upper Castaways Planned Community 06059CO382K 21-Mar-19 Zone X(Unshaded) Utilities Availability Comments Water Yes City of Newport Beach Sewer Yes City of Newport Beach Natural Gas Yes Southern California Gas Company Electricity Yes Southern California Edison Telephone/Cable/Internet Yes Various Mass Transit Yes OCTA Various sources compiled by CBRE Location The subject is on the northeast corner of Dover Drive and 16th Street / Castaways Lane. Land Area The land area size was obtained via the Orange County Assessor's plat map. The site is considered adequate in terms of size and utility. There is no unusable, excess or surplus land area. Shape and Frontage The site is irregularly shaped and has adequate frontage along two thoroughfares. Ingress/Egress Ingress and egress are available to the subject from one curb cut along 16th Street/Castaways Lane. Egress is available from the subject from one curb cut along Dover Drive. CBRE VALUATION & ADVISORY SERVICES 9 © 2024 CBRE, INC 17-86 Site Analysis Dover Drive, at the subject, is a north/south street that has a dedicated width of 125 feet and is improved with two lanes of traffic in each direction. Street improvements include asphalt paving and concrete curbs, gutters and sidewalks, and street lighting. Street parking is not permitted. 16th Street / Castaways Lane, at the subject, is an east/west street that has a dedicated width of 79 feet. It is improved with one lane of traffic in each direction. Additional street improvements include concrete curbs, gutters and sidewalks, and street lighting. Street parking is not permitted. Topography and Drainage The site is generally level and at street grade. The topography of the site is not seen as an impediment to the development of the property. During our inspection of the site, we observed no drainage problems and assume that none exist. Soils A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soils report, it is a specific assumption that the site has adequate soils to support the highest and best use. Easements and Encroachments We were not provided a current title report to review. There are no known easements or encroachments impacting the site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision. Covenants, Conditions and Restrictions There are no known covenants, conditions or restrictions impacting the site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a copy of the current covenants, conditions and restrictions, if any, prior to making a business decision. Utilities and Services The site includes all municipal services, including police, fire and refuse garbage collection. All utilities are available to the site in adequate quality and quantity to service the highest and best use. Environmental Issues Although CBRE was not provided an Environmental Site Assessment (ESA), a tour of the site did not reveal any obvious issues regarding environmental contamination or adverse conditions. CBRE VALUATION & ADVISORY SERVICES 10 © 2024 CBRE, INC 17-87 Site Analysis Adjacent Properties The adjacent land uses are summarized as follows: North: Single-family residential South: Newport Harbor Lutheran Church East: Single-family residential West: Mix of commercial and religious uses Conclusion Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses. We are not aware of any other particular restrictions on development. CBRE VALUATION & ADVISORY SERVICES 11 © 2024 CBRE, INC 17-88 Site Analysis riaL ivies vREPaaeR var caArH;E AiAges rss nsscssmP cEvr. P;aoo ester. e�sq- iiCWEsssNLEs aiiriAsi�i�r sw DINER us Es. •vor ra se RFRRcn.x,'Fn. ALL YRIR ' RESFRYFa. 0 CMvglGNr CWrtnG£ COfMIY A55E55CW 2002 POP. E. 112. S.C. 114. SEC. 27. T 6 S. R 10 JV 49-27 TRACT 29 o.sr� AN. 801 LQr S 1T 16. 716 Ac. <®INO. 112 , Q u 4 634zs-03 r OR1 VE r3 sor �zo � §•A 50 �•N SEE PRLE 2 I SEE IA. l fASrA MA YS'k N AlpOv£F V °7P:o COI R" •v ire CAGE •m 14 .r.n.r 6B Al. w N E v b NO. 15012 440-13 o � o 9 PARCEL MAR P.M. 001-50 NOTE - ASSESSOR'S BLOCK & ASSESSOR'S MAP MARCH 1966 TRACT NO. 1125 M.M. 39-7.8 PARCEL NVkSERS BOOK 117 PAGE 80 TRACT NO. 15012lamended) M.M. 753-23 to 32 inc. SHOWN 1N CIRCLES COUNTY OF ORANGE CBRE VALUATION & ADVISORY SERVICES 12 © 2024 CBRE, INC 17-89 Site Analysis rivva ruin avid National Flood Hazard Layer FIRMette Pp. MA I I =sea ew sra.,e•H 0 260 600 1.000 1.600 2.000 V V axwRx �� aowap: uacs rJx�w m w rasa Legend xs�xe�. �s<FHea Dcwren fe Fq 5R ML FL D YNJ'BFEe.byNta,tc,tox=.uc wa Nla]p.RDAREAS H—o Cl" Al —I CM.— Fkea 4anr0. A-1 or 1ri onnol eXFnac Nona w�N awaac acpX Icss Na. opt rov. or wiM nanog altos d less Jaen ant wseic pile � x �" F�wrc Nanaf�H—lnn.al a—Fha4 Nouco+�� h� xwX Fmrixa Flwa Fitts arcw OfHERAR OF cxc.5cc 4vxs +a•s F UMD Hai4RD hm .r:.X Fl000 Fitts a..cw Fcxca�a Fm, hm or Hn:+wl Rom Ho.a�a ass ErccdF.c uO NRs OFHERARE Arm or Uacxn+':nm Rood GEFERAL _—__ CNonkI,G lwy s5.o�p, Scw SF RUGf ORES liiilll �cxc,DMc, er Remxall s Closs Scaons wJ�lri Annral CNo�rec .,s xa,ers,roae eewd�. --- SkowluFnsca Uncfgm er Swan Jvis iann &�tnoerr — {koswlTr— Eosdinc Of HER Rdlc Basdi�t F ENURES Nrit�opXic Fcw..c D'gi�al Dena AvaloHc N 4o D'gi 10—A.ailmH tt4RRAFELS LN papXta TNc pM aisdowa en tilt papis on oppai pax pain sdcaca lsr.Hc �3<r a�u aocs no. xpr3cn. on o.. W nutrx p�cnr lom�a.. THs FENAY utMoeas rer Jae emu• d oi$�al Need pa ps i+eisna wia es acvai Fsw Fsdew Tlt baswvpsNown mr'ciics.dN FENAY bascpap Tlt neea w,a�a Mreana,ien is aed,� aE�ar+A�,lt o��Nona�x 4 FN i wds scrntcs po.ioca lsr FENA TNa n5op was spenca v� "fY1�rA01 et +ter "N [N ralc[a H-WH ercwiaagxns abssoo-arw J�'saax caa pc. TXc 4 FH F oro crccoix inro�moron par d'arrYc v lScwMc wperscom Er ncwoow mcr �mc. THs papipa Yc is.va T.R opt v morc or.}c rolHwi�y pap de�enm oe ner rxxw: eaurxe ipa�rr. neeo one lebds Ic W smlc 1pap 4care.owc oero'wmAFr ioarNcr; F IFH pond nrpixr, Fna FIR H crccoix aow. Nopipags ror .�rwpxo rno rnpcocA.co a�cas an�aa be rsco+or �nwrr y,rpes�. CBRE VALUATION & ADVISORY SERVICES 13 © 2024 CBRE, INC 17-90 Zoning Zoning The subject is currently zoned PC-43, Upper Castaways Planned Community. However, we have been instructed by our client to assume the site is vacant and zoned for multifamily residential with a maximum density of 14 dwelling units per acre. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. The following chart summarizes the subject's zoning requirements. ZONING SUMMARY Current Zoning PC-43, Upper Castaways Planned Community Legally Conforming Yes Zoning Change Yes Category Zoning Requirement Minimum Lot Size None specified Minimum Lot Width None specified Maximum Height 32 Feet Minimum Setbacks Front Yard 35 Feet Street Side Yard 5 Feet Interior Side Yard 5 Feet Rear Yard 10 Feet Maximum Density Assume 14 dwelling units per acre Source: Newport Beach Planning and Zoning Dept. Conclusion Additional information may be obtained from the appropriate governmental authority. For purposes of this appraisal, CBRE has assumed the information obtained is correct. CBRE VALUATION & ADVISORY SERVICES 14 © 2024 CBRE, INC 17-91 Zoning Zoning Map r �� map ga 1 r � e � x `� z 0. xf Part SUBJEC� #sr vcn maGti a� 4 � P> CBRE VALUATION & ADVISORY SERVICES 15 © 2024 CBRE, INC 17-92 Tax and Assessment Data Tax and Assessment Data In California, privately held real property is typically assessed at 100% of full cash value (which is interpreted to mean market value of the fee simple estate) as determined by the County Assessor. Generally, a reassessment occurs only when a property is sold (or transferred) or when new construction occurs (as differentiated from replacing existing construction). In the case of long-term ground leases, the general rule is that a reassessment is made at the time of assigning or terminating a lease where the remaining term is more than 35 years. For reassessment purposes, the lease term includes all options to extend. Assessments for properties that were acquired before the tax year 1975-1976 were stabilized as of the tax year 1975-1976. Property taxes are limited by state law to 1 % of the assessed value plus voter - approved obligations and special assessments. If no sale (or transfer) occurs or no new building takes place, assessments may not increase by more than 2% annually. The subject property is owned by the City of Newport Beach and therefore it is not subject to real estate taxes. It is located in tax rate area 07-045 which carries a 2023-2024 base tax rate of 1.04830%. Conclusion If the subject sold for the value estimate in this report, a reassessment at that value would most likely occur, with tax increases limited to two percent annually thereafter until the property is sold again. CBRE VALUATION & ADVISORY SERVICES 16 © 2024 CBRE, INC 17-93 Market Analysis Market Analysis The subject is located at the northeast corner of Dover Drive and 16th Street / Castaways Lane in a residential area of the City of Newport Beach. Given prevailing land use patterns and our client's instruction that the subject be analyzed as vacant land with a maximum density of 14 dwelling units per acre, the most likely use is multifamily residential. As such, we have included a multifamily market analysis. Newport Beach Submarket Important characteristics of the Newport Beach apartment market are summarized below: NEWPORT BEACH APARTMENT SUBMARKET Year Ending Inventory Completions Occupied Stock Occupancy Asking Rent Asking Rent Net Absorption (Units) (Units) (Units) ($/Unit / Mo.) Change (Units) 2014 8,908 0 8,491 95.3% $2,393 4.02% 95 2015 8,854 -54 8,473 95.7% $2,503 4.57% -19 2016 8,854 0 8,346 94.3% $2,551 1.91 % -128 2017 9,405 551 8,747 93.0% $2,567 0.66% 400 2018 9,405 0 8,867 94.3% $2,641 2.87% 120 2019 9,405 0 8,910 94.7% $2,775 5.08% 44 2020 9,291 -114 8,876 95.5% $2,807 1.16% -33 2021 9,291 0 9,203 99.1 % $3,299 17.52% 327 2022 9,291 0 9,098 97.9% $3,305 0.18% 106 ----------------------------------------------------------------------------------------------------------------------------------------------------- Q12023 9,291 0 9,057 97.5% $3,285 -0.62% -41 Q2 2023 9,291 0 9,066 97.6% $3,391 3.24% 9 Q3 2023 9,291 0 9,054 97.5% $3,479 2.60% -12 Q4 2023 9,291 0 9,025 97.1 % $3,548 1.97% -29 ----------------------------------------------------------------------------------------------------------------------------------------------------- 2023 9,291 0 9,025 97.1 % $3,548 7.34% -73 ----------------------------------------------------------------------------------------------------------------------------------------------------- Q12024 9,291 0 8,981 96.7% $3,381 -4.69% -44 Q2 2024" 9,291 0 8,956 96.4% $3,391 0.28% -25 Q3 2024" 9,290 -1 8,951 96.3% $3,415 0.71 % -6 Q4 2024" 9,289 1 8,949 96.3% $3,405 -0.28% -2 ----------------------------------------------------------------------------------------------------------------------------------------------------- 2024' 9,289 -2 8,949 96.3% $3,405 -4.01 % -77 2025' 9,286 -3 8,938 96.2% $3,554 4.37% -11 2026' 9,283 -3 8,938 96.3% $3,689 3.80% 0 2027' 9,279 -4 8,956 96.5% $3,815 3.40% 18 2028* 9,276 -3 8,961 96.6% $3,937 3.22% 4 2029* 9,273 -3 8,957 96.6% $4,065 3.26% -3 "Future Projected Data according to Costar Source: Costar, 1st Quarter 2024 The Newport Beach apartment submarket consists of approximately 9,291 units of apartment space. The current submarket inventory represents approximately 3.7% of the overall market inventory. The following observations were noted from the table above: • As of 1st Quarter 2024, there were approximately 8,981 units of occupied apartment space, resulting in an occupancy rate of 96.7% for the submarket. This reflects a decrease from the previous quarter's occupancy of 97.1 %, and a small decrease from an occupancy rate of 97.1 % from last year. The submarket occupancy is above the 96.0% market occupancy. • The submarket experienced negative 44 units of net absorption for the current quarter. This indicates a decline from the previous quarter's negative 29 units of net absorption, and an improvement from the negative 73 units of net absorption from a year ago. The submarket's CBRE VALUATION & ADVISORY SERVICES 17 © 2024 CBRE, INC 17-94 Market Analysis current net absorption of negative 44 units is below the overall market net absorption of positive 78 units. • The submarket had zero completions for the current quarter, which indicates no change from the previous quarter's zero completions, and no change from the zero completions from last year. • The submarket achieved average asking rent of $3,381 per unit, which indicates a decrease from the previous quarter's asking rent of $3,548 per unit, and a decrease from the asking rent of $3,548 per unit from last year. The submarket's current asking rent of $3,381 per unit compares favorably with the overall market asking rent of $2,613 per unit. Historical Inventory - Submarket INVENTORY: NEWPORT BEACH APARTMENT MARKET 300,000 242,560 243,954 245,477 249,218 250, GM253,778 257,551 258,603 260,967 263,922 267,110 250,000 237,372 224,180 227,096 228,625 233,329 _ _ pool M - W 200,000 150,000 100,000 50,000 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market Submarket Future Projected Cata according to Costar Source Costar; 1st Quarter 2024 Submarket Inventory is projected to be 9,289 units at the end of the current year, which represents a small decrease from the previous year's submarket inventory of 9,291 units. Inventory for next year is projected to be 9,286 units, reflecting a small decrease from the current year. CBRE VALUATION & ADVISORY SERVICES 18 © 2024 CBRE, INC 17-95 Market Analysis Historical Occupancy - Submarket 100.0% 95.0% 98.0% OCCUPANCY: NEWPORT BEACH APARTMENT MARKET 99.1% 97.0% 96.3% 96.2% 953% 96.5% 46.6% 96.5% 96.0% 963% 95.0% 99 7% 94.0% 93.0% 92.0% 91.0% 90.0% 89.0% 2014 2015 2015 2017 2019 2019 2020 2021 2022 2023 2024- 2025- 2026' 2027- 2028' 2029' Market Submarket ' Future Projected Data according to Costar Source: Costar. 1st Quarter 2024 Submarket occupancy is projected to be 96.3% at the end of the current year, which represents a decrease from the previous year's submarket occupancy of 97.1 %. Submarket occupancy for next year is projected to be 96.2%, reflecting a small decrease from the current year. Historical Net Absorption - Submarket a,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 ' Future Projected Data according to Coster Source: Costar. 1st Quarter 2024 NET ABSORPTION: NEWPORT BEACH APARTMENT MARKET 7,126 -1,55b Market —o—submarket Net absorption in the submarket is projected to be negative 77 units at the end of the current year, reflecting a decline from the previous year's net absorption of negative 73 units. Net absorption for next year is projected to be negative 11 units, indicating an improvement from the current year. CBRE VALUATION & ADVISORY SERVICES 19 © 2024 CBRE, INC 17-96 Market Analysis Historical Completions - Submarket 6,000 5,000 4,000 3,000 2,000 1,000 0 ' Future Projected Data according to Costar COMPLETIONS: NEWPORT BEACH APARTMENT MARKET 5,188 Market -o-submarket Source: Costar. 1st Quarter 2024 The submarket is projected to achieve completions of negative 2 units at the end of the current year, which indicates a decline from the previous year's zero completions. The submarket is projecting completions of negative 3 units for next year, which indicates a decline from the current year. Historical Asking Rent - Submarket ASKING RENT: NEWPORT BEACH APARTMENT MARKET $4,500 $4,000 $3,548 $3,554 $4,a6s $3815 $3,937 $3,689 $3,500 $3,299 $3,305 $3,405 $3,000 $2,775 $2,807 $2,503 52,551 $2,567 $2,541 $2,393 $2,500 $2,000 $1,500 981 $3,073 $1,000 $500 $0 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market --Q--Submarkat ' Future Projected Data according to Coster Source_ Costar, 1st Quarter 2024 The submarket is projected to achieve average asking of $3,405 per unit at the end of the current year, which represents a decrease from the previous year's asking rent of $3,548 per unit. The submarket is projected to achieve average asking rent of $3,554 per unit, reflecting an increase from the current year. CBRE VALUATION & ADVISORY SERVICES 20 © 2024 CBRE, INC 17-97 Market Analysis Conclusion Overall, the information on the improved multifamily market shows generally level occupancy rates andincreasing rental rates. Net absorption was negative overall in 2023 and there is no new construction activity in the subject submarket. Generally speaking, brokers are reporting that the interest rate increases, and high construction costs have impacted price levels for multifamily land. Overall, the improved multifamily market is performing well and showing positive indicators, but the multifamily land market has remained flat since approximately the end of June 2022. Newport Beach remains a desirable multifamily market due to its location and limited availability of sites for new multifamily development. CBRE VALUATION & ADVISORY SERVICES 21 © 2024 CBRE, INC 17-98 Highest and Best Use Highest and Best Use In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are: • legally permissible; • physically possible; • financially feasible; and • maximally productive. The highest and best use analysis of the subject is discussed below. As Vacant Legal Permissibility The subject is currently zoned PC-43, Upper Castaways Planned Community. However, we have been instructed by our client to assume the site is vacant and zoned for multifamily residential with a maximum density of 14 dwelling units per acre. Therefore, none of the park equipment or improvements was considered in this analysis. The subject is appraised on an unentitled residential land basis. In addition, we were instructed to assume that no future lots would have view potential, that the sites were nearly level, and that the property had utilities available. Given our client's instructions, only multifamily use is given further consideration in determining the highest and best use of the site as vacant. Physical Possibility The subject is adequately served by utilities, and has an adequate shape and size, sufficient access, etc., to be a separately developable site. There are no known physical reasons why the subject site would not support any legally probable development (i.e. it appears adequate for development). Financial Feasibility Potential uses of the site include multifamily. The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. Based on our analysis of the market, there is currently adequate demand for multifamily development in the subject's area. Therefore, this use is considered to be currently financially feasible. Maximum Productivity - Conclusion The final test of highest and best use of the site as if vacant is that the use be maximally productive, yielding the highest return to the land. Based on the information presented above and upon information contained in the market and neighborhood analysis, we conclude that the highest and best use of the subject as if vacant would be for development of a multifamily property. Our analysis of the subject and its respective market characteristics indicate the most likely buyer, as if vacant, would be a developer. CBRE VALUATION & ADVISORY SERVICES 22 © 2024 CBRE, INC 17-99 Land Value Land Value The following map and table summarize the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the addenda. Westminster t L� ©ountain Valley luntington Beach © Newport Bea( up Lak1 v Laguna Woods Omapbox c Mapbcz =OPees reef M-n SUMMARY OF COMPARABLE LAND SALES Transaction Interest Actual Sale Adjusted Sale Size Size Density Allowable Price Per Price Price Per No. Property Location Type Data Transferred Zoning Price Price' (Acres) (SF) (UPA) Units Acre Per SF Bldg Unit 1 Essex and Gage Sale Jun-24 Fee SP14, Beach and $52,000,000 $52,000,000 5.62 244,807 22S5 129 $9,252,669 $21241 $403,101 7225 Edinger Ave. Simple/Freehold Edinger Corridor Huntington Beach, CA 92647 Specific Plan 2 11 Proposed Multifamily Units Sale Nov-22 Fee RM, Multiple $3,700,000 $3,700,000 0,35 15,246 31,43 11 $10,571,429 $242,69 $336,364 1526 Placentia Avenue Simple/Freehold Residential Newport Beach, CA 92663 3 18 Unit Attached Condominium Site Sale Jul-22 Fee R-3 $5,700,000 $5,700,000 0.94 40,946 19.15 18 $6,063,830 $139.21 $316,667 17532 Cameron Lane Simple/Freehold Huntington Beach, CA 92647 4 Detached Condominium Site Sale Sep-21 Fee 1.9 OC Great Park $31,809,500 $31,809,500 6.26 272,612 9.59 60 $5,082,770 $116.68 $530,158 Vicinity of Lynx and Astor Simple/Freehold Irvine, CA 92618 5 Detached Condominium Site Sale Jun-21 Fee 1.9 OC Great Park $19,781,000 $19,781,000 4.39 191,228 843 37 $4,505,923 $10344 $534,622 NW of Merit and Cadence Simple/Freehold Irvine, CA 92618 6 Mariner Square Sale Dec-19 Fee RM-6000, Multi -unit $58,000,000 $58,000,000 5,83 253,955 15,78 92 $9,948,542 $228,39 $630,435 12441rvine Ave. Simple/Freehold Residential Zone Newport Beach, CA 92660 Subject — --- pper --- --- 4.80 209,088 14.00 67 --- --- --- Newport Beach, CA 92660 Castaways Planned Community 'Adjusted sale price for cash equivalency ani development costs (where applicable) Compiled by CBRE The sales utilized represent the best data available for comparison with the subject and were selected from the greater Newport Beach area. Due to the lack of recent transactions in Newport Beach that are of similar size and density, we expanded our search to include sites of up to approximately seven acres that closed between Year -End 2019 to the date of value. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-100 Land Value Discussion/Analysis of Land Sales Conditions of Sale/Financing All sales were indicated to be cash -to -seller transactions or financed by a third party at market terms, and none appeared to occur under duress. As such, no adjustments for cash equivalency were necessary. In addition, the sales reflected arm's length transactions; therefore, no adjustments for conditions of sale were warranted. Details of each of the comparable are located on the data sheets in the addenda of this report. Market Conditions Based on the market data and broker interviews, we have utilized an upward market conditions adjustment of 6% per year through June 2022 for improving market conditions. No adjustment is applied from July 2022 to the date of value, as land values have remained flat. Location Our adjustments are based on the difference between rental rates for multifamily residential units within a one -mile radius of the subject and a one -mile radius of each of the comparable sales. Based on this information, Comparables 1, 2, 3, 4, and 5 required upward adjustments to varying degrees. Frontage/Access The subject has a corner orientation with ingress/egress along two streets, Dover Drive and 16th Street / Castaways Lane. Compared to the subject Comparables 1, 2, and 3 required upward adjustments for their interior orientations. Size Considers the inverse relationship that often exists between parcel size and unit value. Compared to the subject, only Comparables 2 and 3 require downward adjustments due to economies of scale. Shape The shape of the subject would not prohibit development of the subject to a density of 14 units per acre. No adjustments were required. Topography The subject has relatively level topography. Each of the comparables have similar topography and required no adjustments. Zoning/Density Per our client's instructions, we assume the subject has a maximum density of 14 dwelling units per acre. Since we have analyzed the sales on a price per unit basis, the difference in density between the subject and each of the comparables is not a major issue. However, we do apply minor adjustments for their differences. Comparables 4 and 5 were adjusted downward for their lower density. Lower density sites have more land area per unit and typically sell for a higher price per unit. Comparables 1, 2, and 3 were adjusted upward for their higher densities, as higher density sites typically sell for a lower price per unit, due to the lower ratio of land per unit. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-101 Land Value Entitlements Per our client's instruction, we assume the subject is unentitled multifamily residential land. We initially searched for sales of unentitled multifamily residential sites in the vicinity of the subject. Unfortunately, the majority of the comparable data we were able to uncover was entitled, with the exception of Comparable 2. We found that buyers of unentitled land take the land through the entitlement process during escrow and if entitlements are not achieved, the buyer does not close on the transaction. Based on our interviews, the sale price is reflective of an entitled price due to the seller sharing in the risk by having to hold the property for an extended period. Due to the lack of unentitled land sales, we have relied on entitled data and have adjusted for the value of the entitlements as part of the adjustment process. Based on conversations with brokers, an entitled property can command a premium ranging from 20% to 50% over raw, unentitled land. Comparables 1, 3, 4, 5, and 6 sold with entitlements and are adjusted downward. Site Improvements This adjustment accounts for site improvements on a site that require demolition prior to redevelopment. Comparables 1, 2, and 6 had building improvements at their time of sale and required upward adjustments. Views Accounts for any scenic views for the multifamily units that are proposed within the development. No adjustments were required. Summary of Adjustments As in most analyses, each element of comparison is not weighted equally. For example, the location of a property as an element of comparison may outweigh its size, resulting in an overall rating of "inferior" to the subject, though there may be numerically more elements rated as "similar" in the comparison grid. Certain elements balance the effect of other elements in each sale's comparison. Based on our comparative analysis, the following chart summarizes the adjustments warranted to each comparable. CBRE VALUATION & ADVISORY SERVICES 25 © 2024 CBRE, INC 17-102 Land Value LAND SALES ADJUSTMENT GRID Comparable Number 1 2 3 4 5 6 Subject Transaction Type Sale Sale Sale Sale Sale Sale --- Transaction Date Jun-24 Nov-22 Jul-22 Sep-21 Jun-21 Dec-19 --- Interest Transferred Fee Fee Fee Fee Fee Fee Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Zoning SP14, Beach and RM, Multiple R-3 1.9 OC Great 1.9 OC Great RM-6000, Multi- PC-43, Upper Edinger Corridor Residential Park Park unit Residential Castaways Actual Sale Price $52,000,000 $3,700,000 $5,700,000 $31,809,500 $19,781,000 $58,000,000 --- Adjusted Sale Price' $52,000,000 $3,700,000 $5,700,000 $31,809,500 $19,781,000 $58,000,000 --- Size (Acres) 5.62 0.35 0.94 6.26 4.39 5.83 4.80 Size (SF) 244,807 15,246 40,946 272,612 191,228 253,955 209,088 Density (UPA) 22.95 31.43 19.15 9.59 8.43 15.78 14.00 Allowable Units 129 11 18 60 37 92 67 Price ($ Per Unit) $403,101 $336,364 $316,667 $530,158 $534,622 $630,435 Property Rights Conveyed 0% 0% 0% 0% 0% 0 Financing Terms' 0% 0% 0% 0% 0% 0 Conditions of Sale 0% 0% 0% 0% 0% 0 Market Conditions (Time) 0.0 % 0.0 % 0.0 % 5.0 % 6.5 % 15.0 Subtotal $403,101 $336,364 $316,667 $556,666 $569,372 $725,000 Location Inferior Inferior Inferior Inferior Inferior Similar Frontage/Access Inferior Inferior Inferior Similar Similar Similar Size Similar Superior Superior Similar Similar Similar Shape Similar Similar Similar Similar Similar Similar Topography Similar Similar Similar Similar Similar Similar Zoning/Density Inferior Inferior Inferior Superior Superior Similar Entitlements Superior Similar Superior Superior Superior Superior Site Improvements Inferior Inferior Similar Similar Similar Inferior Views Similar Similar Similar Similar Similar Similar Overall Comparability Inferior Inferior Inferior Superior Superior Superior ' Adjusted sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE Conclusion Based on the foregoing discussion of comparability, the market data and the subject may be arrayed as shown below: LAND VALUE ARRAY Data No. Overall Comparison Time Adjusted Price Per Unit 6 Superior $725,000 5 Superior $569,372 4 Superior $556,666 SUBJECT PROPERTY 1 Inferior $403,101 2 Inferior $336,364 3 Inferior $316,667 Compiled by CBRE The preceding analysis indicates a value within a range of $316,667 to $725,000 per unit. Based on the analysis of the comparable sales, we have bracketed the subject as inferior to Sale 4 and superior to Sale 1. Comparables 4, 5, and 6 are at the high end of the range and are ranked as superior overall. Comparable 4 has an inferior location but this adjustment is more than offset by its superior zoning/density and entitlements. Comparable 5 has an inferior location but this adjustment is more than offset by its superior zoning/density and entitlements. Comparable 6 has inferior site improvements but this adjustment is more than offset by its superior entitlements. CBRE VALUATION & ADVISORY SERVICES 26 © 2024 CBRE, INC 17-103 Land Value Comparables 1, 2, and 3 are at the low end of the range and are ranked as inferior overall. Comparable 1 has an inferior location, frontage/access, zoning/density, and site improvements and these adjustments are only partially offset by its superior entitlements. Comparable 2 has an inferior location, frontage/access, zoning/density, and site improvements and these adjustments are only partially offset by its superior size. Comparable 3 has an inferior location, frontage/access, and zoning/density and these adjustments are only partially offset by its superior size and entitlements. Considering this information, the following table presents the valuation conclusion: CONCLUDED LAND VALUE $ Per Unit Subject Units Total $450,000 x 67 = $30,150,000 Indicated Value: $30,150,000 Compiled by CBRE The value equates to approximately $6,281,250 per acre or $144.20 per square foot. After considering the required adjustments, these conclusions are well within the range of our data and the value indications provided by market participants. CBRE VALUATION & ADVISORY SERVICES 27 © 2024 CBRE, INC 17-104 Reconciliation of Value Reconciliation of Value In the sales comparison approach, the subject is compared to similar properties that have been sold recently. The sales used in this analysis are considered comparable to the subject, and the required adjustments were based on reasonable and well -supported rationale. Therefore, the sales comparison approach is considered to provide a reliable value indication. Based on the foregoing, the fair market value of the subject has been concluded as follows: MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $30,150,000 Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 28 © 2024 CBRE, INC 17-105 Assumptions and Limiting Conditions Assumptions and Limiting Conditions CBRE, Inc. through its appraiser (collectively, "CBRE") has inspected through reasonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters. 1. The report, including its conclusions and any portion of such report (the "Report"), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date. 2. Unless otherwise expressly noted in the Report, CBRE has assumed that: (i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company. (ii) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. (iii) Any proposed improvements, on or off -site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices. (iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property. (vii) 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 readily obtained or renewed for any use on which the Report is based. (viii)The subject property is managed and operated in a prudent and competent manner, neither inefficiently, nor super -efficiently. (ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses. (x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property's compliance with the ADA, notwithstanding any discussion of possible readily achievable barrier removal construction items in the Report. CBRE VALUATION & ADVISORY SERVICES 29 © 2024 CBRE, INC 17-106 Assumptions and Limiting Conditions (xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property, nor reviewed or confirmed the accuracy of any legal description of the subject property. Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE's attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report and any conclusions stated therein. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions. 3. CBRE has assumed that all documents, data and information furnished by or on behalf of the client, property owner or owner's representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report and any conclusions stated therein. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report. 4. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including, without limitation, any termite inspection, survey or occupancy permit. 5. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property. 6. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. This Report has been prepared in good faith, based on CBRE's current anecdotal and evidence -based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this Report, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE's control. In addition, many of CBRE's views are opinion and/or projections based on CBRE's subjective analyses of current market circumstances. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections. Further, other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE's current views to later change or be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change. 7. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE's independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property. 8. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge including, but not limited to, environmental, social, and governance principles ("ESG"), beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters. 9. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. CBRE VALUATION & ADVISORY SERVICES 30 © 2024 CBRE, INC 17-107 Assumptions and Limiting Conditions 10. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user's failure to become familiar with and understand the same. 11. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests. 12. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use. 13. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report. 14. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user. CBRE VALUATION & ADVISORY SERVICES 31 © 2024 CBRE, INC 17-108 Addenda Addenda CBRE VALUATION & ADVISORY SERVICES 32 © 2024 CBRE, INC 17-109 Addenda Addendum A Land Sale Data Sheets CBRE VALUATION & ADVISORY SERVICES 33 © 2024 CBRE, INC 17-110 Property Name Essex and Gage Address 7225 Edinger Ave. Huntington Beach, CA 92647 County Orange Govt./Tax ID 142-072-06 Land Area Net 5.620 ac/ 244,807 sf Land Area Gross 5.620 ac/ 244,807 sf Site Development Status Raw Utilities All to site Max Allow Bldg Units/Density 129 / 22.95 Shape Rectangular Primary Frontage 400 ft on Edinger Ave. Topography Level, At Street Grade Flood Zone Class Zone X (Shaded) Flood Panel No./ Date 06059CO232J/ Dec 2009 Zoning SP14, Beach and Edinger Corridor Specific Plan Entitlement Status Fully Entitled/Planning Permissions Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Sale Fee Simple Conventional Developer Freeway Industrial Park N/A N/A 0144574 Primary Verification Costar, Deed, & Press Release Transaction Date 06/11/2024 Recording Date 06/11/2024 Sale Price $52,000,000 Financing Cash to Seller Cash Equivalent $52,000,000 Capital Adjustment $0 % Interest Purchased 100% Adjusted Price $52,000,000 Adjusted Price / ac $9,252,669 / $212.41 and / sf Adjusted Price/ Unit $403,101 This is the June 2024 sale of a 5.62-acre site on the north side of Edinger Avenue, west of Gothard Street in Huntington Beach. The site was improved with a shopping center containing approximately 71,906 square feet at its time of sale. It sold with entitlements for a 129-unit townhome development known as Essex + Gage. The townhomes will be three-story attached units with 13 of the units for moderate income. BRE17-111 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Max Allow Bldg Units/Density Shape Primary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # 11 Proposed Multifamily Units 1526 Placentia Avenue Newport Beach, CA 92663 Orange 424-161-08 0.350 ac/ 15,246 sf 0.350 ac/ 15,246 sf Finished To Site 11 / 31.43 Irregular 122 ft on Placentia Ave. Level, At Street Grade Zone X (Unshaded) 06059CO268J RM, Multiple Residential None Sale Fee Simple Standard Developer Jerry Poladian 11 Month(s) Jerry Poladian-Owner 2022-000352008 Primary Verification Costar/Deed/Public Record Transaction Date 1 1 /01 /2022 Recording Date 11/01/2022 Sale Price $3,700,000 Financing Market Rate Financing Cash Equivalent $3,700,000 Capital Adjustment $0 % Interest Purchased 100% Adjusted Price $3,700,000 Adjusted Price / ac $10,571,429 / $242.69 and / sf Adjusted Price/ Unit $336,364 This represents the sale of a 15,246-square foot site that was previously developed as a retail storefront in 1966. It is zoned RM, Multiple Residential, per the zoning map. It was marketed by the seller for residential redevelopment for 11 months and sold in November 2022 for $3,700,000. After the sale closed, the buyer submitted plans for an 1 1-unit multifamily development. This indicates a density of 31.43 units per acre. BRE17-112 Property Name 18 Unit Attached Condominium Site Address 17532 Cameron Lane Huntington Beach, CA 92647 County Orange Govt./Tax ID 167-471-02 Land Area Net 0.940 ac/ 40,946 sf Land Area Gross 0.940 ac/ 40,946 sf Site Development Status Semi -Finished Utilities To Site Max Allow Bldg Units/Density 18 / 19.15 Shape Rectangular Topography Level, At Street Grade Flood Zone Class Zone X (Shaded) Flood Panel No./ Date 06059CO253J/ Dec 2009 Zoning R-3 Entitlement Status Fully Entitled Transaction Details Type Sale Primary Verification Interest Transferred Fee Simple Transaction Date Condition of Sale None Recording Date Buyer Type Developer Sale Price Recorded Seller SGV Property Fund LLC Financing Marketing Time N/A Cash Equivalent Listing Broker Amy O'Donnell, Land Advisors Capital Adjustment (949) 656-8018 % Interest Purchased Doc # 0250751 Adjusted Price Adjusted Price / ac and / sf Adjusted Price/ Unit Listing Broker 07/18/2022 07/18/2022 $5,700,000 Cash to Seller $5,700,000 $0 100% $5,700,000 $6,063,830 / $139.21 $316,667 This is the July 2022 sale of a 0.94-acre site on the east side of Cameron Lane, one lot south of Slater Avenue in Huntington Beach. The site was in cleared condition and sold with entitlements for 18 attached 2-story townhomes ranging in size from 1,233 to 1,422 square feet. Two units are designated as "moderate income" affordable units. BRE17-113 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Max Allow Bldg Units/Density Shape Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Detached Condominium Site Vicinity of Lynx and Astor Irvine, CA 92618 Orange 591-563-02, 05, 06, 07, 08 6.258 ac/ 272,612 sf 6.258 ac/ 272,612 sf Semi -Finished All to site 60 / 9.59 Irregular Generally Level Zone X (Unshaded) 06059C0315J/ Dec 2009 1.9 OC Great Park Fully Entitled Sale Fee Simple None Developer Heritage Fields El Toro, LLC N/A N/A 549184 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Adjusted Price/ Unit David Kemnitz - Buyer 09/01/2021 09/01/2021 $31,809,500 Cash to Seller $31,809,500 $0 100% $31,809,500 $8,082,770 / $116.68 $530,158 This is the sale of a 60-unit detached condominium site within the Great Park master -planned community in Irvine. The site is in the vicinity of Lynx and Astor and was delivered to the buyer in semi -finished condition with full entitlements. The property was purchased in September 2021 for $31,809,500. The buyer intends to build detached homes ranging from 2,500 to 2,900 square feet. BRE17-114 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Max Allow Bldg Units/Density Shape Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Detached Condominium Site NW of Merit and Cadence Irvine, CA 92618 Orange 591-553-01, 02, 07, 08, 09, 10 4.390 ac/ 191,228 sf 4.390 ac/ 191,228 sf Semi -Finished All to site 37 / 8.43 Irregular Generally Level Zone X (Unshaded) 06059C0315J/ Dec 2009 1.9 OC Great Park Fully Entitled Type Sale Primary Verification Public Records & Costar Interest Transferred Fee Simple Transaction Date 06/01/2021 Condition of Sale None Recording Date 06/01/2021 Buyer Type Developer Sale Price $19,781,000 Recorded Seller Heritage Fields El Toro, LLC Financing Cash to Seller Marketing Time N/A Cash Equivalent $19,781,000 Listing Broker N/A Capital Adjustment $0 Doc # 355611 % Interest Purchased 100% Adjusted Price $19,781,000 Adjusted Price / ac $4,505,923 / $103.44 and / sf Adjusted Price/ Unit $534,622 This is the sale of a 37 unit detached condominium site within the Great Park master -planned community in Irvine. The property is generally located northwest of Merit and Cadence. The site was delivered in semi -finished condition with full entitlements. The buyer intends to build homes from 2,289 to 2,591 square feet to be priced in the $1.2 million to $1.3 million range. BRE17-115 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Utilities Max Allow Bldg Units/Density Shape Primary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Comments Mariner Square 1244 Irvine Ave. Newport Beach, CA 92660 Orange 425-061-09 5.830 ac/ 253,955 sf 5.830 ac/ 253,955 sf All to site 92 / 15.78 Irregular 518 ft on Irvine Avenue Level, At Street Grade Zone X (Unshaded) 06059CO268J/ Dec. 2009 RM-6000, Multi -unit Residential Zone Fully Entitled/Planning Permissions Sale Fee Simple None Developer Mariner Square 2017 LLC and Mariners Investors, LLC N/A N/A 0550020 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Adjusted Price/ Unit CoStar, Deed, & Public Records 12/31/2019 12/31/2019 $58,000,000 Cash to Seller $58,000,000 $0 100% $58,000,000 $9,948,542 / $228.39 $630,435 The Mariner Square multifamily property sold for land value on December 31, 2019 for $58,000,000, or $228.39 per square foot of land. The property sold fully entitled for 92 attached single-family residential homes to be built on -site, comprised of 56 duplex and quad units built by Shea Homes, and 36 townhomes built by Intracorp Homes. The projects will be contiguous and will share private streets, common areas and open space, recreational facilities, utility trunk lines and other utilities, right-of-way, and streetscape infrastructure. The tenants of Mariner Square were given 60-day notices and the building was 100 percent vacant as of December 15th, 2019. The demolition permit was awarded prior to the close of the sale and the 129,846 square foot multifamily improvements will be razed. BRE17-116 Addenda Addendum B Qualifications CBRE VALUATION & ADVISORY SERVICES 34 © 2024 CBRE, INC 17-117 PROFILES Professional Affiliations / Accreditations - Member: Appraisal Institute - Designation: Appraisal Institute - General Review Specialist (AI-GRS) - Fellow: Royal Institution of Chartered Surveyors - Member: The Counselors of Real Estate - Member: International Right of Way Association - License: California State Certified General Real Estate Appraiser - Certified: Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) Education - M.B.A., Pepperdine University - B.S., Kinesiology, University of California, Los Angeles - Certified by the Appraisal Institute's program of continuing education for its designated members. CBRE VALUATION & ADVISORY SERVICES Beth B. Finestone, MAI, AI-GRS, FRICS, CRE Executive Vice President Los Angeles, CA T +1 818 2513669 E Beth.Finestone@CBRE.com Professional Experience Beth B. Finestone, MAI, AI-GRS, FRICS, CRE, is an Executive Vice President for CBRE's Valuation & Advisory Services (VAS). She has been appraising in Southern California since 1981, specializing in valuation and consulting services related to public agency and right-of-way clients and for major investment -grade commercial properties and special purpose properties. She also has extensive expertise in valuing large tracts of land for conservation, mitigation and other purposes. Ms. Finestone's clients include public agencies, right-of-way firms, lenders, institutional investors, major corporations, law firms, and individual property owners. Her services include a wide range of specialized studies including ground lease rent studies, partial interest acquisitions, value diminution (from both internal and external influences), market demand, feasibility, severance damages and project benefits, investment analysis, assessment allocation, reuse analysis, and the valuation of partial interests including leasehold, leased fee, possessory interests, and minority interests. She is experienced in valuing full and partial acquisitions related to eminent domain actions. These services include the valuation of fee acquisitions, permanent and temporary easements, including the appraisal of railroad and other types of corridors, pipeline easements and transmission line easements. She has been a featured speaker at Appraisal Institute, International Right of Way, and legal functions. She was the 2019 President of the Southern California Chapter of the Appraisal Institute, the largest chapter in the country. Beth was previously a Managing Director for and a principal of Integra Realty Resources - Los Angeles. In addition, she was the Executive Director of Integra Realty Resources - Orange County. During her career, she has held senior positions with Finestone & Associates and Cushman & Wakefield. (��2024 CBRF, INC. 17-118 PROFILES Recognition CBRE - Los Angeles Business Journal 2009 Nominee for Executive of the Year - Women Making a Difference, May 2009 - Designated one of Real Estate Southern California's 2006 Women of Influence, October 2006 Seminar Presentations - Corridors, Crops & Condemnation (IRWA National Conference in San Diego, June 2015) - Eminent Domain Appraisals: Pitfalls & Value -Added Services (RICS - Southern California Chapter, CPD Presentation, April 16, 2015) - Government Buildings (Appraisal Institute, Special Purposes Seminar, July 15, 2014) - The Trouble with Ignoring Building Code Violators (SCCAI 43`d Annual Litigation Seminar, Moderator, November 15, 2013) - Conflicting Mandates & Instructions Between USPAP, Yellow Book, & Caltrans Appraisal Guidelines (IRWA Annual Valuation Seminar, April 24, 2012) - Current Issues in Real Estate Appraisal (Lorman Education Services, live audio conference, March 8, 2012) - The Role of the Appraiser in Construction Defect Litigation: Measuring Damages from Construction Defects (MCLE- approved presentation, January 11, 2012, March 4, 2010, and February 10, 2010) Expert Testimony Ms. Finestone has qualified as an expert witness in real estate matters and has testified before: - Superior Courts: Los Angeles and Orange Counties - Arbitration Hearings: Los Angeles County - Tax Appeal Boards: Los Angeles and San Diego Counties Representative Appraisal Assignments - Appraisal of 50+ single-family residences (SFRs) impacted by the 1-405 Widening Project in Costa Mesa. The acquisitions all involve temporary construction easements (TCEs). This assignment required an analysis of temporary severance damages due to impacts to rear yards as well as a valuation of all site improvements in the TCE areas. Appraisal of 50+ commercial properties impacted by various types of partial acquisitions related to the 1-405. Some of the appraisals were extremely complex with significant severance damage studies required. - Multiple appraisal assignments for LACMTA included: - Appraisal of a 1.25-acre parcel improved with a Class A,12-story, medical office building constructed circa 1962, an adjacent one-story bank building and an attached four-story parking structure known as the Westwood Medical Plaza. It is located along the proposed Purple Line Subway Extension Project Corridor, specifically on the northeast corner of Wilshire Boulevard and Westwood Boulevard in the Westwood neighborhood within the City of Los Angeles. As part of this project, LACMTA is seeking acquire various permanent and temporary property interests, and to relocate existing tenants within the subject property. The purpose of this appraisal was to estimate the fair market value of the property interests (Parts Taken) to be acquired from the Larger Parcel and to make a determination as to the impact of the proposed acquisitions on the Remainder Parcel. - Appraisal of Wilshire Federal Building: Appraisal of a deep tunnel easement on the Wilshire frontage of the Federal Building as part of LACMTA's Purple Line extension. Consideration was given to the redevelopment potential of the site and the benefits to the remainder, as well as to the value of the parts taken. - Appraisal involving the valuation of partial acquisitions impacting the Westfield Mall in Century City as part of LACMTA's Purple Line extension. This assignment was challenging with respect to valuing the underlying land associated with the larger parcel. The property is unique due to its location and its size. Complexities involved determining the number of trips allocated to the site as this in part drives land value. Again, consideration was given to damages and benefits, as well as to the value of the parts taken. 02024 CBRE, INC. 17-119 PROFILES CBRE — Appraisal of numerous surface and subsurface acquisitions were required on the Veteran's Administration property for the construction of a subway station and tunnel easements for LACMTA's Purple Line. Significant research was required relative to the VA specific plan and the highest and best use of the property. Consideration was given to damages and project benefits as well as the value of the parts acquired. — Appraisal of 50± miles of pipeline easement running through UPRR and BNSF rail corridors in Urban Los Angeles. — Multiple appraisal assignments for RCTC included: — Appraisal of parcels under more than 50 separate ownerships affected by acquisitions and easements for the SR-91 Corridor Improvement Project through the City of Corona. The complete summary appraisal reports and appraisal summary statements included a valuation of the properties in the before and after condition. Some of the properties had significant severance damage analyses due to loss of building improvements, parking, loading, etc. — City of Riverside 69 kV Electrical Transmission Line Project: Initially valued 22 residential and commercial properties in the City of Riverside. These properties all had a three -foot -wide partial taking along their frontage to accommodate the construction of a 69 kV transmission line. This represented Phase One of this assignment. Phase Two involved the partial taking of land over seven properties owned by JCR for the construction of a transmission line. The final phase involved approximately 100 properties of various types which were impacted by partial acquisitions for the construction of a transmission line. The final phase involved approximately 90 properties of various types which will be impacted by partial takes for the construction of a transmission line. — Appraisal of in excess of 75 private properties on behalf of CHSRA. The property types included agricultural, commercial and residential. Most of the appraisals involved partial acquisitions. In addition, Ms. Finestone completed the appraisal of over 50 railroad corridor properties in conjunction with the high-speed rail project. — Appraisal of the Del Mar Fairgrounds, Racetrack, and Horsepark (450 acres of land and over 1,000,000 square feet in improvements) for the California Department of General Services. — Completed an appraisal of a property that represents one of the largest parcels of undeveloped and unprotected coastal property in Southern California (Banning Ranch). Much of the site had been occupied by oil operations since the 1940's. The appraisal of this property was very complex in that the highest and best use of the property was not clear at the onset of the assignment. This property consists of degraded wetlands, open space, and a small area with the potential for residential development. The goal of this project was to prepare an appraisal for acquisition purposes such that the buyer and seller could agree on a purchase price and put the property under contract. — West Coyote Hills: Appraised Neighborhoods 1 and 3 of Vested Tentative Tract Map (VTTM)17609. This is commonly referred to as Neighborhoods 1 and 3 of the West Coyotes Hills Property. Neighborhood 1 consists of 10.4± acres and was proposed for development with 16 residential units. Neighborhood 3 is 13.7± acres and was proposed for development with 59 residential units. Neighborhoods 1 and 3 were valued separately. The intended users of the report were the California State Coastal Conservancy, City of Fullerton, Wildlife Conservation Board, Rivers and Mountains Conservancy, California Department of Parks and Recreation, California Natural Resources Agency, and the US Fish and Wildlife Service. This report was prepared to Federal Standards in conformance with Yellow Book guidelines and the acquisition was made based on our appraisal. — Appraisal in Fresno County for the State Department of Water Resources, which included 22 permanent flowage easements and three partial fee acquisitions. Some of the proposed flowage easements overlapped existing road and utility easements which had to be considered. Due to the nature of the flowage easements, substantial severance damages accrued to the remainder parcels which had to be considered. This assignment also included the consideration of orchard and crop values. — Multiple appraisal assignments for the U.S. Department of the Interior, Appraisal and Valuation Services Office (AVSO) prepared to Federal Standards in accordance with Yellow Book guidelines. These were for acquisition purposes related to the San Joaquin River Restoration Project and for the acquisition land to be acquired for National Wilderness areas. 02024 CBRE, INC. 17-120 PROFILES VALUATION & ADVISORY SERVICE Thomas G. Richardson, MAI Vice President E tom.richardson1@cbre.com Professional Experience Thomas G. Richardson, MAI is a Vice President for CBRE's Valuation & Advisory Services (VAS). Mr. Richardson began his career in real estate appraisal in 2012. His experience includes consulting and appraisals for improved properties such as single - and multifamily residences, restaurants, shopping centers, office buildings, warehouses, retail and industrial condominiums, mixed -use commercial and residential buildings, religious facilities, and special purpose properties. Pro Affiliations / He has valued various categories of land including agricultural, residential, commercial, open space/recreational, saltwater marshland, solar farm, and mitigation land. His work has Accreditations been utilized by various public agencies, law firms, financial institutions, and property owners for right-of-way, disposition, bond financing, lease negotiations, and in -lieu fees. - Member: Appraisal Institute, His recent appraisal work for right -of -way -related purposes includes assignments for the February 2021 San Juan Creek Bridge Replacement Project, Los Nietos Safe Routes to School Project, - Licensed: California Certified Playa Del Rey Wastewater Line Project, 1-405 Improvement Project, Culver University General Real Estate Appraiser Improvement Project, Regional Connector Transit Project, Century Boulevard Mobility No.3004940 Improvement Project, Riverside Transmission Reliability Project, Centennial Corridor Expires November 2025 Project, California High Speed Rail Authority, Irvine Business Complex Sidewalk Project, and Mid County Parkway Project. Mr. Richardson was previously an Associate Director of Integra Realty Resources - Los Angeles. Education - B.A., History, University of Training / Courses Completed California, Los Angeles Completed the following courses and seminars: — Advanced Concepts & Case Studies — Basic Appraisal Principles — Basic Appraisal Procedures — Business Practices and Ethics — Commercial Appraisal Review — Expert Witness for Commercial Appraisers — General Appraiser Income Approach, Part I — General Appraiser Income Approach, Part II — General Appraiser Market Analysis and Highest & Best Use — Advanced Market Analysis and Highest & Best Use — General Appraiser Report Writing and Case Studies ©2024 CBRE, INC. 17-121 PROFILES General Appraiser Sales Comparison Approach — General Appraiser Site Valuation and Cost Approach — Real Estate Finance, Statistics, and Valuation Modeling — Uniform Standards of Professional Appraisal Practice — Quantitative Analysis — Advanced Income Capitalization ©2024 CBRE, INC. 17-122 Attachment D CBRE Appraisal Report — Hypothetical Property in West Newport, dated August 7, 2024 17-123 CBRE Valuation & Advisory Services Appraisal Report HYPOTHETICAL INDUSTRIAL PROPERTY Near Intersection of Placentia Avenue and Production Place Newport Beach, California 92663 Prepared for: City of Newport Beach Date of Report: August 7, 2024 CBRE File No.: CB24US044895-3 cbrexom/valuation 17-124 CBRE Valuation & Advisory Services CBRE 5921 Owensmouth Avenue Woodland Hills, CA 91367 T (818)251-3600 www.cbre.com/valuation Date of Report: August 7, 2024 Ms. Lauren Wooding Whitlinger Real Property Administrator CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 RE: Appraisal of: Hypothetical Industrial Property Near Intersection of Placentia Avenue and Production Place Newport Beach, Orange County, California CBRE File No.: CB24USO44895-3 Dear Ms. Wooding Whitlinger: At your request and authorization, CBRE, Inc. has prepared an appraisal of the fair market value of the referenced property. Our analysis is presented in the following Appraisal Report. The subject is a hypothetical parcel of vacant land containing an area of 0.46 acres or 20,000 square feet. The parcel size is based on the most typical parcel size of the surrounding industrial properties. The hypothetical property is zoned IG, Industrial, which permits a wide range of moderate to low intensity industrial uses and limited accessory commercial and office uses. Based on the analysis contained in the following report, the market value of the subject is concluded as follows: MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $1,900,000 Compiled by CBRE This Appraisal Report is subject to Extraordinary Assumptions and/or Hypothetical Conditions; please refer to the Executive Summary section of this report for further discussion and analysis. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth CBRE VALUATION & ADVISORY SERVICES 1 © 2024 CBRE, INC 17-125 CBRE Valuation & Advisory Services in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non -intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof). It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES Tom Richardson, MAI Title: VAS - Vice President Phone: (818) 251-3643 Email: Tom. Richardson1@cbre.com License No. & State: 3004940 CA Beth Finestone, MAI, AI-GRS, FRICS, CRE Title: VAS - Executive Vice President Phone: (818) 251-3669 Email: Beth.Finestone@cbre.com License No. & State: AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-126 Certification Certification We certify to the best of our knowledge and belief: 1 . The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have not provided any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. We completed an appraisal of the subject in August 2019. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our 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. 8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice. 9. Tom Richardson has made a personal inspection of the property that is the subject of this report. Beth Finestone, MAI, AI-GRS, FRICS, CRE has not made a personal inspection of the property that is the subject of this report. 10. No one provided significant real property appraisal assistance to the persons signing this certification. 11. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have completed the continuing education program for Designated Members of the Appraisal Institute. Tom Richardson, MAI Certified General 3004940 CA Beth Finestone, MAI, AI-GRS, FRICS, CRE Certified General AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-127 Subject Photographs Subject Photographs `—�`mr—." e l � CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-128 View of property at southwest corner of View of property at northwest corner of Placentia Avenue and Production Place. Placentia Avenue and Production Place. Looking north along Placentia Avenue. ILookina south along Placentia Avenue. a Lookinq west along Production Place. Lookinq east alonq Production Place. Executive Summary Executive Summary Property Name Location Parcel Number(s) Hypothetical Industrial Property Near Intersection of Placentia Avenue and Production Place Newport Beach, Orange County, CA 92663 Hypothetical Property Client City of Newport Beach Highest and Best Use As If Vacant Hold for future industrial use As Improved N/A Property Rights Appraised Fee Simple Estate Date of Inspection July 23, 2024 Estimated Exposure Time 6 - 12 Months Estimated Marketing Time 6 - 12 Months Primary Land Area 0.46 AC 20,000 SF Zoning IG, Industrial Buyer Profile Developer CONCLUDED FAIR MARKET VALUE Appraisal Premise Interest Appraised Date of Value Value Fair Market Value Fee Simple Estate July 23, 2024 $1,900,000 Compiled by CBRE Strengths, Weaknesses, Opportunities and Threats (SWOT) Weaknesses/ Threats • Commercial real estate market conditions have deteriorated at the macro level. The significant recent increase in the cost of capital and reduced volume of transaction activity is impacting price discovery and creating an increase in uncertainty. Increasing interest rates and subdued economic growth will continue to weigh on commercial real estate fundamentals and investment transaction volumes. This creates a higher degree of uncertainty in general, though the impacts may vary by market and asset class/type. Market Volatility We draw your attention to a combination of inflationary pressures (leading to higher interest rates) and recent failures/stress in banking systems which have significantly increased the potential for constrained credit markets, negative capital value movements and enhanced volatility in property markets over the short -to -medium term. Experience has shown that consumer and investor behavior can quickly change during periods of such heightened volatility. Lending or investment decisions should reflect this heightened level of volatility and the potential for deteriorating market conditions. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-130 Executive Summary It is important to note that the conclusions set out in this report are valid as of the valuation date only. Where appropriate, we recommend that the valuation is closely monitored, as we continue to track how markets respond to evolving events. Extraordinary Assumptions An extraordinary assumption is defined as "an assignment -specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions." 1 • None noted. Hypothetical Conditions A hypothetical condition is defined as "a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results but is used for the purposes of analysis." 2 • Per our client's request, we are appraising a hypothetical industrial property that is vacant land in the area of Placentia Avenue and Production Place. Based on our determination of the most typical parcel size in the area, the hypothetical property contains 20,000 square feet. Ownership and Property History The subject is a hypothetical property near Placentia Avenue and Production Place, that will be the likely location for a new park to be constructed by the City of Newport Beach. Since the subject is hypothetical, a discussion of its sale history is not applicable. Exposure/Marketing Time Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. The following table presents our estimates. EXPOSURE/MARKETING TIME DATA Exposure/Mktg. (Months) Investment Type Range CBRE Exposure Time Estimate 6 - 12 Months CBRE Marketing Period Estimate 6 - 12 Months Various Sources Compiled by CBRE 1 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) 2 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-131 Table of Contents Table of Contents Certification........................................................................................................................................................................ i SubjectPhotographs...................................................................................................................................................... ii ExecutiveSummary....................................................................................................................................................... iv Tableof Contents...........................................................................................................................................................vi Scopeof Work....................................................................................................................................................................1 AreaAnalysis....................................................................................................................................................................5 NeighborhoodAnalysis..................................................................................................................................................7 SiteAnalysis......................................................................................................................................................................9 Zoning................................................................................................................................................................................14 Taxand Assessment Data..........................................................................................................................................16 MarketAnalysis...............................................................................................................................................................17 Highestand Best Use...................................................................................................................................................22 LandValue.......................................................................................................................................................................23 Reconciliationof Value................................................................................................................................................27 Assumptions and Limiting Conditions...................................................................................................................28 ADDENDA A Land Sale Data Sheets B Qualifications CBRE VALUATION & ADVISORY SERVICES Vi © 2024 CBRE, INC 17-132 Scope of Work Scope of Work This Appraisal Report is intended to comply with the real property appraisal development and reporting requirements set forth under Standards Rule 1 and 2 of USPAP. The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered, and analysis is applied. Intended Use Of Report The intended use of the appraisal is to assist the City of Newport Beach in establishing Park In -Lieu fees and no other use is permitted. Client The client is the City of Newport Beach. Intended User Of Report This appraisal is to be used by the City of Newport Beach. No other user(s) may rely on our report unless as specifically indicated in this report. Intended users are those who an appraiser intends will use the appraisal or review report. In other words, appraisers acknowledge at the outset of the assignment that they are developing their expert opinions for the use of the intended users they identify. Although the client provides information about the parties who may be intended users, ultimately it is the appraiser who decides who they are. This is an important point to be clear about: The client does not tell the appraiser who the intended users will be. Rather, the client tells the appraiser who the client needs the report to be speaking to, and given that information, the appraiser identifies the intended user or users. It is important to identify intended users because an appraiser's primary responsibility regarding the use of the report's opinions and conclusions is to those users. Intended users are those parties to whom an appraiser is responsible for communicating the findings in a clear and understandable manner. They are the audience. 3 Reliance Language Reliance on any reports produced by CBRE under this Agreement is extended solely to parties and entities expressly acknowledged in a signed writing by CBRE as Intended Users of the respective reports, provided that any conditions to such acknowledgement required by CBRE or hereunder have been satisfied. Parties or entities other than Intended Users who obtain a copy of the report or any portion thereof (including Client if it is not named as an Intended User), whether as a result of its direct dissemination or by any other means, may not rely upon any opinions or conclusions contained in the report or such portions thereof, and CBRE will not be responsible for any unpermitted use of the report, its conclusions or contents or have any liability in connection therewith. 3 Appraisal Institute, The Appraisal of Real Estate, 151h ed. (Chicago: Appraisal Institute, 2020), 40. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-133 Scope of Work Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the fair market value of the fee simple interest in a hypothetical, industrially zoned vacant land property in the area of Placentia Avenue and Production Place as of the effective date of the appraisal. This will likely be the location of a new park to be constructed by the City of Newport Beach. Definition of Fair Market Value "Fair Market Value", as defined pursuant to Part 3, Title 7, Chapter 9, Article 4, of the California Code of Civil Procedure, entitled: Eminent Domain Law, is as follows: Fair Market Value ... Article 4. Measure of Compensation for Property Taken. 1263.320 (a) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (b) The fair market value of the property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method valuation that is just and equitable. 1263.330 The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: (a) The project for which the property is taken. (b) The eminent domain proceeding in which the property is taken. (c) Any preliminary actions of the plaintiff relating to the taking of the property. Interest Appraised The value estimated represents Fee Simple Estate as defined below: Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. 4 Extent to Which the Property is Identified The property is identified through the following sources: • Postal address • Assessor's records • Legal description 4 Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022), 73. CBRE VALUATION & ADVISORY SERVICES 2 © 2024 CBRE, INC 17-134 Scope of Work Extent to Which the Property is Inspected Tom Richardson, MAI conducted an inspection of the area of the hypothetical subject, as well as its surrounding environs on the effective date of appraisal. This inspection was considered adequate and is the basis for our findings. Type and Extent of the Data Researched CBRE reviewed the following: • Applicable tax data • Zoning requirements • Flood zone status • Demographics • Comparable data Type and Extent of Analysis Applied CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. For vacant land, the sales comparison approach has been employed for this assignment. Statement of Competency The appraisers have the appropriate knowledge, education, and experience to complete this assignment competently. Appraisal Methodology In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. Depending on a specific appraisal assignment, any of the following four methods may be used to determine the market value of the fee simple interest of land: • Sales Comparison Approach; • Income Capitalization Procedures; • Allocation; and • Extraction. The following summaries of each method are paraphrased from the text. The first is the sales comparison approach. This is a process of analyzing sales of similar, recently sold parcels in order to derive an indication of the most probable sales price (or value) of the property being appraised. The reliability of this approach is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data regarding size, price, terms of sale, etc., (c) the degree of comparability or extent of adjustment necessary for differences between the subject and the comparables, and (d) the absence of nontypical conditions affecting the sales price. This is the primary and most reliable method used to value land (if adequate data exists). The income capitalization procedures include three methods: land residual technique, ground rent capitalization, and Subdivision Development Analysis. A discussion of each of these three techniques is presented in the following paragraphs. CBRE VALUATION & ADVISORY SERVICES 3 © 2024 CBRE, INC 17-135 Scope of Work The land residual method may be used to estimate land value when sales data on similar parcels of vacant land are lacking. This technique is based on the principle of balance and the related concept of contribution, which are concerned with equilibrium among the agents of production--i.e. labor, capital, coordination, and land. The land residual technique can be used to estimate land value when: 1) building value is known or can be accurately estimated, 2) stabilized, annual net operating income to the property is known or estimable, and 3) both building and land capitalization rates can be extracted from the market. Building value can be estimated for new or proposed buildings that represent the highest and best use of the property and have not yet incurred physical deterioration or functional obsolescence. The subdivision development method is used to value land when subdivision and development represent the highest and best use of the appraised parcel. In this method, an appraiser determines the number and size of lots that can be created from the appraised land physically, legally, and economically. The value of the underlying land is then estimated through a discounted cash flow analysis with revenues based on the achievable sale price of the finished product and expenses based on all costs required to complete and sell the finished product. The ground rent capitalization procedure is predicated upon the assumption that ground rents can be capitalized at an appropriate rate to indicate the market value of a site. Ground rent is paid for the right to use and occupy the land according to the terms of the ground lease; it corresponds to the value of the landowner's interest in the land. Market -derived capitalization rates are used to convert ground rent into market value. This procedure is useful when an analysis of comparable sales of leased land indicates a range of rents and reasonable support for capitalization rates can be obtained. The allocation method is typically used when sales are so rare that the value cannot be estimated by direct comparison. This method is based on the principle of balance and the related concept of contribution, which affirm that there is a normal or typical ratio of land value to property value for specific categories of real estate in specific locations. This ratio is generally more reliable when the subject property includes relatively new improvements. The allocation method does not produce conclusive value indications, but it can be used to establish land value when the number of vacant land sales is inadequate. The extraction method is a variant of the allocation method in which land value is extracted from the sale price of an improved property by deducting the contribution of the improvements, which is estimated from their depreciated costs. The remaining value represents the value of the land. Value indications derived in this way are generally unpersuasive because the assessment ratios may be unreliable and the extraction method does not reflect market considerations. For the purposes of this analysis, we use only the sales comparison approach in developing an opinion of value for the subject. This approach is applicable to the subject because there is an active market for similar properties, and sufficient sales data is available for analysis. The cost approach is not applicable because there are no improvements that contribute value to the hypothetical property. The income approach is not applicable because the hypothetical property is not likely to generate rental income in its current state. CBRE VALUATION & ADVISORY SERVICES 4 © 2024 CBRE, INC 17-136 Area Analysis Area Analysis Norwalk Compton Fullerton Torrance Carson Anaheim f LOB w7 Orange Long Beach Westminster Santa Ana � v Huntington Irvine Beach Newpo't3each O mapiiM land T7 Corona Lake Forest Mission Vlejo 74 74 Laguna Niguel San Mateo C Wiidern- San Clemente = . ucr! .7,,a!!.,r The subject is located in Orange County. Key information about the area is provided in the following tables. Population The area has a population of 3,171,875 and a AREA POPULATION BYAGE median age of 40, with the largest population 500,000 group in the 20-29 age range and the smallest 400,000 00,000 population in 80+ age range. 300,000 100,000 I ' 0 Source: ESRI 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80+ Population has increased by 161,664 since 2010, POPULATION BY YEAR reflecting an annual increase of 0.4%. Population 4,000,000 is projected to decrease by 2,549 between 2024 3,000,000 and 2029, reflectinga 0.0% annual population P p 2,000,000 decline. 1,000,000 0 Source: ESRI 2010 Source: ESRI, downloaded on Jul, 31 2024 CBRE VALUATION & ADVISORY SERVICES 5 2024 2029 © 2024 CBRE, INC 17-137 Area Analysis Income The area features an average household income of $157,826 and a median household income of $112,796. Over the next five years, median household income is expected to increase by 15.0%, or $3,394 per annum. Education A total of 46.2% of individuals over the age of 24 have a college degree, with 29.2% holding a bachelor's degree and 16.9% holding a graduate degree. Employment MEDIAN INCOME BY YEAR $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Source: ESRI 2024 2029 POPULATION BY DEGREE ■ Bachelor's Degree ■ Graduate Degree ■ Other Source: ESRI Health Care/Social Assistance Manufacturing Prof/Scientific/Tech Services Retail Trade Educational Services Accommodation/Food Services Construction Finance/Insurance Other Services (excl Publ Adm) Admin/Support/Waste Mgmt Srvcs Source: ESRI 0% 2% 4% 6% 8% 10% 12% 14% The area includes a total of 1,627,211 employees. The top three industries within the area are Health Care/Social Assistance, Manufacturing and Prof/Scientific/Tech Services, which represent a combined total of 35% of the workforce. Source: ESRI, downloaded on Jul 31, 2024; BLS.gov dated Jan 0, 1900 In summary, the area is forecasted to experience a decrease in population and an increase in household income. CBRE VALUATION & ADVISORY SERVICES 6 © 2024 CBRE, INC 17-138 Neighborhood Analysis Neighborhood Analysis W 1 Sth St v 5 "yd ET rh so i Park Dr Shalimar Dr o n D 3 cd o 6^� n Sf P ro ro Trader Joe's Tiki Bar pia Ramada Costa Mesa/ Randall Preserve Newport Beach eons 17th Street Pi W 16th St � Target Production Pt© 8aPa¢ �o+ CoastlineCommunity n gcaO+ ° q( aa� �6fhq College ro Y9 ai S� Pc NHoag Heatth Center FPS �P^sf �ac`a .o hSr SUPERIOR dr^% HEIGHTS Pia 0 ,na 40Pr Cad 0 9d s� HARBOR HEIGHTS S� acay Sunset Ridge Park Riz + �ep� ^Pray Hoag Memorial Qmapbox b P H—nitai P...hvt—ian Location The hypothetical subject is in the city of Newport Beach and is considered a suburban location. The city of Newport Beach is situated in southern Orange County. Boundaries The hypothetical subject is located in a primarily industrial pocket within the City of Newport Beach near its boundary with the City of Costa Mesa. This area is generally delineated as follows: North: West 17th Street South: West 15th Street East: Newport Boulevard West: Whittier Avenue Land Use In the immediate vicinity of the hypothetical subject, land uses include a mix of industrial and multifamily residential. CBRE VALUATION & ADVISORY SERVICES 7 © 2024 CBRE, INC 17-139 Neighborhood Analysis Access Primary access to the area is provided by Placentia Avenue and Newport Boulevard (SR-55), major arterials that cross Orange County in a north/south direction and 17th Street, which crosses in an east/west direction. Overall, vehicular access is average. Public transportation is provided by Orange County Transportation Authority. The nearest bus stop is located at the intersection of Placentia Avenue and Production Place. The local market perceives public transportation as average compared to other areas in the region. However, the primary mode of transportation in this area is the automobile. John Wayne Airport is located about five miles northeast from the area. Demographics Selected neighborhood demographics in 1-, 3- and 5-mile radius from the subject are shown in the following table: SELECTED NEIGHBORHOOD DEMOGRAPHICS ear Intersecton or Placentia Avenue an Production Place 1 Mile Radius 3 Mile Radius 5 Mile Radius California Orange County W2u' c"' Rcarh CA Q9rrIA Population 2029 Total Population 24,447 125,876 268,550 39,717,178 3,169,326 2024 Total Population 24,639 126,056 269,758 39,530,491 3,171,875 2010 Total Population 25,060 128,673 269,422 37,253,959 3,010,211 2000 Total Population 25,428 130,645 270,814 33,871,651 2,846,214 Annual Growth 2024 - 2029 -0.16% -0.03% -0.09% 0.09% -0.02% Annual Growth 2010 - 2024 -0.12% -0.15% 0.01 % 0.42% 0.37% Annual Growth 2000 - 2010 -0.15% -0.15% -0.05% 0.96% 0.56% Households 2029 Total Households 10,358 52,525 112,555 13,903,885 1,123,363 2024 Total Households 10,138 51,261 110,009 13,641,471 1,090,541 2010 Total Households 9,748 50,720 107,290 12,577,497 992,769 2000 Total Households 10,082 51,656 108,135 11,502,868 935,264 Annual Growth 2024 - 2029 0.43% 0.49% 0.46% 0.38% 0.59% Annual Growth 2010 - 2024 0.28% 0.08% 0.18% 0.58% 0.67% Annual Growth 2000 - 2010 -0.34% -0.18% -0.08% 0.90% 0.60% Income 2024 Median Household Income $106,675 $120,100 $123,299 $97,646 $112,796 2024 Average Household Income $160,368 $178,033 $177,914 $139,308 $157,826 2024 Per Capita Income $65,869 $72,435 $72,548 $48,206 $54,311 2024 Pop 25+ College Graduates 9,133 50,260 110,518 10,659,207 1,035,382 Age 25+ Percent College Graduates - 2024 49.6% 53.5% 54.7% 38.8% 46.2% Source: ESRI Conclusion In keeping with the principle of conformity, we expect neighborhood land uses to continue to be suburban, similar to the present use. A generally negative population growth rate is expected in the near future. This is a negative indicator for real estate demand. However, the limited supply of available property combined with macroeconomic conditions will continue to bolster the local real estate market. CBRE VALUATION & ADVISORY SERVICES 8 © 2024 CBRE, INC 17-140 Site Analysis Site Analysis The following chart summarizes the salient characteristics of the subject site. SITE SUMMARY AND ANALYSIS Physical Description Gross Site Area 0.46 Acres 20,000 Sq. Ft. Net Site Area 0.46 Acres 20,000 Sq. Ft. Shape Rectangular (Based on typical parcel shape in the area) Topography Level, At Street Grade Parcel Number(s) Hypothetical Property Zoning District IG, Industrial Flood Map Panel No. & Date 06059CO268J 3-Dec-09 Flood Zone Zone X (Unshaded) Utilities Availability Comments Water Yes City of Newport Beach Sewer Yes City of Newport Beach Natural Gas Yes Southern California Gas Company Electricity Yes Southern California Edison Telephone/Cable/Internet Yes Various Mass Transit Yes OCTA Various sources compiled by CBRE Location The hypothetical subject is near the intersection of Placentia Avenue and Production Place. Land Area The subject is a hypothetical parcel of vacant land containing an area of 0.46 acres or 20,000 square feet. The parcel size is based on the most typical parcel size of the surrounding industrial properties. The hypothetical site is considered adequate in terms of size and utility. There is no unusable, excess or surplus land area. Shape and Frontage The hypothetical site is rectangular shaped, based on the typical parcel in the area. It is assumed to have adequate frontage for development. Ingress/Egress The hypothetical site is assumed to have adequate ingress and egress. Placentia Avenue, at the hypothetical subject, is a north/south street that has a dedicated width of 70 feet and is improved with two lanes of traffic in each direction. Street improvements include asphalt paving and concrete curbs, gutters and sidewalks, and street lighting. Street parking is not permitted. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-141 Site Analysis Production Place, at the hypothetical subject, is an east/west street that has a dedicated width of 60 feet. It is improved with one lane of traffic in each direction. Additional street improvements include concrete curbs, gutters and sidewalks, and street lighting. Street parking is permitted. Topography and Drainage The hypothetical site is generally level and at street grade. The topography of the hypothetical site is not seen as an impediment to the development of the property. During our inspection of the site, we observed no drainage problems and assume that none exist. Soils A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soils report, it is a specific assumption that the site has adequate soils to support the highest and best use. Easements and Encroachments There are no known easements or encroachments impacting the hypothetical site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision. Covenants, Conditions and Restrictions There are no known covenants, conditions or restrictions impacting the hypothetical site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a copy of the current covenants, conditions and restrictions, if any, prior to making a business decision. Utilities and Services The hypothetical site includes all municipal services, including police, fire and refuse garbage collection. All utilities are available to the hypothetical site in adequate quality and quantity to service the highest and best use. Environmental Issues Although CBRE was not provided an Environmental Site Assessment (ESA), a tour of the area of the hypothetical subject did not reveal any obvious issues regarding environmental contamination or adverse conditions. CBRE VALUATION & ADVISORY SERVICES 10 © 2024 CBRE, INC 17-142 Site Analysis Adjacent Properties The land uses at the intersection of Placentia Avenue and Production Place are summarized as follows: North: Mix of industrial and multifamily residential South: Mix of industrial and multifamily residential East: Multifamily residential West: Industrial Conclusion Overall, the physical characteristics of the hypothetical site and the availability of utilities result in functional utility suitable for a variety of uses. We are not aware of any other particular restrictions on development. CBRE VALUATION & ADVISORY SERVICES 11 © 2024 CBRE, INC 17-143 Site Analysis rllaL avid - J I II / !, 3 SIXTEENTH W Q 1r IT FIRST ADDITION TO y O GOT /3 O O O COT B/P O � ye O $ TO a •e Y 141 x23� 'a•'m^. NEW RTMESAOTRACT axro/> /B "sa/9� M ro Ili ,. 2P 19 TSi 16 P>Po 'a w'28 �� `P9 30� ..ro3/32 ""' MAC 8 19 I6 IT I i6 115 �IO�� 13 12,i q1 ! 10 8 PRODUCTION PLACE $ Q L•ar 1 :.:.: � i ,..m ,. w� ,.ro ,.. ,.,,. .. .. ro� ..� o d m/-3B f yin v S 8 I !1 0 i i4 O5 _ C 3 142 , c 6 / Cg%i _ /^� & `J 10 x II /12 13 R T: B 3 3 JNO. 3145 T�/ b _j 15 MARCH 197E FIRST ADD TO NEWPORT MESA TRACT M. M. 8-61 NOTE -ASSESSORS BLOCK d ASSESSOR'S MAR O TRACT NO 3145 M.M 99-53 PARCEL NUMBERS BOOK424 PAGE 14 SHOWN IN CIRCLES COUNTY OF ORANGE We did not include the plat maps for properties to the east and south of the area of Placentia Avenue and Production Place as the properties in these directions are primarily multifamily residential and therefore not applicable to our analysis. CBRE VALUATION & ADVISORY SERVICES 12 © 2024 CBRE, INC 17-144 Site Analysis —1 E —1 ■_r 9 0la._■_- C-111 ■ VI C-J National Flood Hazard Layer FIRMette ;FNMA I. VV VU 0 260 600 1.000 1.600 2.000 &xsamap kFl�rySoev[o: 11'"NYI� 'M��0�3 Legend gN�xa., k,u FHca FJ�wdanrkFFs 5PE LFLOOD 'l'BFEorpcdl�f��Ic�lo Nf.uc,p H RDAREP A�,6 y Flmowr 0.2h Mnrol CNodec FHaa N000rq l.cos a+ih onrvoleNrom Neva wdr e�aepc oep.N less Jrwr eye +eo er x:J� n.wneg o�cos d Icss Jron one w�o�c n':Ic a>. it WWIAwrc lknddeia ih Mrval FHaa Hoasc —, Mm xi.N gm�mo Flmo Fi�o�ew OFHERARE OF cxc.5cc flocs fe�x FL D H RD A— xi.H Fl— pill— Fcxcfe�o rmi M,n er Nnwnl gaao H— rs�x PrcaF.s QM4s Or HERAREr6 M,n a+LWcwmtinw peso rW�oia faro GENERAL ____ {Monncl,G IwN +cJwn�Scxa sr Rllcr IlRE'S l 111 scxc,pic, or Rooa.wll § post Scoians rid ih Mn.al Worec .,s xawrs,aom kcwda --- ikssnl Trarsca — kNsc gaaa Fkwdv� lint fk F4 JvisSd Hn &oanaorr [ &"l Tronx[x kosdic Or HER gdilc kosdin FE URES Hp pNe Fewve pi¢iml pom hralollc 4o piy.nlpo�nwila>t� �, tt4P FQAKE IS LNmspFxo T THco aisdo>aa on.R moths on odpo:mow pain sdam:a FW dre o-scr eiq ams or s..larindx F�c Rr loader. net rtprccnt T li modta+Spli� wi�X FENAY s.onao�as ror Jrc ric d ai$t Noon mo�ir:. isno wia os actdiFxa Fsdo.c TNc boseowpsN w.w mvpicsvridr FENAY bescnnp Tlc Noaa W abb :rro�moa Hn is acn.ca aic drr-malc o�Jrariwdx 4 14 s ndf scIi— pnriaca kr FE1111 0ilk m W .as c�ponco a TrSdr'i0bi ra &SS P N r rdlc[x tN ngs oromo�amcnssrkscoro� waJ�d aow ona bmc. TNc 4 FH F oro crcctvx inre mndan qnv drergc a cmmc s.perscow Er ncwos�a ocr dmc. TNs gnpinn Yc is rdo Y FNc ant a mvc er dre+alHvniq nnp doP,�r� ae re, rcxa: Eas<my, i�+n>Frr. n W a sec Irbil; Icsalt Fwr, mod ocodorawc mmm.N.r iao�dNcr; F I4W pond n.nbcr, pra Flq N crcctrix oow. NNpimegs rer mo-ppca o-na rnmoacN.ca o�cos an�a. Fx rscN ror r+p4bwry prrpcsa. CBRE VALUATION & ADVISORY SERVICES 13 © 2024 CBRE, INC 17-145 Zoning Zoning Per our client's instruction, the hypothetical subject is to be valued as though it is vacant industrial land. Based on our review of the zoning map, the predominant zoning designation is IG, Industrial in the area of Placentia Avenue and Production Place. As such, we assume the hypothetical subject is zoned IG, Industrial. The following chart summarizes the hypothetical subject's assumed zoning requirements. ZONING SUMMARY Current Zoning IG, Industrial Legally Conforming N/A - Hypothetical Parcel Uses Permitted A wide range of moderate to low intensity industrial uses and limited accessory commercial and office uses Zoning Change No Category Zoning Requirement Minimum Lot Size 10,000 Sq. Ft. Minimum Lot Width None Maximum Height Flat roof - 32 ft.; Sloped roof - 37 ft. Minimum Setbacks Front Yard 15 Feet Street Side Yard None Rear Yard None, unless adjoining non -industrial zone, then 10 Feet Maximum FAR 0.75 : 1 Parking Requirements Generally 1 per 500 Sq. Ft. for industrial uses Source: Newport Beach Planning and Zoning Dept. Conclusion Additional information may be obtained from the appropriate governmental authority. For purposes of this appraisal, CBRE has assumed the information obtained is correct. CBRE VALUATION & ADVISORY SERVICES 14 © 2024 CBRE, INC 17-146 Zoning LU111119 IVId g INTERSECTION OF PLACENTIA AVENUE & PRODUCTION PLACE rget �t qN y�' 212 s p o ,w zow, n 1— IA oin +iw •J,00,3alo SA i.,.in-d-/.%//.:/.%//.':/F cso sazo sA I CBRE VALUATION & ADVISORY SERVICES 15 © 2024 CBRE, INC 17-147 Tax and Assessment Data Tax and Assessment Data In California, privately held real property is typically assessed at 100% of full cash value (which is interpreted to mean market value of the fee simple estate) as determined by the County Assessor. Generally, a reassessment occurs only when a property is sold (or transferred) or when new construction occurs (as differentiated from replacing existing construction). In the case of long-term ground leases, the general rule is that a reassessment is made at the time of assigning or terminating a lease where the remaining term is more than 35 years. For reassessment purposes, the lease term includes all options to extend. Assessments for properties that were acquired before the tax year 1975-1976 were stabilized as of the tax year 1975-1976. Property taxes are limited by state law to 1 % of the assessed value plus voter - approved obligations and special assessments. If no sale (or transfer) occurs or no new building takes place, assessments may not increase by more than 2% annually. The hypothetical subject property is assumed to be owned by the City of Newport Beach and therefore it is not subject to real estate taxes. It is located in tax rate area 07-055 which carries a 2023-2024 base tax rate of 1.04830%. Conclusion If the hypothetical subject sold for the value estimate in this report, a reassessment at that value would most likely occur, with tax increases limited to two percent annually thereafter until the property is sold again. CBRE VALUATION & ADVISORY SERVICES 16 © 2024 CBRE, INC 17-148 Market Analysis Market Analysis The hypothetical subject is located near Placentia Avenue and Production Place in an industrial area of the City of Newport Beach. Given prevailing land use patterns and our client's instruction that the hypothetical property be analyzed as vacant industrial land, the most likely use is industrial. As such, we have included an industrial market analysis. Newport Beach Submarket Important characteristics of the Newport Beach warehouse market are summarized below: NEWPORT BEACH WAREHOUSE SUBMARKET Year Ending Inventory Completions Occupied Stock Occupancy Asking Rent Asking Rent Net Absorption (SF) (SF) (SF) ($/SF NNN) Change (SF) 2014 1,050,148 -144,704 1,020,147 97.1% $15.39 6.35% -123,742 2015 1,050,148 0 1,031,347 98.2% $16.62 7.99% 11,200 2016 1,050,148 0 1,036,607 98.7% $17.84 7.32% 5,260 2017 1,051,952 1,804 1,031,369 98.0% $19.03 6.65% -5,238 2018 1,051,952 0 1,030,771 98.0% $20.20 6.17% -598 2019 1,051,952 0 1,032,626 98.2% $21.34 5.63% 1,855 2020 1,021,452 -30,500 991,003 97.0% $22.37 4.84% -41,623 2021 1,021,452 0 972,285 95.2% $24.12 7.83% -18,718 2022 1,021,452 0 988,965 96.8% $26.38 9.38% 16,680 ----------------------------------------------------------------------------------------------------------------------------------------------------- Q12023 1,021,452 0 1,006,011 98.5% $26.88 1.90% 17,046 Q22023 1,021,452 0 991,766 97.1% $27.26 1.42% -14,245 Q3 2023 1,021,452 0 1,005,209 98.4% $27.56 1.10% 13,443 Q4 2023 ----------------------------------------------------------------------------------------------------------------------------------------------------- 1,021,452 0 999,110 97.8% $27.81 0.88% -6,099 2023 ------- ---------------------------------------------------------------------------------------------------------------------------------------------- 1,021,452 0 999,110 97.8% $27.81 5.40% 10,145 Q12024 1,021,452 0 993,334 97.2% $27.97 0.59% -5,776 Q2 2024* 1,021,452 0 996,616 97.6% $28.09 0.42% 3,282 Q3 2024* 1,020,711 -741 992,800 97.3% $28.32 0.84% -3,805 Q42024* ----------------------------------------------------------------------------------------------------------------------------------------------------- 1,019,928 -783 990,686 97.1% $28.58 0.89% -2,073 2024* 1,019,928 -1,524 990,686 97.1% $28.58 2.77% -8,372 2025* 1,016,813 -3,115 988,750 97.2% $29.91 4.65% -1,810 2026* 1,013,708 -3,105 988,984 97.6% $31.51 5.38% 353 2027* 1,010,609 -3,099 987,506 97.7% $33.07 4.95% -1,366 2028* 1,007,504 -3,105 985,627 97.8% $34.59 4.60% -1,766 2029* 1,004,408 -3,096 983,246 97.9% $36.02 4.13% -2,242 *Future Projected Data according to Costar Source: Costar, 1st Quarter 2024 The Newport Beach warehouse submarket consists of approximately 1,021,452 square feet of warehouse space. The current submarket inventory represents approximately 0.3% of the overall market inventory. The following observations were noted from the table above: • As of 1st Quarter 2024, there was approximately 993,334 square feet of occupied warehouse space (including sublet space), resulting in an occupancy rate of 97.2% for the submarket. This reflects a decrease from the previous quarter's occupancy of 97.8%, and a decrease from an occupancy rate of 97.8% from last year. The submarket occupancy is above the 96.1 % market occupancy. • The submarket experienced negative 5,776 square feet of net absorption for the current quarter. This indicates an improvement from the previous quarter's negative 6,099 square feet of net absorption, and a decline from the positive 10,145 square feet of net absorption from a year ago. CBRE VALUATION & ADVISORY SERVICES 17 © 2024 CBRE, INC 17-149 Market Analysis The submarket's current net absorption of negative 5,776 square feet compares favorably with the overall market net absorption of negative 1,882,655 square feet. • The submarket had zero completions for the current quarter, which indicates no change from the previous quarter's zero completions, and no change from the zero completions from last year. • The submarket achieved average asking rent of $27.97 per square foot, which indicates an increase from the previous quarter's asking rent of $27.81 per square foot, and an increase from the asking rent of $27.81 per square foot from last year. The submarket's current asking rent of $27.97 per square foot compares favorably with the overall market asking rent of $19.81 per square foot. Historical Inventory - Submarket INVENTORY: NEWPORT BEACH WAREHOUSE MARKET 350,000,000 303,862,938 303,311,017 302,667,CC- 302.499.578 301,095,304 303,785,240 303,329,069 303,522,791 5 300,000,000 250,000,000 200,00%000 150,000,000 100,000,000 50,000,000 0 2014 2015 2015 2017 2018 2015 2020 2021 2022 2023 2024' 2025' 2025' 2027' 2028' 2025' Market Submarket ' Future Projected Data according to Costar Source_ Costar_ 1st Quarter 2024 Submarket Inventory is projected to be 1,019,928 square feet at the end of the current year, which represents a small decrease from the previous year's submarket inventory of 1,021,452 square feet. Inventory for next year is projected to be 1,016,813 square feet, reflecting a small decrease from the current year. CBRE VALUATION & ADVISORY SERVICES 18 © 2024 CBRE, INC 17-150 Market Analysis Historical Occupancy - Submarket OCCUPANCY: NEWPORT BEACH WAREHOUSE MARKET 99.O% 98 7% 99.2% 98.21S 97.9% 98.0% 978% 47.6% 97]% 97 8% 97.1 97.1% 97 2% 97.0% 8 96.0% 95.0% 94.0% 93.0% 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market Submarket ` Future Projected Deta according to Coster Source: Costar. 1st Quarter 2024 Submarket occupancy is projected to be 97.1 % at the end of the current year, which represents a decrease from the previous year's submarket occupancy of 97.8%. Submarket occupancy for next year is projected to be 97.2%, reflecting a small increase from the current year. Historical Net Absorption - Submarket NET ABSORPTION: NEWPORT BEACH WAREHOUSE MARKET 4,000,000 2,918,328 2 3,000,000 ,929,392 2,074,839 2,000,000 1,000,000 718,797 736,963 829,051 175,133 579,144 536,348 378,840 349,058 -5,238 -598 1,855 10,145 -8,372 -1, 10 0 Nib 2014 2015 2016 2020 2021 2022 2025° 2026' 2C27' 2028' 2029' -1,000,000-595,931 -2,000,000-1,516,102-1,547,403 -1,996,382 -3,000,000 -3,443,695 -4,000,000 Market Submarket ` Future Projected Data according to Costar Source: Costar. 1st Quarter 2024 Net absorption in the submarket is projected to be negative 8,372 square feet at the end of the current year, reflecting a decline from the previous year's net absorption of positive 10,145 square feet. Net absorption for next year is projected to be negative 1,810 square feet, indicating an improvement from the current year. CBRE VALUATION & ADVISORY SERVICES 19 © 2024 CBRE, INC Market Analysis Historical Completions - Submarket COMPLETIONS: NEWPORT BEACH WAREHOUSE MARKET 2,500,000 2,173,425 2,000,000 1,500,000 1,000,000 515,511 500,000 288,009 342,454 210,581 47,845 q5 g77 27780 ,4 0 0 1,'04 0 0 -3,115 -3,105 -3,699 13 i0.5 0-144,704 2013 2020 2021 2022 2023 2024' 20 6' 2027' 2028' 2029' -500,000-253.948-277,224"-274,697-369,311 86,850 520,517 -1,000,000 -935,944 -1,500,000 -1,604,255 -2,000,000 Market Submarket ' Future Projected Deta according to Coster Source: Costar. 1st Quarter 2024 The submarket is projected to achieve completions of negative 1,524 square feet at the end of the current year, which indicates a decline from the previous year's zero completions. The submarket is projecting completions of negative 3,115 square feet for next year, which indicates a decline from the current year. Historical Asking Rent - Submarket ASKING RENT: NEWPORT BEACH WAREHOUSE MARKET $40.00 $36.02 $34.59 $35.00 $33.07 $31.51 $29.91 $30.00 $27.81 $28.58 $25.39 $2,5 oa $24.12 $22.37 $21.34 $19.03 $20.20 $20.00 $17.94 $16.62 $15.39 W.00 $10.00 $5.00 $0.00 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2029' 2029' Market Submarket ` Future Projected Data according to Costar Source: Costar. 1st Quarter 2024 The submarket is projected to achieve average asking of $28.58 per square foot at the end of the current year, which represents an increase from the previous year's asking rent of $27.81 per square foot. The submarket is projected to achieve average asking rent of $29.91 per square foot, reflecting an increase from the current year. CBRE VALUATION & ADVISORY SERVICES 2( © 2024 CBRE, INC 17-152 Market Analysis Conclusion The industrial market was very strong in 2021 and early 2022 and was showing rapid price and rent increases. However, market participants indicated the rise in interest rates beginning in June 2022 and inflation and recession concerns have negatively impacted the market. Brokers are reporting price declines for industrial properties. We note that the prior data primarily corresponds with the improved industrial market, but land tends to follow the trends of the improved market. Costar is still forecasting small rental increases for improved industrial buildings. They are, however, forecasting stable occupancy and negative net absorption. The brokers we interviewed indicated the pace of the decline in the land market has been at a higher level than the improved industrial market. Due to the COVID-19 pandemic, there were supply chain issues which led to a significant increase in demand for industrial properties. This increase in demand led to significant price appreciation for industrial properties. However, based on the information and examples of transactions reported by brokers, along with elevated interest rates, prices and rents in the industrial land market are now declining at higher rates than improved properties. Overall, the industrial land market has declined. CBRE VALUATION & ADVISORY SERVICES 21 © 2024 CBRE, INC 17-153 Highest and Best Use Highest and Best Use In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are: • Legally permissible; • Physically possible; • Financially feasible; and • Maximally productive. The highest and best use analysis of the subject is discussed below. As Vacant Legal Permissibility Per our client's instruction, we are appraising a hypothetical industrial property in the area of Placentia Avenue and Production Place. Based on the predominant zoning designations in that area for industrial uses, the site would likely be zoned IG, Industrial. Permitted uses include a wide range of moderate to low intensity industrial uses and limited accessory commercial and office uses. Given our client's instructions, only industrial use is given further consideration in determining the highest and best use of the site as vacant. Physical Possibility The hypothetical subject contains 20,000 square feet and is rectangular in shape. The hypothetical subject is assumed to be adequately served by utilities, and has an adequate shape and size, sufficient access, etc., to be a separately developable site. There are no known physical reasons why the hypothetical subject site would not support any legally probable development (i.e. it appears adequate for development). Financial Feasibility Potential uses of the hypothetical site include industrial. The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. Based on our analysis of the market, there is currently limited demand for additional industrial development in the subject's area. Therefore, this use is not considered to be currently financially feasible. Nevertheless, it is expected the multifamily market will see an eventual recovery, accompanied by a rise in property values to a level justifying the cost of new construction. Thus, it is anticipated a multifamily use will become financially feasible in the future. Maximum Productivity - Conclusion The final test of highest and best use of the hypothetical site as if vacant is that the use be maximally productive, yielding the highest return to the land. Based on the information presented above and upon information contained in the market and neighborhood analysis, we conclude that the highest and best use of the subject, as if vacant, would be to hold for future development of an industrial property when economic conditions improve. Our analysis of the hypothetical subject and its respective market characteristics indicate the most likely buyer, as if vacant, would be a developer. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-154 Land Value Land Value The following map and table summarize the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the addenda. Westminster i12 Fountain Valley is Huntington Beach 0 mapbox '$v rC, Mapbox, q� 4pen5treetMap SUMMARY OF COMPARABLE LAND SALES Transaction Interest Actual Sale Adjusted Sale Size Size Price No. Property Location Type Date Transferred Zoning Price Price' (Acres) (SF) Per SF 1 Industrial Zoned Site Sale Jun-23 Fee MG - General $1,800,000 $1,800,000 0.37 16,200 $111.11 891 W. 17th Street Simple/Freehold Industrial Costa Mesa, CA 92627 2 Industrial Redevelopment Site Sale Mar-23 Fee IG, Industrial $6,000,000 $6,000,000 1.71 74,488 $80.55 7671 Liberty Dr. Simple/Freehold General Huntington Beach, CA 92647 3 Vacant Industrial Land Sale Sep-22 Fee RT, Research & $739,000 $739,000 0.18 7,778 $95.01 7422 Warner Ave. Simple/Freehold Technology Huntington Beach, CA 92647 4 Redevelopment Site Sale Nov-21 Fee M-1, Limited $1,025,000 $1,025,000 0.28 12,220 $83.88 13781 Newhope Street Simple/Freehold Industrial Zone Garden Grove, CA 92843 5 Deere Ave. Land Sale Jun-21 Fee 5.1, IBC Multi -Use $4,180,000 $4,180,000 1.37 59,721 $69.99 1675 Deere Ave. Simple/Freehold Irvine, CA 92606 6 Proposed Industrial Development Sale Nov-19 Fee MG, General $1,950,000 $1,950,000 0.56 24,300 $80.25 1777 Monrovia Avenue Simple/Freehold Industrial Costa Mesa, CA 92627 Subject Near Intersection of Placentia Avenue --- --- IG, Industrial --- --- 0.46 20,000 --- and Production Place Newport Beach, CA 92663 ' Adjusted sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 23 © 2024 CBRE, INC 17-155 Land Value The sales utilized represent the best data available for comparison with the subject and were selected from the greater Newport Beach area. Due to the lack of recent transactions in Newport Beach that are of similar size and zoning, we expanded our search to include sites of up to approximately two acres that closed between Year -End 2019 to the date of value. Discussion/Analysis of Land Sales Conditions of Sale/Financing All sales were indicated to be cash -to -seller transactions or financed by a third party at market terms, and none appeared to occur under duress. As such, no adjustments for cash equivalency were necessary. In addition, the sales reflected arm's length transactions; therefore, no adjustments for conditions of sale were warranted. Details of each of the comparable are located on the data sheets in the addenda of this report. Market Conditions Based on the market data and broker interviews, we have utilized an upward market conditions adjustment of 15% per year through 3rd Quarter 2022 for improving market conditions. However, we also utilize a -10% annual rate from 4th Quarter 2022 to the date of value, as land values have been decreasing. Location Our adjustments are based on the difference between rental rates for industrial properties within a one - mile radius of the subject and a one -mile radius of each of the comparable sales. Based on this information, Comparables 2, 3, 4, and 5 required upward adjustments to varying degrees. Frontage/Access Compared to the hypothetical subject, Comparable 2 requires a downward adjustment for its superior frontage/access along four streets. Size Considers the inverse relationship that often exists between parcel size and unit value. Compared to the hypothetical subject, only Comparable 3 requires an upward adjustment as its small site area limits its development potential. Shape The hypothetical subject has a rectangular shape. Each of the comparables have a similar shape and no adjustments were required. Topography The hypothetical subject has relatively level topography. Each of the comparables have similar topography and required no adjustments. Zoning Density of development and productivity of the land can be impacted by differences in land use regulations, although land may be similarly zoned. Each of the comparables have similar zoning and no adjustments were required. CBRE VALUATION & ADVISORY SERVICES 24 © 2024 CBRE, INC 17-156 Land Value Entitlements Entitlements or approvals that are in place at the time of sale can impact value. None of the comparables were entitled at the time of sale and no adjustments were warranted. Site Improvements This adjustment accounts for site improvements on a site that require demolition prior to redevelopment. Comparables 1, 2, 4, and 6 had building improvements at their time of sale. Comparable 1 has superior site improvements as the buyer will be performing a major renovation of the existing improvements rather than demolishing them. Although the sale price was based primarily on the value of the land, the improvements had some contributory value. Sale 2 did not require any adjustment as the building improvements generate interim income until the site is redeveloped, which offsets any demolition costs. Sale 4 required an upward adjustment for its inferior site improvements that required demolition. Sale 6 did not require any adjustment as the building improvements generate interim income that offset demolition costs. Summary of Adjustments As in most analyses, each element of comparison is not weighted equally. For example, the location of a property as an element of comparison may outweigh its size, resulting in an overall rating of "inferior" to the subject, though there may be numerically more elements rated as "similar" in the comparison grid. Certain elements balance the effect of other elements in each sale's comparison. Based on our comparative analysis, the following chart summarizes the adjustments warranted to each comparable. Comparable Number Transaction Type Transaction Date Interest Transferred LAND SALES ADJUSTMENT GRID 2 3 4 5 6 Sale Sale Sale Sale Sale Sale Jun-23 Mar-23 Sep-22 Nov-21 Jun-21 Nov-19 Fee Fee Fee Fee Fee Fee Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Zoning MG - General IG, Industrial RT, Research & M-1, Limited 5.1, IBC Multi- MG, General Industrial General Technology Industrial Zone Use Industrial Actual Sale Price $1,800,000 $6,000,000 $739,000 $1,025,000 $4,180,000 $1,950,000 Adjusted Sale Price' $1,800,000 $6,000,000 $739,000 $1,025,000 $4,180,000 $1,950,000 Size (Acres) 0.37 1.71 0.18 0.28 1.37 0.56 Size (SF) 16,200 74,488 7,778 12,220 59,721 24,300 Price ($ PSF) $111.11 $80.55 $95.01 $83.88 $69.99 $80.25 Property Rights Conveyed 0% 0% 0% 0% 0% 0% Financing Terms' 0% 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% 0% Market Conditions (Time) -11.0% -13.5% -17.6% -7.0% -1.8% 16.8% Subtotal $98.89 $69.68 $78.29 $78.01 $68.73 $93.73 Subject IG, Industrial 0.46 20,000 Location Similar Inferior Inferior Inferior Inferior Similar Frontage/Access Similar Superior Similar Similar Similar Similar Size Similar Similar Inferior Similar Similar Similar Shape Similar Similar Similar Similar Similar Similar Topography Similar Similar Similar Similar Similar Similar Zoning Similar Similar Similar Similar Similar Similar Entitlements Similar Similar Similar Similar Similar Similar Site Improvements Superior Similar Similar Inferior Similar Similar Overall Comparison Superior Inferior Inferior Inferior Inferior Similar ' Adjusted sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 25 © 2024 CBRE, INC 17-157 Land Value Conclusion Based on the foregoing discussion of comparability, the market data and the subject may be arrayed as shown below: LAND VALUE ARRAY Data No. Overall Comparison Time Adjusted Price Per Square Foot 1 Superior $98.89 SUBJECT PROPERTY 6 Similar $93.73 3 Inferior $78.29 4 Inferior $78.01 2 Inferior $69.68 5 Inferior $68.73 Compiled by CBRE The preceding analysis indicates a value within a range of $68.73 to $98.89 per square foot. Based on the analysis of the comparable sales, we have bracketed the subject as inferior to Sale 1 and superior to Sale 3, with Sale 6 ranked as similar. Comparable 1 is at the high end of the range and is ranked as superior overall. Comparable 1 has superior site improvements as the buyer will be performing a major renovation of the existing improvements rather than demolishing them. Although the sale price was based primarily on the value of the land, the improvements had some contributory value. Comparable 6 is ranked as similar to the subject and required no adjustments. Comparables 2, 3, 4, and 5 are at the low end of the range and are ranked as inferior overall. Comparable 2 has an inferior location and this adjustment is partially offset by its superior frontage/access. Comparable 3 has an inferior location and size and required no downward adjustments. Comparable 4 has an inferior location and site improvements and required no downward adjustments. Comparable 5 has an inferior location and required no downward adjustments. Considering this information, the following table presents the valuation conclusion: CONCLUDED LAND VALUE $ PSF Subject SF Total $95.00 x 20,000 = $1,900,000 Indicated Value: $1,900,000 Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 26 © 2024 CBRE, INC 17-158 Reconciliation of Value Reconciliation of Value In the sales comparison approach, the subject is compared to similar properties that have been sold recently. The sales used in this analysis are considered comparable to the subject, and the required adjustments were based on reasonable and well -supported rationale. Therefore, the sales comparison approach is considered to provide a reliable value indication. Based on the foregoing, the fair market value of the subject has been concluded as follows: MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $1,900,000 Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 27 © 2024 CBRE, INC 17-159 Assumptions and Limiting Conditions Assumptions and Limiting Conditions CBRE, Inc. through its appraiser (collectively, "CBRE") has inspected through reasonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters. 1. The report, including its conclusions and any portion of such report (the "Report"), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date. 2. Unless otherwise expressly noted in the Report, CBRE has assumed that: (i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company. (ii) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. (iii) Any proposed improvements, on or off -site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices. (iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property. (vii) 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 readily obtained or renewed for any use on which the Report is based. (viii)The subject property is managed and operated in a prudent and competent manner, neither inefficiently, nor super -efficiently. (ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses. (x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property's compliance with the ADA, notwithstanding any discussion of possible readily achievable barrier removal construction items in the Report. CBRE VALUATION & ADVISORY SERVICES 28 © 2024 CBRE, INC 17-160 Assumptions and Limiting Conditions (xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property, nor reviewed or confirmed the accuracy of any legal description of the subject property. Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE's attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report and any conclusions stated therein. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions. 3. CBRE has assumed that all documents, data and information furnished by or on behalf of the client, property owner or owner's representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report and any conclusions stated therein. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report. 4. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including, without limitation, any termite inspection, survey or occupancy permit. 5. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property. 6. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. This Report has been prepared in good faith, based on CBRE's current anecdotal and evidence -based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this Report, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE's control. In addition, many of CBRE's views are opinion and/or projections based on CBRE's subjective analyses of current market circumstances. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections. Further, other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE's current views to later change or be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change. 7. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE's independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property. 8. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge including, but not limited to, environmental, social, and governance principles ("ESG"), beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters. 9. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. CBRE VALUATION & ADVISORY SERVICES 29 © 2024 CBRE, INC 17-161 Assumptions and Limiting Conditions 10. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user's failure to become familiar with and understand the same. 11. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests. 12. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use. 13. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report. 14. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user. CBRE VALUATION & ADVISORY SERVICES 30 © 2024 CBRE, INC 17-162 Addenda Addenda CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-163 Addenda Addendum A Land Sale Data Sheets CBRE VALUATION & ADVISORY SERVICES 32 © 2024 CBRE, INC 17-164 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Shape Primary Frontage Secondary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Industrial Zoned Site 891 W. 17th Street Costa Mesa, CA 92627 Orange 424-101-01 0.372 ac/ 16,200 sf 0.372 ac/ 16,200 sf Finished All to Site Rectangular 135 ft on W. 17th St. 55 ft on Monrovia Ave. Level, At Street Grade Zone X (Unshaded) 06059CO268J/ Dec 2009 MG - General Industrial None Sale Fee Simple None N/A Jcm Investments 3 Month(s) Mark Todd, Compass Realty (949-514-0000) 0137929 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Public Records, Costar, Listing Broker 06/19/2023 06/19/2023 $1,800,000 Cash to Seller $1,800,000 $0 100% $1,800,000 $4,840,011 / $111.11 This comparable is locate at the southwest corner of 17th Street and Monroe Avenue in west Costa Mesa. The site is zoned MG, General Industrial. The site is improved with a storage yard and small light industrial buildings for boat repair. The property sold in June 2023 for $1,800,000 or $1 1 1.1 1 per square foot of land. The buyer will be performing a major renovation of the existing improvements rather than demolishing them. Although the sale price was based primarily on the value of the land, the improvements had some contributory value. BRE17-165 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Shape Primary Frontage Secondary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Comments Industrial Redevelopment Site 7671 Liberty Dr. Huntington Beach, CA 92647 Orange 165-293-01 1.710 ac/ 74,488 sf 1.710 ac/ 74,488 sf Other(See Comments) All to site Rectangular 230 ft on Liberty Ave. 230 ft on Crabb Ln. Level, At Street Grade Zone X (Shaded) 06059CO253J/ Dec 2009 IG, Industrial General None Sale Fee Simple Arm's Length Developer The Cheryl Bartolini Family Trust 4 Month(s) Roland Loelkes, eXp Commercial (949) 274- 6474 0061919 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Listing Broker 03/17/2023 03/17/2023 $6,000,000 Cash to Seller $6,000,000 $0 100% $6,000,000 $3,508,772 / $80.55 The site encompasses an entire block and has frontage along four streets. It is surrounded by industrial uses to the north and west, a mix of industrial and multifamily residential to the south, and multifamily residential to the east. The buyer purchased the site to redevelop it with an industrial use but no entitlements were in place at the time of sale. The site was improved with several industrial buildings that will generate interim income until the site is redeveloped. BRE17-166 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Shape Primary Frontage Secondary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Vacant Industrial Land 7422 Warner Ave. Huntington Beach, CA 92647 Orange 111-022-07 0.179 ac/ 7,778 sf 0.179 ac/ 7,778 sf Raw All to site Rectangular 48 ft on Warner Ave. 66 ft on Palmdale Ln. Level, At Street Grade Zone X (Shaded) 06059CO253J/ Dec 2009 RT, Research & Technology None Sale Fee Simple Arm's Length Developer Daniel N. Kahale 17 Month(s) Frank Adler, Lee & Associates (949) 724- 4735 0307365 1I 11 i _r-w +► Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Listing Broker 09/15/2022 09/15/2022 $739,000 Cash to Seller $739,000 $0 100% $739,000 $4,137,738 / $95.01 The site is located at the southeast corner of Warner Avenue and Palmdale Lane. It is surrounded by a mix of commercial and industrial uses in all directions. The buyer purchased the site to develop it with an industrial use but no entitlements were in place at the time of sale. BRE17-167 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Shape Primary Frontage Secondary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Comments Redevelopment Site 13781 Newhope Street Garden Grove, CA 92843 Orange County 100-141-02,03 0.281 ac/ 12,220 sf 0.281 ac/ 12,220 sf Raw At Site Rectangular 94 ft on Newhope St. N/A Level, At Street Grade Zone A 06059C0143J/ Dec 2009 M-1, Limited Industrial Zone None Sale Fee Simple Arm's Length N/A Vernon Dale Miller and Sherry Lynn Miller, Trustee of the Miller Family Trust 3 Month(s) David Knowlton, NAI Capital (949) 468- 2307 2021000665163 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf t -- Listing Broker 11/02/2021 11/02/2021 $1,025,000 Cash to Seller $1,025,000 $0 100% $1,025,000 $3,654,189 / $83.88 This is the sale of a 0.28-acre, or 12,220 square foot two -parcel site that is located at 13781 Newhope Street, in the city of Garden Grove. The property is located mid -block block on Newhope Street, between Woodbury Road and Wesminster Avenue. The rectangularly shaped site sold in November 2021, for $1,025,000, or $83.88 per square foot. The site is zoned M-1, Limited Industrial Zone, and is surrounded by light industrial uses, as well as tertiary residential uses. The property sold as unentitled land. The site was improved with a heavily -depreciated, 1,269-square foot single-family residential structure. The listing agent stated that the buyers of the site were going to demolish the existing single-family residential improvements to build a new auto repair shop. There are no atypical adverse conditions that impacted the sale price of the property. BRE17-168 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Shape Primary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Deere Ave. Land 1675 Deere Ave. Irvine, CA 92606 Orange 430-201-09 1.371 ac/ 59,721 sf 1.371 ac/ 59,721 sf Raw All to site Rectangular 198 ft on Aston Level, At Street Grade Zone X (Unshaded) 06059CO279J/ Dec 2009 5.1, IBC Multi -Use None Sale Fee Simple Arm's Length Developer Sigma Trident, LLC N/A N/A 0354678 a 4,� �. R Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Costar, Deed, & Public Records 06/01/2021 06/01/2021 $4,180,000 All Cash $4,180,000 $0 100% $4,180,000 $3,048,869 / $69.99 This is the sale of a 1.37-acre secured yard that is zoned for multi -uses such as light manufacturing, warehouse, and research development uses. The property sold on June 1, 2021 for $4,180,000, or $69.99 per square foot of land. The site is located in the heart of the Irvine Business Center with quick access to the 405, 55, and 5 freeways. It is also in close proximity to the John Wayne Airport and Tustin Legacy. There were no brokers involved with either of the parties. BRE17-169 Property Name Address County Govt./Tax ID Land Area Net Land Area Gross Site Development Status Utilities Shape Primary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Proposed Industrial Development 1777 Monrovia Avenue Costa Mesa, CA 92627 Orange 424-361-20,21 0.558 ac/ 24,300 sf 0.558 ac/ 24,300 sf Other(See Comments) All to site Irregular 225 ft on Monrovia Ave. Level, At Street Grade Zone X (Unshaded) 06059CO268J/ Dec 2009 MG, General Industrial None Sale Fee Simple Arm's Length Developer Jean E Hidden Revocable Trust 16 Month(s) Steve Eberle - 949-350-3231 0493755 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment % Interest Purchased Adjusted Price Adjusted Price / ac and / sf Listing Broker 11/26/2019 11/26/2019 $1,950,000 Cash to Seller $1,950,000 $0 100% $1,950,000 $3,495,250 / $80.25 This comparable land represents the November 2019 sale of a 0.56-acre site with existing single family residential structures onsite. The buyer is an industrial developer who purchased the property for $1,950,000 or $80.25 per square foot of land area. The property is located within the Mesa West Bluff Urban Plan of Costa Mesa and is zoned General Industrial . The site was improved with three single-family residences that were generating interim income until the property is redeveloped into an industrial use. The broker indicated that there were no entitlements for an industrial use. The buyer plans to construct an 8,000-square foot industrial property. BRE17-170 Addenda Addendum B Qualifications CBRE VALUATION & ADVISORY SERVICES 33 © 2024 CBRE, INC 17-171 PROFILES Professional Affiliations / Accreditations - Member: Appraisal Institute - Designation: Appraisal Institute - General Review Specialist (AI-GRS) - Fellow: Royal Institution of Chartered Surveyors - Member: The Counselors of Real Estate - Member: International Right of Way Association - License: California State Certified General Real Estate Appraiser - Certified: Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) Education - M.B.A., Pepperdine University - B.S., Kinesiology, University of California, Los Angeles - Certified by the Appraisal Institute's program of continuing education for its designated members. CBRE VALUATION & ADVISORY SERVICES Beth B. Finestone, MAI, AI-GRS, FRICS, CRE Executive Vice President Los Angeles, CA T +1 818 2513669 E Beth.Finestone@CBRE.com Professional Experience Beth B. Finestone, MAI, AI-GRS, FRICS, CRE, is an Executive Vice President for CBRE's Valuation & Advisory Services (VAS). She has been appraising in Southern California since 1981, specializing in valuation and consulting services related to public agency and right-of-way clients and for major investment -grade commercial properties and special purpose properties. She also has extensive expertise in valuing large tracts of land for conservation, mitigation and other purposes. Ms. Finestone's clients include public agencies, right-of-way firms, lenders, institutional investors, major corporations, law firms, and individual property owners. Her services include a wide range of specialized studies including ground lease rent studies, partial interest acquisitions, value diminution (from both internal and external influences), market demand, feasibility, severance damages and project benefits, investment analysis, assessment allocation, reuse analysis, and the valuation of partial interests including leasehold, leased fee, possessory interests, and minority interests. She is experienced in valuing full and partial acquisitions related to eminent domain actions. These services include the valuation of fee acquisitions, permanent and temporary easements, including the appraisal of railroad and other types of corridors, pipeline easements and transmission line easements. She has been a featured speaker at Appraisal Institute, International Right of Way, and legal functions. She was the 2019 President of the Southern California Chapter of the Appraisal Institute, the largest chapter in the country. Beth was previously a Managing Director for and a principal of Integra Realty Resources - Los Angeles. In addition, she was the Executive Director of Integra Realty Resources - Orange County. During her career, she has held senior positions with Finestone & Associates and Cushman & Wakefield. (��2024 CBRF, INC. 17-172 PROFILES Recognition CBRE - Los Angeles Business Journal 2009 Nominee for Executive of the Year - Women Making a Difference, May 2009 - Designated one of Real Estate Southern California's 2006 Women of Influence, October 2006 Seminar Presentations - Corridors, Crops & Condemnation (IRWA National Conference in San Diego, June 2015) - Eminent Domain Appraisals: Pitfalls & Value -Added Services (RICS - Southern California Chapter, CPD Presentation, April 16, 2015) - Government Buildings (Appraisal Institute, Special Purposes Seminar, July 15, 2014) - The Trouble with Ignoring Building Code Violators (SCCAI 43`d Annual Litigation Seminar, Moderator, November 15, 2013) - Conflicting Mandates & Instructions Between USPAP, Yellow Book, & Caltrans Appraisal Guidelines (IRWA Annual Valuation Seminar, April 24, 2012) - Current Issues in Real Estate Appraisal (Lorman Education Services, live audio conference, March 8, 2012) - The Role of the Appraiser in Construction Defect Litigation: Measuring Damages from Construction Defects (MCLE- approved presentation, January 11, 2012, March 4, 2010, and February 10, 2010) Expert Testimony Ms. Finestone has qualified as an expert witness in real estate matters and has testified before: - Superior Courts: Los Angeles and Orange Counties - Arbitration Hearings: Los Angeles County - Tax Appeal Boards: Los Angeles and San Diego Counties Representative Appraisal Assignments - Appraisal of 50+ single-family residences (SFRs) impacted by the 1-405 Widening Project in Costa Mesa. The acquisitions all involve temporary construction easements (TCEs). This assignment required an analysis of temporary severance damages due to impacts to rear yards as well as a valuation of all site improvements in the TCE areas. Appraisal of 50+ commercial properties impacted by various types of partial acquisitions related to the 1-405. Some of the appraisals were extremely complex with significant severance damage studies required. - Multiple appraisal assignments for LACMTA included: - Appraisal of a 1.25-acre parcel improved with a Class A,12-story, medical office building constructed circa 1962, an adjacent one-story bank building and an attached four-story parking structure known as the Westwood Medical Plaza. It is located along the proposed Purple Line Subway Extension Project Corridor, specifically on the northeast corner of Wilshire Boulevard and Westwood Boulevard in the Westwood neighborhood within the City of Los Angeles. As part of this project, LACMTA is seeking acquire various permanent and temporary property interests, and to relocate existing tenants within the subject property. The purpose of this appraisal was to estimate the fair market value of the property interests (Parts Taken) to be acquired from the Larger Parcel and to make a determination as to the impact of the proposed acquisitions on the Remainder Parcel. - Appraisal of Wilshire Federal Building: Appraisal of a deep tunnel easement on the Wilshire frontage of the Federal Building as part of LACMTA's Purple Line extension. Consideration was given to the redevelopment potential of the site and the benefits to the remainder, as well as to the value of the parts taken. - Appraisal involving the valuation of partial acquisitions impacting the Westfield Mall in Century City as part of LACMTA's Purple Line extension. This assignment was challenging with respect to valuing the underlying land associated with the larger parcel. The property is unique due to its location and its size. Complexities involved determining the number of trips allocated to the site as this in part drives land value. Again, consideration was given to damages and benefits, as well as to the value of the parts taken. 02024 CBRE, INC. 17-173 PROFILES CBRE — Appraisal of numerous surface and subsurface acquisitions were required on the Veteran's Administration property for the construction of a subway station and tunnel easements for LACMTA's Purple Line. Significant research was required relative to the VA specific plan and the highest and best use of the property. Consideration was given to damages and project benefits as well as the value of the parts acquired. — Appraisal of 50± miles of pipeline easement running through UPRR and BNSF rail corridors in Urban Los Angeles. — Multiple appraisal assignments for RCTC included: — Appraisal of parcels under more than 50 separate ownerships affected by acquisitions and easements for the SR-91 Corridor Improvement Project through the City of Corona. The complete summary appraisal reports and appraisal summary statements included a valuation of the properties in the before and after condition. Some of the properties had significant severance damage analyses due to loss of building improvements, parking, loading, etc. — City of Riverside 69 kV Electrical Transmission Line Project: Initially valued 22 residential and commercial properties in the City of Riverside. These properties all had a three -foot -wide partial taking along their frontage to accommodate the construction of a 69 kV transmission line. This represented Phase One of this assignment. Phase Two involved the partial taking of land over seven properties owned by JCR for the construction of a transmission line. The final phase involved approximately 100 properties of various types which were impacted by partial acquisitions for the construction of a transmission line. The final phase involved approximately 90 properties of various types which will be impacted by partial takes for the construction of a transmission line. — Appraisal of in excess of 75 private properties on behalf of CHSRA. The property types included agricultural, commercial and residential. Most of the appraisals involved partial acquisitions. In addition, Ms. Finestone completed the appraisal of over 50 railroad corridor properties in conjunction with the high-speed rail project. — Appraisal of the Del Mar Fairgrounds, Racetrack, and Horsepark (450 acres of land and over 1,000,000 square feet in improvements) for the California Department of General Services. — Completed an appraisal of a property that represents one of the largest parcels of undeveloped and unprotected coastal property in Southern California (Banning Ranch). Much of the site had been occupied by oil operations since the 1940's. The appraisal of this property was very complex in that the highest and best use of the property was not clear at the onset of the assignment. This property consists of degraded wetlands, open space, and a small area with the potential for residential development. The goal of this project was to prepare an appraisal for acquisition purposes such that the buyer and seller could agree on a purchase price and put the property under contract. — West Coyote Hills: Appraised Neighborhoods 1 and 3 of Vested Tentative Tract Map (VTTM)17609. This is commonly referred to as Neighborhoods 1 and 3 of the West Coyotes Hills Property. Neighborhood 1 consists of 10.4± acres and was proposed for development with 16 residential units. Neighborhood 3 is 13.7± acres and was proposed for development with 59 residential units. Neighborhoods 1 and 3 were valued separately. The intended users of the report were the California State Coastal Conservancy, City of Fullerton, Wildlife Conservation Board, Rivers and Mountains Conservancy, California Department of Parks and Recreation, California Natural Resources Agency, and the US Fish and Wildlife Service. This report was prepared to Federal Standards in conformance with Yellow Book guidelines and the acquisition was made based on our appraisal. — Appraisal in Fresno County for the State Department of Water Resources, which included 22 permanent flowage easements and three partial fee acquisitions. Some of the proposed flowage easements overlapped existing road and utility easements which had to be considered. Due to the nature of the flowage easements, substantial severance damages accrued to the remainder parcels which had to be considered. This assignment also included the consideration of orchard and crop values. — Multiple appraisal assignments for the U.S. Department of the Interior, Appraisal and Valuation Services Office (AVSO) prepared to Federal Standards in accordance with Yellow Book guidelines. These were for acquisition purposes related to the San Joaquin River Restoration Project and for the acquisition land to be acquired for National Wilderness areas. 02024 CBRE, INC. 17-174 PROFILES VALUATION & ADVISORY SERVICE Thomas G. Richardson, MAI Vice President E tom.richardson1@cbre.com Professional Experience Thomas G. Richardson, MAI is a Vice President for CBRE's Valuation & Advisory Services (VAS). Mr. Richardson began his career in real estate appraisal in 2012. His experience includes consulting and appraisals for improved properties such as single - and multifamily residences, restaurants, shopping centers, office buildings, warehouses, retail and industrial condominiums, mixed -use commercial and residential buildings, religious facilities, and special purpose properties. Pro Affiliations / He has valued various categories of land including agricultural, residential, commercial, open space/recreational, saltwater marshland, solar farm, and mitigation land. His work has Accreditations been utilized by various public agencies, law firms, financial institutions, and property owners for right-of-way, disposition, bond financing, lease negotiations, and in -lieu fees. - Member: Appraisal Institute, His recent appraisal work for right -of -way -related purposes includes assignments for the February 2021 San Juan Creek Bridge Replacement Project, Los Nietos Safe Routes to School Project, - Licensed: California Certified Playa Del Rey Wastewater Line Project, 1-405 Improvement Project, Culver University General Real Estate Appraiser Improvement Project, Regional Connector Transit Project, Century Boulevard Mobility No.3004940 Improvement Project, Riverside Transmission Reliability Project, Centennial Corridor Expires November 2025 Project, California High Speed Rail Authority, Irvine Business Complex Sidewalk Project, and Mid County Parkway Project. Mr. Richardson was previously an Associate Director of Integra Realty Resources - Los Angeles. Education - B.A., History, University of Training / Courses Completed California, Los Angeles Completed the following courses and seminars: — Advanced Concepts & Case Studies — Basic Appraisal Principles — Basic Appraisal Procedures — Business Practices and Ethics — Commercial Appraisal Review — Expert Witness for Commercial Appraisers — General Appraiser Income Approach, Part I — General Appraiser Income Approach, Part II — General Appraiser Market Analysis and Highest & Best Use — Advanced Market Analysis and Highest & Best Use — General Appraiser Report Writing and Case Studies ©2024 CBRE, INC. 17-175 PROFILES General Appraiser Sales Comparison Approach — General Appraiser Site Valuation and Cost Approach — Real Estate Finance, Statistics, and Valuation Modeling — Uniform Standards of Professional Appraisal Practice — Quantitative Analysis — Advanced Income Capitalization CBRE ©2024 CBRE, INC. 17-176 Attachment E CBRE Appraisal Report — Hypothetical Property in Airport Area, dated August 13, 2024 17-177 CBRE Valuation & Advisory Services Appraisal Report HYPOTHETICAL AIRPORT AREA PROPERTY North Newport Beach, Proximate to John Wayne Airport Newport Beach, California 91324 Prepared for: City of Newport Beach Date of Report: August 13, 2024 CBRE File No.: CB24US044895-4 cbrexom/valuation 17-178 CBRE Valuation & Advisory Services CBRE 5921 Owensmouth Avenue Woodland Hills, CA 91367 T (818)251-3600 www.cbre.com/valuation Date of Report: August 13, 2024 Ms. Lauren Wooding Whitlinger Real Property Administrator CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 RE: Appraisal of: Hypothetical Airport Area Property North Newport Beach, Proximate to John Wayne Airport Newport Beach, Orange County, California CBRE File No.: CB24USO44895-4 Dear Ms. Wooding Whitlinger: At your request and authorization, CBRE, Inc. has prepared an appraisal of the fair market value of the referenced property. Our analysis is presented in the following Appraisal Report. The subject is a hypothetical parcel of vacant land in the Airport Area, in north Newport Beach proximate to John Wayne Airport. Based on discussions with our client, the hypothetical parcel is 66,969 square feet, or 1.54 acres, and has a mixed -use land use designation, which are based on the average parcel size and predominant land use in the Airport Area. Additionally, we were instructed to assume a maximum Floor Area Ratio (FAR) of 0.5 and maximum residential density of 50 dwelling units per acre. Based on the analysis contained in the following report, the market value of the subject is concluded as follows: MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $7,700,000 Compiled by CBRE This Appraisal Report is subject to Extraordinary Assumptions and/or Hypothetical Conditions; please refer to the Executive Summary section of this report for further discussion and analysis. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-179 CBRE Valuation & Advisory Services The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non -intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof). It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES Tom Richardson, MAI Title: VAS - Vice President Phone: (818) 251-3643 Email: Tom. Richardson1@cbre.com License No. & State: 3004940 CA Beth Finestone, MAI, AI-GRS, FRICS, CRE Title: VAS - Executive Vice President Phone: (818) 251-3669 Email: Beth.Finestone@cbre.com License No. & State: AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-180 Certification Certification We certify to the best of our knowledge and belief: 1 . The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have not provided any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our 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. 8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice. 9. Tom Richardson has made a personal inspection of the area of the hypothetical subject. Beth Finestone, MAI, AI-GRS, FRICS, CRE has not made a personal inspection of the area of the hypothetical subject. 10. No one provided significant real property appraisal assistance to the persons signing this certification. 11. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, Tom Richardson, MAI and Beth Finestone, MAI, AI-GRS, FRICS, CRE have completed the continuing education program for Designated Members of the Appraisal Institute. Tom Richardson, MAI Certified General 3004940 CA Beth Finestone, MAI, AI-GRS, FRICS, CRE Certified General AG 004030 CA CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-181 rr } ` cdoOp �� ;fir � a• ��r. �-' � .� Q�w ��' �� * T s•..# �R gs Pj 41 Aerial View of the Airport Area Typical property along Campus Drive. Typical property along Campus Drive. qua , Typical property along Campus Drive. Typical property along Birch Street. 1 _-------- _ Typical Drogerty along MacArthur Boulevard. IITVDical groqerty along Birch Street. Campus Drive, near Bristol Street North, Campus Drive, near Bristol Street North, looking south. I looking north. Campus Drive, at Airport Way, looking south. Birch Street, near MacArthur Boulevard, looking south. �r ypy 6 .. - a AIM' .p Birch Street, near MacArthur Boulevard, Dove Street looking west at John Wayne lookinq north. Airport. Executive Summary Executive Summary Property Name Location Parcel Number(s) Client Highest and Best Use As If Vacant As Improved Property Rights Appraised Date of Inspection Estimated Exposure Time Estimated Marketing Time Primary Land Area Buyer Profile Hypothetical Airport Area Property North Newport Beach, Proximate to John Wayne Airport Newport Beach, Orange County, CA 91324 Hypothetical Property City of Newport Beach Mixed retail and multifamily use N/A Fee Simple Estate July 23, 2024 6 - 12 Months 6 - 12 Months 1.54 AC Developer 66,969 SF CONCLUDED FAIR MARKET VALUE Appraisal Premise Interest Appraised Date of Value Value Fair Market Value Fee Simple Estate July 23, 2024 $7,700,000 Compiled by CBRE Strengths, Weaknesses, Opportunities and Threats (SWOT) Weaknesses/ Threats • Commercial real estate market conditions have deteriorated at the macro level. The significant recent increase in the cost of capital and reduced volume of transaction activity is impacting price discovery and creating an increase in uncertainty. Increasing interest rates and subdued economic growth will continue to weigh on commercial real estate fundamentals and investment transaction volumes. This creates a higher degree of uncertainty in general, though the impacts may vary by market and asset class/type. Market Volatility We draw your attention to a combination of inflationary pressures (leading to higher interest rates) and recent failures/stress in banking systems which have significantly increased the potential for constrained credit markets, negative capital value movements and enhanced volatility in property markets over the short -to -medium term. Experience has shown that consumer and investor behavior can quickly change during periods of such heightened volatility. Lending or investment decisions should reflect this heightened level of volatility and the potential for deteriorating market conditions. CBRE VALUATION & ADVISORY SERVICES v © 2024 CBRE, INC 17-185 Executive Summary It is important to note that the conclusions set out in this report are valid as of the valuation date only. Where appropriate, we recommend that the valuation is closely monitored, as we continue to track how markets respond to evolving events. Extraordinary Assumptions An extraordinary assumption is defined as "an assignment -specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions." 1 • None noted. Hypothetical Conditions A hypothetical condition is defined as "a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results but is used for the purposes of analysis." 2 • Per our client's request, we are appraising a hypothetical property that is vacant land in the Airport Area, in north Newport Beach proximate to John Wayne Airport. Based on discussions with our client, the hypothetical parcel is 66,969 square feet, or 1.54 acres, and has a mixed -use land use designation, which are based on the average parcel size and predominant land use in the Airport Area. Additionally, we were instructed to assume a maximum Floor Area Ratio (FAR) of 0.5 and maximum residential density of 50 dwelling units per acre. Ownership and Property History The subject is a hypothetical property in the Airport Area, in north Newport Beach proximate to John Wayne Airport. Since the subject is hypothetical, a discussion of its sale history is not applicable. Exposure/Marketing Time Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. The following table presents our estimates. EXPOSURE/MARKETING TIME DATA Exposure/Mktg. (Months) CBRE Exposure Time Estimate 6 - 12 Months CBRE Marketing Period Estimate 6 - 12 Months Various Sources Compiled by CBRE 1 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) 2 The Appraisal Foundation, USPAP, 2024 Edition (Effective January 1, 2024) CBRE VALUATION & ADVISORY SERVICES vi © 2024 CBRE, INC 17-186 Table of Contents Table of Contents Certification........................................................................................................................................................................ i SubjectPhotographs...................................................................................................................................................... ii ExecutiveSummary........................................................................................................................................................v Tableof Contents..........................................................................................................................................................vii Scopeof Work....................................................................................................................................................................1 AreaAnalysis....................................................................................................................................................................5 NeighborhoodAnalysis..................................................................................................................................................7 Site Analysis I• Zoning.................................................................................................................................................................................13 Taxand Assessment Data..........................................................................................................................................16 RetailMarket Analysis..................................................................................................................................................17 MultifamilyMarket Analysis......................................................................................................................................22 Highestand Best Use...................................................................................................................................................27 Land Value Reconciliation of Value M. 33 Assumptions and Limiting Conditions...................................................................................................................34 ADDENDA A Land Sale Data Sheets B Qualifications CBRE VALUATION & ADVISORY SERVICES vii © 2024 CBRE, INC 17-187 Scope of Work Scope of Work This Appraisal Report is intended to comply with the real property appraisal development and reporting requirements set forth under Standards Rule 1 and 2 of USPAP. The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered, and analysis is applied. Intended Use Of Report The intended use of the appraisal is to assist the City of Newport Beach in establishing Park In -Lieu fees and no other use is permitted. Client The client is the City of Newport Beach. Intended User Of Report This appraisal is to be used by the City of Newport Beach. No other user(s) may rely on our report unless as specifically indicated in this report. Intended users are those who an appraiser intends will use the appraisal or review report. In other words, appraisers acknowledge at the outset of the assignment that they are developing their expert opinions for the use of the intended users they identify. Although the client provides information about the parties who may be intended users, ultimately it is the appraiser who decides who they are. This is an important point to be clear about: The client does not tell the appraiser who the intended users will be. Rather, the client tells the appraiser who the client needs the report to be speaking to, and given that information, the appraiser identifies the intended user or users. It is important to identify intended users because an appraiser's primary responsibility regarding the use of the report's opinions and conclusions is to those users. Intended users are those parties to whom an appraiser is responsible for communicating the findings in a clear and understandable manner. They are the audience. 3 Reliance Language Reliance on any reports produced by CBRE under this Agreement is extended solely to parties and entities expressly acknowledged in a signed writing by CBRE as Intended Users of the respective reports, provided that any conditions to such acknowledgement required by CBRE or hereunder have been satisfied. Parties or entities other than Intended Users who obtain a copy of the report or any portion thereof (including Client if it is not named as an Intended User), whether as a result of its direct dissemination or by any other means, may not rely upon any opinions or conclusions contained in the report or such portions thereof, and CBRE will not be responsible for any unpermitted use of the report, its conclusions or contents or have any liability in connection therewith. 3 Appraisal Institute, The Appraisal of Real Estate, 151h ed. (Chicago: Appraisal Institute, 2020), 40. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-188 Scope of Work Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the fair market value of the fee simple interest in a hypothetical vacant land property in the Airport Area, in north Newport Beach proximate to John Wayne Airport, as of the effective date of the appraisal. Definition of Fair Market Value "Fair Market Value", as defined pursuant to Part 3, Title 7, Chapter 9, Article 4, of the California Code of Civil Procedure, entitled: Eminent Domain Law, is as follows: Fair Market Value ... Article 4. Measure of Compensation for Property Taken. 1263.320 (a) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (b) The fair market value of the property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method valuation that is just and equitable. 1263.330 The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: (a) The project for which the property is taken. (b) The eminent domain proceeding in which the property is taken. (c) Any preliminary actions of the plaintiff relating to the taking of the property. Interest Appraised The value estimated represents Fee Simple Estate as defined below: Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. 4 Extent to Which the Property is Identified The property is identified through the following sources: • Postal address • Assessor's records • Legal description 4 Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022), 73. CBRE VALUATION & ADVISORY SERVICES 2 © 2024 CBRE, INC 17-189 Scope of Work Extent to Which the Property is Inspected Tom Richardson, MAI conducted an inspection of the area of the hypothetical subject, as well as its surrounding environs on the effective date of appraisal. This inspection was considered adequate and is the basis for our findings. Type and Extent of the Data Researched CBRE reviewed the following: • Applicable tax data • Zoning requirements • Flood zone status • Demographics • Comparable data Type and Extent of Analysis Applied CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. For vacant land, the sales comparison approach has been employed for this assignment. Statement of Competency The appraisers have the appropriate knowledge, education, and experience to complete this assignment competently. Appraisal Methodology In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. Depending on a specific appraisal assignment, any of the following four methods may be used to determine the market value of the fee simple interest of land: • Sales Comparison Approach; • Income Capitalization Procedures; • Allocation; and • Extraction. The following summaries of each method are paraphrased from the text. The first is the sales comparison approach. This is a process of analyzing sales of similar, recently sold parcels in order to derive an indication of the most probable sales price (or value) of the property being appraised. The reliability of this approach is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data regarding size, price, terms of sale, etc., (c) the degree of comparability or extent of adjustment necessary for differences between the subject and the comparables, and (d) the absence of nontypical conditions affecting the sales price. This is the primary and most reliable method used to value land (if adequate data exists). The income capitalization procedures include three methods: land residual technique, ground rent capitalization, and Subdivision Development Analysis. A discussion of each of these three techniques is presented in the following paragraphs. CBRE VALUATION & ADVISORY SERVICES 3 © 2024 CBRE, INC 17-190 Scope of Work The land residual method may be used to estimate land value when sales data on similar parcels of vacant land are lacking. This technique is based on the principle of balance and the related concept of contribution, which are concerned with equilibrium among the agents of production--i.e. labor, capital, coordination, and land. The land residual technique can be used to estimate land value when: 1) building value is known or can be accurately estimated, 2) stabilized, annual net operating income to the property is known or estimable, and 3) both building and land capitalization rates can be extracted from the market. Building value can be estimated for new or proposed buildings that represent the highest and best use of the property and have not yet incurred physical deterioration or functional obsolescence. The subdivision development method is used to value land when subdivision and development represent the highest and best use of the appraised parcel. In this method, an appraiser determines the number and size of lots that can be created from the appraised land physically, legally, and economically. The value of the underlying land is then estimated through a discounted cash flow analysis with revenues based on the achievable sale price of the finished product and expenses based on all costs required to complete and sell the finished product. The ground rent capitalization procedure is predicated upon the assumption that ground rents can be capitalized at an appropriate rate to indicate the market value of a site. Ground rent is paid for the right to use and occupy the land according to the terms of the ground lease; it corresponds to the value of the landowner's interest in the land. Market -derived capitalization rates are used to convert ground rent into market value. This procedure is useful when an analysis of comparable sales of leased land indicates a range of rents and reasonable support for capitalization rates can be obtained. The allocation method is typically used when sales are so rare that the value cannot be estimated by direct comparison. This method is based on the principle of balance and the related concept of contribution, which affirm that there is a normal or typical ratio of land value to property value for specific categories of real estate in specific locations. This ratio is generally more reliable when the subject property includes relatively new improvements. The allocation method does not produce conclusive value indications, but it can be used to establish land value when the number of vacant land sales is inadequate. The extraction method is a variant of the allocation method in which land value is extracted from the sale price of an improved property by deducting the contribution of the improvements, which is estimated from their depreciated costs. The remaining value represents the value of the land. Value indications derived in this way are generally unpersuasive because the assessment ratios may be unreliable and the extraction method does not reflect market considerations. For the purposes of this analysis, we use only the sales comparison approach in developing an opinion of value for the subject. This approach is applicable to the subject because there is an active market for similar properties, and sufficient sales data is available for analysis. The cost approach is not applicable because there are no improvements that contribute value to the hypothetical property. The income approach is not applicable because the hypothetical property is not likely to generate rental income in its current state. CBRE VALUATION & ADVISORY SERVICES 4 © 2024 CBRE, INC 17-191 Area Analysis Area Analysis Compton` Torrance Lang Beach Q mapb= 1 a& Santa Ana Huntington --- ,Irvine Beach Newport Beach / Corona 1 oil. Mission Viejo The subject is located in Orange County. Key information about the area is provided in the following tables. Population The area has a population of 3,171,875 and a AREA POPULATION BYAGE median age of 40, with the largest population 500,000 group in the 20-29 age range and the smallest 400,000 00,000 population in 80+ age range. 300,000 100,000 I ' 0 Source: ESRI 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80+ Population has increased by 161,664 since 2010, POPULATION BY YEAR reflecting an annual increase of 0.4%. Population 4,000,000 is projected to decrease by 2,549 between 2024 3,000,000 and 2029, reflecting a 0.0% annual population 2,000,000 decline. 1,000,000 0 Source: ESRI 2010 2024 2029 Source: ESRI, downloaded on Aug, 8 2024 CBRE VALUATION & ADVISORY SERVICES 5 © 2024 CBRE, INC 17-192 Area Analysis Income The area features an average household income of $157,826 and a median household income of $112,796. Over the next five years, median household income is expected to increase by 15.0%, or $3,394 per annum. Education A total of 46.2% of individuals over the age of 24 have a college degree, with 29.2% holding a bachelor's degree and 16.9% holding a graduate degree. Employment MEDIAN INCOME BY YEAR $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Source: ESRI 2024 2029 POPULATION BY DEGREE ■ Bachelor's Degree ■ Graduate Degree ■ Other Source: ESRI Health Care/Social Assistance Manufacturing Prof/Scientific/Tech Services Retail Trade Educational Services Accommodation/Food Services Construction Finance/Insurance Other Services (excl Publ Adm) Admin/Support/Waste Mgmt Srvcs Source: ESRI 0% 2% 4% 6% 8% 10% 12% 14% The area includes a total of 1,627,211 employees. The top three industries within the area are Health Care/Social Assistance, Manufacturing and Prof/Scientific/Tech Services, which represent a combined total of 35% of the workforce. Source: ESRI, downloaded on Aug 8, 2024; BLS.gov dated Jan 0, 1900 In summary, the area is forecasted to experience a decrease in population and an increase in household income. CBRE VALUATION & ADVISORY SERVICES 6 © 2024 CBRE, INC 17-193 Neighborhood Analysis Neighborhood Analysis John Wayne Airport m tm ° Lyon Air Museum a P 2 0 CD ACl Jet �aR O� 00 y �00 Ga The Melting Pot �yoP Renaissance Newport c Ga d Beach Hotel S A N J 0 SF ©�� i` M Af r ersfof Sf Qa UCI - NORTH `tee CAMPUS Newport Beach Ood 'ate San Joaquin Golf Course 'fpf Marsh Reserve SfQ f Sf UPPER BAY ate` ,e > �P Location The hypothetical subject is in the Airport Area neighborhood within the city of Newport Beach and is considered a suburban location. The city of Newport Beach is situated in southern Orange County. Boundaries The hypothetical subject is located in the Airport Area neighborhood within the City of Newport Beach. The Airport Area is generally delineated as follows: North: Campus Drive South: Bristol Street North / State Route 73 East: Jamboree Road West: Campus Drive Land Use In the Airport Area, where the hypothetical subject is located, land uses include a mix of office, retail, hospitality, multifamily residential, mixed -use commercial and multifamily residential, and rental car facilities that serve the nearby John Wayne Airport. CBRE VALUATION & ADVISORY SERVICES 7 © 2024 CBRE, INC 17-194 Neighborhood Analysis Access Primary access to the Airport Area is provided by Campus Drive, MacArthur Boulevard, and Jamboree Road, major arterials that traverse the area in a north/south direction. Major east/west arterials include State Route 73, Bristol Street North, and Campus Drive. Overall, vehicular access is average. Public transportation is provided by Orange County Transportation Authority. There are numerous bus stops within the Airport Area along Bristol Street North, Jamboree Road, Birch Street, Von Karman Avenue, and Campus Drive. The local market perceives public transportation as average compared to other areas in the region. However, the primary mode of transportation in this area is the automobile. John Wayne Airport is located adjacent to the west of the Airport Area neighborhood. Demographics Selected neighborhood demographics in 1-, 3- and 5-mile radius from the Airport Area are shown in the following table: SELECTED NEIGHBORHOOD DEMOGRAPHICS North Newport Beach, Proximate to John Wayne Airport 1 Mile Radius 3 Mile Radius 5 Mile Radius California Orange County Newport Beach, CA 91324 Population 2029 Total Population 9,306 180,906 460,698 39,717,178 3,169,326 2024 Total Population 8,075 174,319 456,084 39,530,491 3,171,875 2010 Total Population 5,462 144,452 433,754 37,253,959 3,010,211 2000 Total Population 2,384 126,207 402,959 33,871,651 2,846,214 Annual Growth 2024 - 2029 2.88% 0.74% 0.20% 0.09% -0.02% Annual Growth 2010 - 2024 2.83% 1.35% 0.36% 0.42% 0.37% Annual Growth 2000 - 2010 8.64% 1.36% 0.74% 0.96% 0.56% Households 2029 Total Households 5,360 73,312 172,780 13,903,885 1,123,363 2024 Total Households 4,484 67,873 164,981 13,641,471 1,090,541 2010 Total Households 2,998 55,982 149,044 12,577,497 992,769 2000 Total Households 1,221 47,526 135,411 11,502,868 935,264 Annual Growth 2024 - 2029 3.63% 1.55% 0.93% 0.38% 0.59% Annual Growth 2010 - 2024 2.92% 1.39% 0.73% 0.58% 0.67% Annual Growth 2000 - 2010 9.40% 1.65% 0.96% 0.90% 0.60% Income 2024 Median Household Income $105,363 $109,435 $117,165 $97,646 $112,796 2024 Average Household Income $140,454 $153,758 $167,280 $139,308 $157,826 2024 Per Capita Income $78,502 $60,409 $60,609 $48,206 $54,311 2024 Pop 25+ College Graduates 4,432 70,344 168,918 10,659,207 1,035,382 Age 25+ Percent College Graduates - 2024 71.8% 60.6% 53.6% 38.8% 46.2% Source: ESRI Conclusion In keeping with the principle of conformity, we expect neighborhood land uses to continue to be suburban, similar to the present use. A generally positive population growth rate is expected in the near future. This is a positive indicator for real estate demand. Additionally, the limited supply of available property combined with macroeconomic conditions will continue to bolster the local real estate market. CBRE VALUATION & ADVISORY SERVICES 8 © 2024 CBRE, INC 17-195 Site Analysis Site Analysis The following chart summarizes the salient characteristics of the subject site. SITE SUMMARY AND ANALYSIS Physical Description Gross Site Area Net Site Area Shape Topography Parcel Number(s) Flood Map Panel No. & Date Flood Zone Utilities Availability Water Yes Sewer Yes Natural Gas Yes Electricity Yes Telephone/Cable/Internet Yes Mass Transit Yes Various sources compiled by CBRE Location 1.54 Acres 66,969 Sq. Ft. 1.54 Acres 66,969 Sq. Ft. Rectangular (Based on typical parcel shape in the area) Level, At Street Grade Hypothetical Property 06059CO286J 3-Dec-09 Zone X(Unshaded) Comments City of Newport Beach City of Newport Beach Southern California Gas Company Southern California Edison Various OCTA The hypothetical subject is located in the Airport Area neighborhood within the City of Newport Beach. Land Area Based on discussions with our client, the hypothetical parcel is 66,969 square feet, or 1.54 acres. The parcel size is based on the most typical parcel size of the properties located within the Airport Area. The hypothetical site is considered adequate in terms of size and utility. Shape and Frontage We assume the hypothetical site has adequate shape and frontage for development. Ingress/Egress The hypothetical site is assumed to have adequate ingress and egress. Campus Drive, in the Airport Area, is a north/south street that curves to an east/west street, that has a dedicated width ranging from 80 to 94 feet and is improved with two to three lanes of traffic in each direction. Street improvements include asphalt paving and concrete curbs, gutters and sidewalks, and street lighting. Street parking is not permitted. CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-196 Site Analysis Jamboree Road, in the Airport Area, is a north/south street that curves to an east/west street, that has a dedicated width ranging from 134 to 148 feet and is improved with three to four lanes of traffic in each direction. Street improvements include asphalt paving and concrete curbs, gutters and sidewalks, and street lighting. Street parking is not permitted. Bristol Street North, in the Airport Area, is a westbound street that has a dedicated width of 90 feet. It is a one-way street improved with three lanes of traffic in a westbound direction. Additional street improvements include concrete curbs, gutters, and street lighting. Only the north side of the street is improved with sidewalks. Street parking is not permitted. Topography and Drainage The hypothetical site is generally level and at street grade. The topography of the hypothetical site is not seen as an impediment to the development of the property. During our inspection of the Airport Area, we observed no drainage problems and assume that none exist. Soils A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soils report, it is a specific assumption that the site has adequate soils to support the highest and best use. Easements and Encroachments There are no known easements or encroachments impacting the hypothetical site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision. Covenants, Conditions and Restrictions There are no known covenants, conditions or restrictions impacting the hypothetical site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a copy of the current covenants, conditions and restrictions, if any, prior to making a business decision. Utilities and Services The hypothetical site includes all municipal services, including police, fire and refuse garbage collection. All utilities are available to the hypothetical site in adequate quality and quantity to service the highest and best use. Environmental Issues Although CBRE was not provided an Environmental Site Assessment (ESA), a tour of the area of the hypothetical subject did not reveal any obvious issues regarding environmental contamination or adverse conditions. CBRE VALUATION & ADVISORY SERVICES 10 © 2024 CBRE, INC 17-197 Site Analysis Conclusion Overall, the physical characteristics of the hypothetical site and the availability of utilities result in functional utility suitable for a variety of uses. We are not aware of any other particular restrictions on development. CBRE VALUATION & ADVISORY SERVICES 11 © 2024 CBRE, INC 17-198 Site Analysis �I — I�i�l�l�..■_r.C• 111 ■ 1V C-J l��\ 1 � ll�ll�1�\ice Ap�aeB �erF �nedn�er.prt aEd roes Ex repersa MN Omwd U� © gElsAed rlppdrtop 6ourdary oi�ul Dora mWLJa i.f D �:r•r Dada a.3_NMe MaP PA'•EL5 - .� o�rr:. r Ai: �axh uea OTV.FR AREAS h�\\\Y�"as'a• ;rr _•Fiu•oe 3ys[vn Area Wnnou[Base Floae E .1—IM El SPECIAL FLODD Wlrh OFE m Deplh HAZARD AREAS Re6ularery 0.2'e Annual cnarxe i:ooe rtaza ro. Maas M1? anr:ua [nano_ hoot vF In a.,.p Mptn less 01.11111 loos or wi llt etas ge Arefs of .. rnan one,_ ntae - kX, rnmx lw Anireai cna�tce � tom na:aro - . A.ea wpm Ree�cae! lone fersh a.e m OTHER AREAS OF tree Sec Norco.: FLOOD HAZARD Area wrtn I loon RHA e.e ro I—- •. p mi Cross SeFlimuwim l4,.Annual Chance water 5�rtace BeaaLon o- — — Coastal iransetn _-- --a.. II—EI—I1. LAM tBFEV mir M S1, lurrr 'l n Boondnry _-- CuA IRE iron Buwllr OMR _ Pro*" 8as ,ne FEATURES HydrogrV� Fealore 0EK5RAL I —I -- Cha w C� mar $I— $r STRUCTURES , t a r t Lerwe. Dyke. o. Ffoo - CBRE VALUATION & ADVISORY SERVICES 12 © 2024 CBRE, INC 17-199 Zoning Zoning Based on discussions with our client, the hypothetical parcel has a mixed -use land use designation, based on the predominant land use in the Airport Area. Additionally, we were instructed to assume a maximum Floor Area Ratio (FAR) of 0.5 and maximum residential density of 50 dwelling units per acre. Conclusion Additional information may be obtained from the appropriate governmental authority. For purposes of this appraisal, CBRE has assumed the information obtained is correct. CBRE VALUATION & ADVISORY SERVICES 13 © 2024 CBRE, INC 17-200 Zoning The Airport Area is outlined in red in the image above. CBRE VALUATION & ADVISORY SERVICES 14 © 2024 CBRE, INC 17-201 Zoning CBRE VALUATION & ADVISORY SERVICES 15 © 2024 CBRE, INC 17-202 Tax and Assessment Data Tax and Assessment Data In California, privately held real property is typically assessed at 100% of full cash value (which is interpreted to mean market value of the fee simple estate) as determined by the County Assessor. Generally, a reassessment occurs only when a property is sold (or transferred) or when new construction occurs (as differentiated from replacing existing construction). In the case of long-term ground leases, the general rule is that a reassessment is made at the time of assigning or terminating a lease where the remaining term is more than 35 years. For reassessment purposes, the lease term includes all options to extend. Assessments for properties that were acquired before the tax year 1975-1976 were stabilized as of the tax year 1975-1976. Property taxes are limited by state law to 1 % of the assessed value plus voter - approved obligations and special assessments. If no sale (or transfer) occurs or no new building takes place, assessments may not increase by more than 2% annually. The hypothetical subject property is assumed to be owned by the City of Newport Beach and therefore it is not subject to real estate taxes. The Airport Area, in which the hypothetical subject is located, is within tax rate areas 07-061 and 07-088 which each carry a 2023-2024 base tax rate of 1.0798%. Conclusion If the hypothetical subject sold for the value estimate in this report, a reassessment at that value would most likely occur, with tax increases limited to two percent annually thereafter until the property is sold again. CBRE VALUATION & ADVISORY SERVICES 16 © 2024 CBRE, INC 17-203 Retail Market Analysis Retail Market Analysis The subject is located in the Airport Area neighborhood of the City of Newport Beach. Given prevailing land use patterns and our client's instruction that the subject be analyzed as vacant mixed -use land with a maximum FAR of 0.5 and maximum density of 50 dwelling units per acre, the most likely use is mixed -use retail and multifamily residential. As such, we have included a retail market analysis, followed by a multifamily analysis. Newport Beach Submarket Important characteristics of the Newport Beach retail market are summarized below: NEWPORT BEACH RETAIL SUBMARKET Inventory Completions Occupied Stock Asking Rent Asking Rent Net Absorption Year Ending (SF) (SF) (SF) Occupancy ($NSF NNN) Change (SF) 2014 5,552,400 31,712 5,405,105 97.3% $39.69 4.50% 25,768 2015 5,582,925 30,525 5,405,448 96.8% $41.43 4.38% 343 2016 5,582,925 0 5,461,310 97.8% $42.57 2.75% 55,862 2017 5,644,641 61,716 5,523,479 97.9% $43.07 1.16% 62,169 2018 5,656,651 12,010 5,506,500 97.3% $44.10 2.40% -16,979 2019 5,656,651 0 5,518,412 97.6% $44.83 1.67% 11,912 2020 5,656,651 0 5,495,802 97.2% $45.68 1.89% -22,610 2021 5,647,851 -8,800 5,491,141 97.2% $47.35 3.65% -4,661 2022 ----------------------------------------------------------------------------------------------------------------------------------------------------- 5,609,223 -38,628 5,436,445 96.9% $48.84 3.16% -54,696 Q12023 5,610,723 1,500 5,440,209 97.0% $49.21 0.74% 3,764 Q2 2023 5,610,723 0 5,451,782 97.2% $49.54 0.69% 11,573 Q3 2023 5,610,723 0 5,425,953 96.7% $49.74 0.40% -25,829 Q42023 5,610,723 0 5,448,189 97.1% $49.45 -0.58% 22,236 ---------------------------------------------------------------------------------------------------------------------------- 2023 5,610,723 1,500 5,448,189 97.1% $49.45 ----------- 1.24% -------------- 11,744 ----------------------------------------------------------------------------------------------------------------------------------------------------- Q12024 5,610,723 0 5,454,779 97.2% $50.36 1.83% 6,590 Q22024 5,610,723 0 5,449,456 97.1% $50.54 0.36% -5,322 032024* 5,609,480 -1,243 5,445,622 97.1% $50.95 0.82% -3,797 Q42024* ----------------------------------------------------------------------------------------------------------------------------------------------------- 5,608,214 -1,266 5,444,268 97.1% $51.39 0.86% -1,190 2024* 5,608,214 -2,509 5,444,268 97.1% $51.39 3.91% -3,719 2025* 5,606,183 -2,031 5,443,761 97.1% $52.99 3.12% -206 2026* 5,603,102 -3,081 5,439,630 97.1% $54.45 2.75% -3,923 2027* 5,599,007 -4,095 5,433,641 97.0% $55.78 2.45% -5,265 2028* 5,598,266 -741 5,430,139 97.0% $57.04 2.26% -3,531 2029* 5,602,901 4,635 5,431,772 96.9% $58.29 2.19% 1,129 "Future Projected Data according to Costar Source: Costar, 2nd Quarter 2024 The Newport Beach retail submarket consists of approximately 5,610,723 square feet of retail space. The current submarket inventory represents approximately 3.9% of the overall market inventory. The following observations were noted from the table above: • As of 2nd Quarter 2024, there was approximately 5,449,456 square feet of occupied retail space (including sublet space), resulting in an occupancy rate of 97.1 % for the submarket. This reflects a small decrease from the previous quarter's occupancy of 97.2%, and no change from an occupancy rate of 97.1% from last year. The submarket occupancy is above the 95.7% market occupancy. • The submarket experienced negative 5,322 square feet of net absorption for the current quarter. This indicates a decline from the previous quarter's positive 6,590 square feet of net absorption, CBRE VALUATION & ADVISORY SERVICES 17 © 2024 CBRE, INC 17-204 Retail Market Analysis and a decline from the positive 11,744 square feet of net absorption from a year ago. Overall, the submarket has experienced positive 1,268 square feet of net absorption for the current year-to- date period.The submarket's current net absorption of negative 5,322 square feet is below the overall market net absorption of positive 34,799 square feet. • The submarket had zero completions for the current quarter, which indicates no change from the previous quarter's zero completions, and no change from the zero completions from last year. • The submarket achieved average asking rent of $50.54 per square foot, which indicates an increase from the previous quarter's asking rent of $50.36 per square foot, and an increase from the asking rent of $49.45 per square foot from last year. The submarket's current asking rent of $50.54 per square foot compares favorably with the overall market asking rent of $37.08 per square foot. Historical Inventory - Submarket INVENTORY: NEWPORT BEACH RETAIL MARKET 150,000,000 142,571,795 143,&57,014 144,897,762 144,992,566 144,673,S63 144,311,374 144,211,415 144,094,263 143,717,2(kl 144,849,261 145,135,882 1195 144,301,338 144,290,988 144,110,655 144,221,844 140,000,000 120,000,000 100,000,000 80,000,000 50,000,000 40,000,000 20,000,000 ,651 647,851 5, 0 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market --0-5ubrnarket " Future Projected Data according to Costar Source: Costar. 2nd Quarter 2D24 Submarket Inventory is projected to be 5,608,214 square feet at the end of the current year, which represents a small decrease from the previous year's submarket inventory of 5,610,723 square feet. Inventory for next year is projected to be 5,606,183 square feet, reflecting a small decrease from the current year. CBRE VALUATION & ADVISORY SERVICES 18 © 2024 CBRE, INC 17-205 Retail Market Analysis Historical Occupancy - Submarket OCCUPANCY: NEWPORT BEACH RETAIL MARKET 98.5% 97 t� 9E.0% 97.8�; _ 97 E %S 97.5% 973% 97.5% 97.2% 97.2% 47 1% 971% 971% 971% 969% 969% 97.0% 96.E 96.5% 96.0% 95.5% 95.0% 94.5% 94.0% 2014 2015 2016 2017 201E 2019 2020 2021 2022 2023 2024- 2025' 2026' 2027- 202E' 2029° Market Submarket ' Future Projected Data according to Costar Source: Costar. 2nd Quarter 2024 Submarket occupancy is projected to be 97.1 % at the end of the current year, which represents no change from the previous year's submarket occupancy of 97.1 %. Submarket occupancy for next year is projected to be 97.1 %, reflecting no change from the current year. Historical Net Absorption - Submarket NET ABSORPTION: NEWPORT BEACH RETAIL MARKET 2,500,000 2,000,000 1,919,373 1500,000 1,247,092 1,000,000 636,43E 473,108 500,000 zsz,an 1E716E4 u•-16,979 11,912-22,510 r- 2014 2015 2015 2017 201E 2021 2022 -500,000-258,099 -1,000,000 -1,720,366 -1,500,000 Market --c-5ubmarket ' Future Projected Data according to Coster Source_ Costar, 2nd Quarter 2024 35,349 11,744 33,712 -206 -3,923 -5,265 -3,531 %M 2024' 2025" _A2W2111W _�2�' 2029' 127,04E 279,076 Net absorption in the submarket is projected to be negative 3,719 square feet at the end of the current year, reflecting a decline from the previous year's net absorption of positive 11,744 square feet. Net absorption for next year is projected to be negative 206 square feet, indicating an improvement from the current year. CBRE VALUATION & ADVISORY SERVICES 19 © 2024 CBRE, INC 17-206 Retail Market Analysis Historical Completions - Submarket COMPLETIONS: NEWPORT BEACH RETAIL MARKET 1,400,000 1,200,000 1,145,409 99z,z47 1,000,000 800,000 500,000 400,000 332,587 238,1z0 200,000 139,810 6 33,010 0 2014 2015 2016 2017 2018 2013 -200,000 -400,000 -600,000 ' Future Projected Data according to Costar 127,581 0 -8,800 _38,628 1,500 ii%bn -2,031 -3,091 -4,095 -741 1124' 6 Asok 2029' -143,316-130,323-77,573 -188,380-102,760 -372,525 Market Submarket Source: Costar. 2nd Quarter 2024 The submarket is projected to achieve completions of negative 2,509 square feet at the end of the current year, which indicates a decline from the previous year's completions of positive 1,500 square feet. The submarket is projecting completions of negative 2,031 square feet for next year, which indicates an improvement from the current year. Historical Asking Rent - Submarket ASKING RENT: NEWPORT BEACH RETAIL MARKET $70.rrc $60.00 $s7.oa $5a.z9 $51.39 $52.99 45 $55.7s $50.00 $47.35 �8'� $49.45 $41.43 $42.57 $43.07 $44.10 $44.83 $45.68 $39.69 $40.00 $30.00 $20.00 $37. $10.00 $0.00 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market --Q--Submarkat Future Projected Data according to Costar Source: Costar, 2nd Quarter 2024 The submarket is projected to achieve average asking of $51.39 per square foot at the end of the current year, which represents an increase from the previous year's asking rent of $49.45 per square foot. The submarket is projected to achieve average asking rent of $52.99 per square foot, reflecting an increase from the current year. CBRE VALUATION & ADVISORY SERVICES 20 © 2024 CBRE, INC 17-207 Retail Market Analysis Conclusion Overall, the improved retail Orange County metro market and Newport Beach submarket are viewed as desirable retail markets. Over the last three years, the improved retail market has shown slight rental rate increases and stable vacancy rates. Vacancy rates are forecasted to remain relatively stable over the next five years and rental rates are expected to increase. Overall, the Newport Beach market remains desirable as evidenced by the relatively stable occupancy rates ranging from approximately 96% to 97% over the past 10 years. Generally speaking, brokers are reporting that the interest rate increases, and high construction costs have impacted price levels for retail land. Overall, the improved retail market is performing well and showing positive indicators, but the retail land market has remained flat since approximately the end of June 2022. CBRE VALUATION & ADVISORY SERVICES 21 © 2024 CBRE, INC 17-208 Multifamily Market Analysis Multifamily Market Analysis The subject is located in the Airport Area neighborhood of the City of Newport Beach. Given prevailing land use patterns and our client's instruction that the subject be analyzed as vacant mixed -use land with a maximum FAR of 0.5 and maximum density of 50 dwelling units per acre, the most likely use is mixed -use retail and multifamily residential. As such, we have included a multifamily market analysis. Newport Beach Submarket Important characteristics of the Newport Beach apartment market are summarized below: NEWPORT BEACH APARTMENT SUBMARKET Year Ending Inventory Completions Occupied Stock Occupancy Asking Rent Asking Rent Net Absorption (Units) (Units) (Units) ($/Unit / Mo.) Change (Units) 2014 8,908 0 8,491 95.3% $2,393 4.02% 95 2015 8,854 -54 8,473 95.7% $2,503 4.57% -19 2016 8,854 0 8,346 94.3% $2,551 1.91 % -128 2017 9,405 551 8,747 93.0% $2,567 0.66% 400 2018 9,405 0 8,867 94.3% $2,641 2.87% 120 2019 9,405 0 8,910 94.7% $2,775 5.08% 44 2020 9,291 -114 8,876 95.5% $2,807 1.16% -33 2021 9,291 0 9,203 99.1 % $3,299 17.52% 327 2022 9,291 0 9,098 97.9% $3,305 0.18% 106 ----------------------------------------------------------------------------------------------------------------------------------------------------- Q12023 9,291 0 9,057 97.5% $3,285 -0.62% -41 Q2 2023 9,291 0 9,066 97.6% $3,391 3.24% 9 Q3 2023 9,291 0 9,054 97.5% $3,479 2.60% -12 Q4 2023 9,291 0 9,025 97.1 % $3,548 1.97% -29 ----------------------------------------------------------------------------------------------------------------------------------------------------- 2023 ------- ---------------------------------------------------------------------------------------------------------------------------------------------- 9,291 0 9,025 97.1 % $3,548 7.34% -73 Q12024 9,291 0 8,981 96.7% $3,381 -4.69% -44 Q2 2024" 9,291 0 8,956 96.4% $3,391 0.28% -25 Q3 2024" 9,290 -1 8,951 96.3% $3,415 0.71 % -6 Q4 2024" 9,289 1 8,949 96.3% $3,405 -0.28% 2 ----------------------------------------------------------------------------------------------------------------------------------------------------- 2024" 9,289 -2 8,949 96.3% $3,405 -4.01 % -77 2025' 9,286 -3 8,938 96.2% $3,554 4.37% -11 2026' 9,283 -3 8,938 96.3% $3,689 3.80% 0 2027' 9,279 -4 8,956 96.5% $3,815 3.40% 18 2028* 9,276 -3 8,961 96.6% $3,937 3.22% 4 2029* 9,273 -3 8,957 96.6% $4,065 3.26% -3 'Future Projected Data according to Costar Source: Costar, 1st Quarter 2024 The Newport Beach apartment submarket consists of approximately 9,291 units of apartment space. The current submarket inventory represents approximately 3.7% of the overall market inventory. The following observations were noted from the table above: • As of 1st Quarter 2024, there were approximately 8,981 units of occupied apartment space, resulting in an occupancy rate of 96.7% for the submarket. This reflects a decrease from the previous quarter's occupancy of 97.1 %, and a small decrease from an occupancy rate of 97.1 % from last year. The submarket occupancy is above the 96.0% market occupancy. • The submarket experienced negative 44 units of net absorption for the current quarter. This indicates a decline from the previous quarter's negative 29 units of net absorption, and an improvement from the negative 73 units of net absorption from a year ago. The submarket's CBRE VALUATION & ADVISORY SERVICES 22 © 2024 CBRE, INC 17-209 Multifamily Market Analysis current net absorption of negative 44 units is below the overall market net absorption of positive 78 units. • The submarket had zero completions for the current quarter, which indicates no change from the previous quarter's zero completions, and no change from the zero completions from last year. • The submarket achieved average asking rent of $3,381 per unit, which indicates a decrease from the previous quarter's asking rent of $3,548 per unit, and a decrease from the asking rent of $3,548 per unit from last year. The submarket's current asking rent of $3,381 per unit compares favorably with the overall market asking rent of $2,613 per unit. Historical Inventory - Submarket INVENTORY: NEWPORT BEACH APARTMENT MARKET 300,000 242,560 243,954 245,477 249,218 250, GM253,778 257,551 258,603 260,967 263,922 267,110 250,000 237,372 224,180 227,096 228,625 233,329 _ _ pool M - W 200,000 150,000 100,000 50,000 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market Submarket Future Projected Cata according to Costar Source Costar; 1st Quarter 2024 Submarket Inventory is projected to be 9,289 units at the end of the current year, which represents a small decrease from the previous year's submarket inventory of 9,291 units. Inventory for next year is projected to be 9,286 units, reflecting a small decrease from the current year. CBRE VALUATION & ADVISORY SERVICES 23 © 2024 CBRE, INC 17-210 Multifamily Market Analysis Historical Occupancy - Submarket 100.0% 95.0% 98.0% OCCUPANCY: NEWPORT BEACH APARTMENT MARKET 99.1% 97.0% 96.3% 96.2% 953% 96.5% 46.6% 96.5% 96.0% 963% 95.0% 99 7% 94.0% 93.0% 92.0% 91.0% 90.0% 89.0% 2014 2015 2015 2017 2019 2019 2020 2021 2022 2023 2024- 2025- 2026' 2027- 2028' 2029' Market Submarket ' Future Projected Data according to Costar Source: Costar. 1st Quarter 2024 Submarket occupancy is projected to be 96.3% at the end of the current year, which represents a decrease from the previous year's submarket occupancy of 97.1 %. Submarket occupancy for next year is projected to be 96.2%, reflecting a small decrease from the current year. Historical Net Absorption - Submarket a,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 ' Future Projected Data according to Coster Source: Costar. 1st Quarter 2024 NET ABSORPTION: NEWPORT BEACH APARTMENT MARKET 7,126 -1,55b Market —o—submarket Net absorption in the submarket is projected to be negative 77 units at the end of the current year, reflecting a decline from the previous year's net absorption of negative 73 units. Net absorption for next year is projected to be negative 11 units, indicating an improvement from the current year. CBRE VALUATION & ADVISORY SERVICES 2v © 2024 CBRE, INC 17-211 Multifamily Market Analysis Historical Completions - Submarket 6,000 5,000 4,000 3,000 2,000 1,000 0 ' Future Projected Data according to Costar COMPLETIONS: NEWPORT BEACH APARTMENT MARKET 5,188 Market Submarket Source: Costar. 1st Quarter 2024 The submarket is projected to achieve completions of negative 2 units at the end of the current year, which indicates a decline from the previous year's zero completions. The submarket is projecting completions of negative 3 units for next year, which indicates a decline from the current year. Historical Asking Rent - Submarket ASKING RENT: NEWPORT BEACH APARTMENT MARKET $4,500 $4,000 $3,548 $3,554 $4,a6s $3815 $3,937 $3,689 $3,500 $3,299 $3,305 $3,405 $3,000 $2,775 $2,807 $2,503 52,551 $2,567 $2,541 $2,393 $2,500 $2,000 $1,500 981 $3,073 $1,000 $500 $0 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 2024' 2025' 2026' 2027' 2028' 2029' Market --Q--Submarkat ' Future Projected Data according to Coster Source_ Costar, 1st Quarter 2024 The submarket is projected to achieve average asking of $3,405 per unit at the end of the current year, which represents a decrease from the previous year's asking rent of $3,548 per unit. The submarket is projected to achieve average asking rent of $3,554 per unit, reflecting an increase from the current year. CBRE VALUATION & ADVISORY SERVICES 25 © 2024 CBRE, INC 17-212 Multifamily Market Analysis Conclusion Overall, the information on the improved multifamily market shows generally level occupancy rates andincreasing rental rates. Net absorption was negative overall in 2023 and there is no new construction activity in the subject submarket. Generally speaking, brokers are reporting that the interest rate increases, and high construction costs have impacted price levels for multifamily land. Overall, the improved multifamily market is performing well and showing positive indicators, but the multifamily land market has remained flat since approximately the end of June 2022. Newport Beach remains a desirable multifamily market due to its location and limited availability of sites for new multifamily development. CBRE VALUATION & ADVISORY SERVICES 26 © 2024 CBRE, INC 17-213 Highest and Best Use Highest and Best Use In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are: • Legally permissible; • Physically possible; • Financially feasible; and • Maximally productive. The highest and best use analysis of the subject is discussed below. As Vacant Legal Permissibility Based on discussions with our client, the hypothetical parcel has a mixed -use land use designation, based on the predominant land use in the Airport Area. Additionally, we were instructed to assume a maximum Floor Area Ratio (FAR) of 0.5 and maximum residential density of 50 dwelling units per acre. Given our client's instructions, only a mix of retail/office and multifamily residential use is given further consideration in determining the highest and best use of the site as vacant. Physical Possibility The hypothetical subject contains 66,969 square feet and has adequate shape for development. The hypothetical subject is assumed to be adequately served by utilities, and has an adequate size, sufficient access, etc., to be a separately developable site. There are no known physical reasons why the hypothetical subject site would not support any legally probable development (i.e. it appears adequate for development). Financial Feasibility Potential uses of the hypothetical site include a mix of retail/office and multifamily residential use. The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. Based on our analysis of the market, there is currently adequate demand for multifamily, limited demand for retail, and no demand for office in the subject's area. Typical mixed -use developments in the hypothetical subject's area consist primarily of multifamily residential with a small retail component. Although retail is not currently financially feasible, the primary component for a mixed -use project is multifamily residential, which is considered to be currently financially feasible. As such, mixed -use retail and multifamily is considered to be currently financially feasible. Maximum Productivity - Conclusion The final test of highest and best use of the hypothetical site as if vacant is that the use be maximally productive, yielding the highest return to the land. Based on the information presented above and upon information contained in the market and neighborhood analysis, we conclude that the highest and best use of the subject as if vacant would be for development of a mixed -use retail and multifamily property. Our analysis of the hypothetical subject and its respective market characteristics indicate the most likely buyer, as if vacant, would be a developer. CBRE VALUATION & ADVISORY SERVICES 27 © 2024 CBRE, INC 17-214 Land Value Land Value The following map and table summarize the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the addenda. Hazard Ave c s y C m W 5th St a Ave go .CL d 1st St a 1cFadden Ave in a e ter Ave Fountain Valley z a O Huntington Beach W N CL cn SNA ^ram �CID Costa Mesa 0 Qmapbox _ C` Mapbox,© OpenStreetMap SUMMARY OF COMPARABLE LAND SALES Transaction Interest Actual Sale Adjusted Sale Size Size Density Maximum Price No. Property Location Type Date Transferred Zoning Price Price (Acres) (SF) (UPA) FAR Per SF 1 184 Unit Multifamily Development Site Sale Mar-23 Fee 5.1, IBC Mufti -Use $11,000,000 $11,000,000 1.85 80,717 99.30 0.50 $136.28 2602 McGaw Avenue Simple/Freehold Irvine, CA 92614 2 221-unit Multifamily Development Site Sale Feb-23 Fee PC-11, Newport $20,437,500 $20,437.500 2.38 103,499 93.01 0.50 $197.47 1400-1420 Bristol St N Simple/Freehold Place Newport Beach, CA 92660 3 Redevelopment Site Sale Aug-22 Leased Fee Westminster Mall $49,000,000 $49,000,000 11.65 507,474 45.06 N/A $96.56 545 Westminster Mall Specific Plan Westminster, CA 92683 4 550 Westminster Mall Sale May-22 Fee Westminster Mall $46,300,000 $46,300,000 14.12 614,893 45.48 N/A $75.30 550 Westminster Mall Simple/Freehold Specific Plan Westminster, CA 92683 5 1.97-Acre Development Site Sale Aug-21 Fee PC-11, Newport $10,500,000 $10,500,000 1.97 85,726 58.94 0.50 $122.48 1300 Bristol Street N. Simple/Freehold Place Newport Beach, CA 92660 6 Previously Developed Site - 5.60 Acres Sale Jun-21 Fee PC-11, Newport $45,000,000 $45,000,000 5.69 247,856 61.51 0.50 $181.56 4200-4250 Scott Drive, 42514255 Martingale Simple/Freehold Place Avenue, 1701 Corinthian Way & 1660 Dove Street Newport Beach, CA 92660 Subject North Newport Beach, Proximate to John Wayne -- -- $0.00 --- -- 1.54 66,969 50.00 0.50 -- Airport Newport Beach, CA 91324 'Adjusted sale price forwsh equivalency and/or development costs (where applicable) Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 28 © 2024 CBRE, INC 17-215 Land Value The sales utilized represent the best data available for comparison with the subject and were selected from the greater Newport Beach area. Due to the lack of recent transactions in Newport Beach that are of similar size and density, we expanded our search to include sites of up to approximately 15 acres that closed between Mid -Year 2021 to the date of value. We note that Comparables 3 and 4 are inferiorly located and outside of the subject's market area. These comparables have been included as they were unentitled at their times of sale and help bracket the density of the hypothetical subject. Discussion/Analysis of Land Sales Conditions of Sale/Financing All sales were indicated to be cash -to -seller transactions or financed by a third party at market terms, and none appeared to occur under duress. As such, no adjustments for cash equivalency were necessary. In addition, the sales reflected arm's length transactions; therefore, no adjustments for conditions of sale were warranted. Details of each of the comparable are located on the data sheets in the addenda of this report. Market Conditions Based on the market data and broker interviews, we have utilized an upward market conditions adjustment of 6% per year through June 2022 for improving market conditions. No adjustment is applied from July 2022 to the date of value, as land values have remained flat. Location Our adjustments are based on the difference between rental rates for retail and multifamily properties within a one -mile radius of the subject and a one -mile radius of each of the comparable sales. Based on this information, Comparables 1, 3, and 4 required upward adjustments to varying degrees. Frontage/Access The hypothetical subject is assumed to have adequate frontage and access. Each of the comparables have similar frontage/access and no adjustments were required. Size Considers the inverse relationship that often exists between parcel size and unit value. Compared to the hypothetical subject, Comparables 3 and 4 require upward adjustments due to economies of scale. Shape The shape of the hypothetical subject would not prohibit development to a FAR of 0.5 and a residential density of 50 dwelling units per acre. No adjustments were required. Topography The hypothetical subject is assumed to have level topography. Each of the comparables have similar topography and required no adjustments. Zoning/Density Per our client's instructions, we assume the subject has a maximum FAR of 0.5 and maximum density of 50 dwelling units per acre. Comparables 1, 2, 5, and 6 were adjusted downward to varying degrees for their higher densities, as higher density sites typically sell for a higher price per square foot. CBRE VALUATION & ADVISORY SERVICES 29 © 2024 CBRE, INC 17-216 Land Value Entitlements Per our client's instruction, we assume the subject is unentitled mixed -use land. We initially searched for sales of unentitled mixed -use sites in the vicinity of the subject. Unfortunately, the majority of the comparable data we were able to uncover was entitled, with the exception of Comparables 3 and 4. We found that buyers of unentitled land take the land through the entitlement process during escrow and if entitlements are not achieved, the buyer does not close on the transaction. Based on our interviews, the sale price is reflective of an entitled price due to the seller sharing in the risk by having to hold the property for an extended period. Due to the lack of unentitled land sales, we have relied on entitled data and have adjusted for the value of the entitlements as part of the adjustment process. Based on conversations with brokers, an entitled property can command a premium ranging from 20% to 50% over raw, unentitled land. Comparables 1, 2, 5, and 6 sold with entitlements and are adjusted downward. It should be noted that Comparable 5 required a lesser adjustment for entitlements as the entitlement process was started during escrow but were not fully in place at the time the transaction closed. Site Improvements This adjustment accounts for site improvements on a site that require demolition prior to redevelopment. Each of the Comparables had building improvements at their time of sale and required upward adjustments with the exception of Comparable 3. Comparable 3 did not require any adjustment as the building improvements generated interim income until the site is redeveloped, which offsets any demolition costs. Summary of Adjustments As in most analyses, each element of comparison is not weighted equally. For example, the location of a property as an element of comparison may outweigh its size, resulting in an overall rating of "inferior" to the subject, though there may be numerically more elements rated as "similar" in the comparison grid. Certain elements balance the effect of other elements in each sale's comparison. Based on our comparative analysis, the following chart summarizes the adjustments warranted to each comparable. CBRE VALUATION & ADVISORY SERVICES 30 © 2024 CBRE, INC 17-217 Land Value LAND SALES ADJUSTMENT GRID Comparable Number 1 2 3 4 5 6 Subject Transaction Type Sale Sale Sale Sale Sale Sale --- Transaction Date Mar-23 Feb-23 Aug-22 May-22 Aug-21 Jun-21 --- Interest Transferred Fee Fee Leased Fee Fee Fee Fee Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Simple/Freehold Zoning 5.1, IBC Multi- PC-1 1, Newport Westminster Mall Westminster Mall PC-1 1, Newport PC-1 1, Newport --- Use Place Specific Plan Specific Plan Place Place Actual Sale Price $11,000,000 $20,437,500 $49,000,000 $46,300,000 $10,500,000 $45,000,000 --- Adjusted Sale Price' $11,000,000 $20,437,500 $49,000,000 $46,300,000 $10,500,000 $45,000,000 --- Size (Acres) 1.85 2.38 11.65 14.12 1.97 5.69 1.54 Size (SF) 80,717 103,499 507,474 614,893 85,726 247,856 66,969 Density (UPA) 99.30 93.01 45.06 45.48 58.94 61.51 50.00 Maximum FAR 0.50 0.50 N/A N/A 0.50 0.50 0.50 Price ($ PSF) $136.28 $197.47 $96.56 $75.30 $122.48 $181.56 Property Rights Conveyed 0 % 0 % 0°% 0°% 0 % 0% Financing Terms' 0 % 0 % 0 % 0 % 0 % 0 % Conditions of Sale 0 % 0 % 0 % 0 % 0 % 0 % Market Conditions (Time) 0.0 % 0.0 % 0.6 % 2.1 % 7.0 % 7.5 % Subtotal $136.28 $197.47 $97.14 $76.88 $131.06 $195.17 Location Inferior Similar Inferior Inferior Similar Similar Frontage/Access Similar Similar Similar Similar Similar Similar Size Similar Similar Inferior Inferior Similar Similar Shape Similar Similar Similar Similar Similar Similar Topography Similar Similar Similar Similar Similar Similar Zoning/Density Superior Superior Similar Similar Superior Superior Entitlements Superior Superior Similar Similar Superior Superior Site Improvements Inferior Inferior Similar Inferior Inferior Inferior Overall Comparison Superior Superior Inferior Inferior Superior Superior ' Adjusted sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE Conclusion Based on the foregoing discussion of comparability, the market data and the subject may be arrayed as shown below: LAND VALUE ARRAY Data No. Overall Comparison Time Adjusted Price Per Square Foot 2 Superior $197.47 6 Superior $195.17 1 Superior $136.28 5 Superior $131.06 SUBJECT PROPERTY 3 Inferior $97.14 4 Inferior $76.88 Compiled by CBRE The preceding analysis indicates a value within a range of $76.88 to $197.47 per square foot. Based on the analysis of the comparable sales, we have bracketed the subject as inferior to Sale 5 and superior to Sale 3. Comparables 1, 2, 5, and 6 are at the high end of the range and are ranked as superior overall. Comparable 1 has superior zoning/density and entitlements and these adjustments are partially offset by its inferior location and site improvements. Comparable 2 has superior zoning/density and entitlements and these adjustments are partially offset by its inferior site improvements. Comparable 5 has superior zoning/density and entitlements and these adjustments are partially offset by its inferior site CBRE VALUATION & ADVISORY SERVICES © 2024 CBRE, INC 17-218 Land Value improvements. Comparable 6 has superior zoning/density and entitlements and these adjustments are partially offset by its inferior site improvements. Comparables 3 and 4 are at the low end of the range and are ranked as inferior overall. Comparable 3 has an inferior location and size and required no downward adjustments. Comparable 4 has an inferior location, size, and site improvements and required no downward adjustments. Considering this information, the following table presents the valuation conclusion: CONCLUDED LAND VALUE $ PSF Subject SF Total $115.00 x 66,969 = $7,701,435 Indicated Value (Rounded): $7,700,000 Compiled by CBRE The value equates to approximately $100,169 per unit. After considering the required adjustments, this conclusion is well within the range of our data and the value indications provided by market participants. CBRE VALUATION & ADVISORY SERVICES 32 © 2024 CBRE, INC 17-219 Reconciliation of Value Reconciliation of Value In the sales comparison approach, the subject is compared to similar properties that have been sold recently. The sales used in this analysis are considered comparable to the subject, and the required adjustments were based on reasonable and well -supported rationale. Therefore, the sales comparison approach is considered to provide a reliable value indication. Based on the foregoing, the fair market value of the subject has been concluded as follows: MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion Fair Market Value Fee Simple Estate July 23, 2024 $7,700,000 Compiled by CBRE CBRE VALUATION & ADVISORY SERVICES 33 © 2024 CBRE, INC 17-220 Assumptions and Limiting Conditions Assumptions and Limiting Conditions CBRE, Inc. through its appraiser (collectively, "CBRE") has inspected through reasonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters. 1. The report, including its conclusions and any portion of such report (the "Report"), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date. 2. Unless otherwise expressly noted in the Report, CBRE has assumed that: (i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company. (ii) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. (iii) Any proposed improvements, on or off -site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices. (iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property. (vii) 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 readily obtained or renewed for any use on which the Report is based. (viii)The subject property is managed and operated in a prudent and competent manner, neither inefficiently, nor super -efficiently. (ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses. (x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property's compliance with the ADA, notwithstanding any discussion of possible readily achievable barrier removal construction items in the Report. CBRE VALUATION & ADVISORY SERVICES 34 © 2024 CBRE, INC 17-221 Assumptions and Limiting Conditions (xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property, nor reviewed or confirmed the accuracy of any legal description of the subject property. Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE's attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report and any conclusions stated therein. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions. 3. CBRE has assumed that all documents, data and information furnished by or on behalf of the client, property owner or owner's representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report and any conclusions stated therein. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report. 4. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including, without limitation, any termite inspection, survey or occupancy permit. 5. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property. 6. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. This Report has been prepared in good faith, based on CBRE's current anecdotal and evidence -based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this Report, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE's control. In addition, many of CBRE's views are opinion and/or projections based on CBRE's subjective analyses of current market circumstances. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections. Further, other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE's current views to later change or be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change. 7. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE's independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property. 8. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge including, but not limited to, environmental, social, and governance principles ("ESG"), beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters. 9. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. CBRE VALUATION & ADVISORY SERVICES 35 © 2024 CBRE, INC 17-222 Assumptions and Limiting Conditions 10. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user's failure to become familiar with and understand the same. 11. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests. 12. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use. 13. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report. 14. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user. CBRE VALUATION & ADVISORY SERVICES 36 © 2024 CBRE, INC 17-223 Addenda Addenda CBRE VALUATION & ADVISORY SERVICES 37 © 2024 CBRE, INC 17-224 Addenda Addendum A Land Sale Data Sheets CBRE VALUATION & ADVISORY SERVICES 38 © 2024 CBRE, INC 17-225 Property Name 184 Unit Multifamily Development Site Address 2602 McGaw Avenue Irvine, CA 92614 County Orange Govt./Tax ID 435-053-18 Area Measurement(NRA) Land Area Net 1.853 ac/ 80,717 sf Land Area Gross 1.853 ac/ 80,717 sf Site Development Status Finished Utilities All available to site Maximum FAR 0.50 Max Allow Bldg Units/Density 184 / 99.30 Min Land Bldg Ratio 2.00:1 Shape Rectangular Primary Frontage 260 ft on McGaw Ave. Topography Generally Level Flood Zone Class Zone X (Unshaded) Flood Panel No./ Date 06059CO287J/ Dec 2009 Zoning 5.1, IBC Multi -Use Entitlement Status Fully Entitled/Planning Permissions Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Sale Fee Simple None Developer Zhenyu Wang N/A Cindy Chin Realty, Cindy Chin (877) 622- 7789 0056519 Primary Verification Transaction Date Recording Date Sale Price Financing Cash Equivalent Capital Adjustment Public Records, CoStar 03/13/2023 03/13/2023 $11,000,000 Market Rate Financing $11,000,000 $0 % Interest Purchased 100% Adjusted Price $11,000,000 Adjusted Price / ac and $5,936,319 / $136.28 / sf Adjusted Price/ FAR $272.55 Adjusted Price/ Unit $59,783 This is the March 2023 sale of a 1.85-acre site of land zoned 5.1 IBC Multi -Use located at 2602 McGaw Avenue in Irvine. At the time of sale, the property had a 24,500 SF industrial building that has been demolished. The property sold for $11,000,000, or $136.28/site square foot. The buyer plans to develop a 184-unit multi -family property. The buyer sought entitlements during escrow and obtained approvals in October 2022. There was an appeal filed to the Irvine City Council. The Council denied the appeal in January 2023 and the sale closed in March 2023. BRE17-226 Property Name 221-unit Multifamily Development Site Address 1400-1420 Bristol St N Newport Beach, CA 92660 County Orange Govt./Tax ID 427-332-02 Area Measurement(NRA) Land Area Net 2.376 ac/ 103,499 sf Land Area Gross 2.376 ac/ 103,499 sf Site Development Status Finished Utilities All available to site Maximum FAR 0.50 Max Allow Bldg Units/Density 221 / 93.01 Min Land Bldg Ratio 2.00:1 Shape Rectangular Primary Frontage 225 ft on Spruce Ave. Secondary Frontage 385 ft on Bristol St. N. Topography Generally Level Flood Zone Class Zone X (Unshaded) Flood Panel No./ Date 06059CO287J/ Dec 2009 Zoning PC-11, Newport Place Entitlement Status Other (See Comments) Transaction Details Type Sale Primary Verification CoStar, Public Records, Deed Interest Transferred Fee Simple Transaction Date 02/03/2023 Condition of Sale None Recording Date 02/03/2023 Buyer Type Developer Sale Price $20,437,500 Recorded Seller BSP Bristol, LLC Financing All Cash Marketing Time N/A Cash Equivalent $20,437,500 Listing Broker N/A Capital Adjustment $0 Doc # 23-0024997 % Interest Purchased 100% Adjusted Price $20,437,500 Adjusted Price / ac and $8,601,641 / $197.47 / sf Adjusted Price/ FAR $394.93 Adjusted Price/ Unit $92,477 This is the February 2023 sale of a site located on at the intersection of Bristol Street North and Spruce Avenue. The site was improved with a two-story office building at the time of sale. It was unentitled. However, the buyer began to seek entitlements during the escrow period. The buyer submitted plans in October 2022 for a six -story apartment building with 221 units (191 market rate units and 30 affordable units). The plans were not yet approved when the transaction closed in February 2023 but the sale price was reflective of entitled land. BRE17-227 Property Name Address County Govt./Tax ID Area Measurement(NRA) Land Area Net Land Area Gross Site Development Status Utilities Maximum FAR Max Allow Bldg Units/Density Shape Primary Frontage Secondary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Redevelopment Site 545 Westminster Mall Westminster, CA 92683 Orange 195-373-10 11.650 ac/ 507,474 sf 11.650 ac/ 507,474 sf Finished All to site N/A 525 / 45.06 Irregular 443 ft on Edwards St. 318 ft on Balsa Ave. Level, At Street Grade Zone A 06059CO232J/ Dec 2009 Westminster Mall Specific Plan None Sale Leased Fee Arm's Length Private Investor Macy's Retail Holdings, LLC N/A Lee Aarons - Land Advisors (310) 405-1311 2022000289953 Primary Verification Buyer's Broker Transaction Date 08/26/2022 Recording Date 08/26/2022 Sale Price $49,000,000 Financing Cash to Seller Cash Equivalent $49,000,000 Capital Adjustment $0 % Interest Purchased 100% Adjusted Price $49,000,000 Adjusted Price / ac and $4,206,009 / $96.56 / sf Adjusted Price/ FAR N/A Adjusted Price/ Unit $93,333 l►kalfi{A° 4! The property is comprised of a portion of the Westminster Mall and has frontage along Balsa Avenue and Edwards Street but does not have a corner orientation. The transaction was arm's length and was purchased to redevelop the existing Macy's department store into a mixed -use development, but no entitlements were in place at the time of sale. The buyer purchased a nearby, non-contiguous site containing approximately 14.1 acres identified as APN 195-373-09 in July 2022 that will be part of the same mixed -use development. Macy's will leaseback the improvements for approximately two years but details regarding the lease were unavailable. In April 2023, the buyer revealed their specific plans for the entire 26-acre property, known as Balsa Pacific at Westminster, which will consist of three apartment buildings with 1,065 rental units, 102 for -sale townhomes, a 175-room hotel, a 2.5-acre park, open space promenades, an amphitheater, and outdoor dining. This equates to a multifamily density of approximately 45.3 dwelling units per acre for the entire 25.8-acre development site. BRE17-228 Property Name Address County Govt./Tax ID Area Measurement(NRA) Land Area Net Land Area Gross Site Development Status Utilities Maximum FAR Max Allow Bldg Units/Density Shape Primary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details 550 Westminster Mall 550 Westminster Mall Westminster, CA 92683 Orange 195-373-09 14.116 ac/ 614,893 sf 14.116 ac/ 614,893 sf Finished All to site N/A 642 / 45.48 Irregular 609 ft on Balsa Ave. Level, At Street Grade Zone A 06059CO232J/ Dec 2009 Westminster Mall Specific Plan None Type Sale Primary Verification Costar, Deed, Public Records, & Buyer's Press Release Interest Transferred Fee Simple Transaction Date 05/26/2022 Condition of Sale Arm's Length Recording Date 07/08/2022 Buyer Type Private Investor Sale Price $46,300,000 Recorded Seller Seritage SRC Finance LLC Financing Market Rate Financing Marketing Time N/A Cash Equivalent $46,300,000 Listing Broker N.A. Capital Adjustment $0 Doc # 22-000240329 % Interest Purchased 100% Adjusted Price $46,300,000 Adjusted Price / ac and $3,279,966 / $75.30 / sf Adjusted Price/ FAR N/A Adjusted Price/ Unit $72,118 Comments The property is comprised of a portion of the Westminster Mall and has frontage along Balsa Avenue and the southbound 1-405 Balsa Avenue off - ramp but does not have a corner orientation. The transaction was arm's length and was purchased to redevelop the existing, vacant Sears department store and auto center into a mixed -use development, but no entitlements were in place at the time of sale. The sale price was reportedly based on land value. The buyer purchased a nearby, non-contiguous site containing approximately 1 1.65 acres identified as APN 195- 373-10 in August 2022 that will be part of the same mixed -use development, but no assemblage premium was paid. In April 2023, the buyer revealed their specific plans for the entire 26-acre property, known as Balsa Pacific at Westminster, which will consist of three apartment buildings with 1,065 rental units, 102 for -sale townhomes, a 175-room hotel, a 2.5-acre park, open space promenades, an amphitheater, and outdoor dining. This equates to a multifamily density of approximately 45.3 dwelling units per acre for the entire 25.8-acre development site. BRE17-229 Property Name Address County Govt./Tax ID Area Measurement(NRA) Land Area Net Land Area Gross Site Development Status Utilities Maximum FAR Max Allow Bldg Units/Density Min Land Bldg Ratio Shape Primary Frontage Secondary Frontage Topography Flood Zone Class Flood Panel No./ Date Zoning Entitlement Status Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # 1.97-Acre Development Site 1300 Bristol Street N. Newport Beach, CA 92660 Orange 427-342-01 1.968 ac/ 85,726 sf 1.968 ac/ 85,726 sf Finished All available to site 0.50 1 16 / 58.94 2.02:1 Rectangular 275 ft on Bristol St. N. 282 ft on Spruce Avenue Level, At Street Grade Zone X (Unshaded) 06059CO286J/ Dec 2009 PC-11, Newport Place None Sale Fee Simple None Developer Hilbert Properties II N/A Simon Dillon, CBRE, 949-725-8668 490294 Primary Verification Listing Broker Transaction Date 08/03/2021 Recording Date 08/03/2021 Sale Price $10,500,000 Financing All Cash Cash Equivalent $10,500,000 Capital Adjustment $0 % Interest Purchased 100% Adjusted Price $10,500,000 Adjusted Price / ac and $5,329,949 / $122.48 / sf Adjusted Price/ FAR $244.97 Adjusted Price/ Unit $90,517 i This is a 1.97-acre site that was improved with a two-story, 32,390 square foot office building that was built in 1978. The broker reported that the property was purchased for its land value and that the site would be redeveloped to a multifamily use. The site was not entitled at the time of sale. The entitlement process was started during escrow but were not fully in place at the time the transaction closed. The property sold in August 2021 for $10,500,000 or $122 per square foot of land area. B R E17-230 Property Name Previously Developed Site - 5.60 Acres Address 4200-4250 Scott Drive, 4251-4255 Martingale Avenue, 1701 Corinthian Way 1660 Dove Street Newport Beach, CA 92660 County Orange Govt./Tax ID 427-172-02, -03, -05 & -06 Area Measurement(NRA) Land Area Net 5.690 ac/ 247,856 sf Land Area Gross 5.690 ac/ 247,856 sf Site Development Status Finished Utilities All available to site Maximum FAR 0.50 Max Allow Bldg Units/Density 350 / 61.51 Min Land Bldg Ratio 2.00:1 Shape Irregular Primary Frontage 351 ft on Dove Street Secondary Frontage 487 ft on Scott Drive Topography Generally Level Flood Zone Class Zone X (Unshaded) Flood Panel No./ Date 06059CO287J/ Dec 2009 Zoning PC-11, Newport Place Entitlement Status Fully Entitled/Planning Permissions Transaction Details Type Interest Transferred Condition of Sale Buyer Type Recorded Seller Marketing Time Listing Broker Doc # Sale Fee Simple None Private Investor Starboard Macarthur Square LP N/A N/A 427441 Primary Verification Costar, public records Transaction Date 06/30/2021 Recording Date 06/30/2021 Sale Price $45,000,000 Financing Cash to Seller Cash Equivalent $45,000,000 Capital Adjustment $0 % Interest Purchased 100% Adjusted Price $45,000,000 Adjusted Price / ac and $7,908,612 / $181.56 / sf Adjusted Price/ FAR $363.11 Adjusted Price/ Unit $128,571 I i This is a 5.69-acre, previously developed commercial site located on the east side of Scott Drive, spanning the entire block between Dove Street and Corinthian Way, just west of MacArthur Boulevard in Newport Beach. The immediate surrounding area consists of primarily low to mid -rise office and retail. The John Wayne Airport is located a few blocks west of the property. The site is zoned PC 1 1 which permits various commercial uses. The site was previously improved with a mix of office and retail buildings mostly built in the 1970s and totaling approximately 58,196 square feet. In June 2021, the site sold for land value at a purchase price of $45,000,000 or $182 psf of land area. The site is proposed for development of a mixed -use project consisting of 350 apartment units, 2,000 SF of restaurant space, 5,500 SF of retail, and a 0.5-acre park. The property was entitled by the seller in 2019. BRE17-231 Addenda Addendum B Qualifications CBRE VALUATION & ADVISORY SERVICES 39 © 2024 CBRE, INC 17-232 PROFILES Professional Affiliations / Accreditations - Member: Appraisal Institute - Designation: Appraisal Institute - General Review Specialist (AI-GRS) - Fellow: Royal Institution of Chartered Surveyors - Member: The Counselors of Real Estate - Member: International Right of Way Association - License: California State Certified General Real Estate Appraiser - Certified: Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) Education - M.B.A., Pepperdine University - B.S., Kinesiology, University of California, Los Angeles - Certified by the Appraisal Institute's program of continuing education for its designated members. CBRE VALUATION & ADVISORY SERVICES Beth B. Finestone, MAI, AI-GRS, FRICS, CRE Executive Vice President Los Angeles, CA T +1 818 2513669 E Beth.Finestone@CBRE.com Professional Experience Beth B. Finestone, MAI, AI-GRS, FRICS, CRE, is an Executive Vice President for CBRE's Valuation & Advisory Services (VAS). She has been appraising in Southern California since 1981, specializing in valuation and consulting services related to public agency and right-of-way clients and for major investment -grade commercial properties and special purpose properties. She also has extensive expertise in valuing large tracts of land for conservation, mitigation and other purposes. Ms. Finestone's clients include public agencies, right-of-way firms, lenders, institutional investors, major corporations, law firms, and individual property owners. Her services include a wide range of specialized studies including ground lease rent studies, partial interest acquisitions, value diminution (from both internal and external influences), market demand, feasibility, severance damages and project benefits, investment analysis, assessment allocation, reuse analysis, and the valuation of partial interests including leasehold, leased fee, possessory interests, and minority interests. She is experienced in valuing full and partial acquisitions related to eminent domain actions. These services include the valuation of fee acquisitions, permanent and temporary easements, including the appraisal of railroad and other types of corridors, pipeline easements and transmission line easements. She has been a featured speaker at Appraisal Institute, International Right of Way, and legal functions. She was the 2019 President of the Southern California Chapter of the Appraisal Institute, the largest chapter in the country. Beth was previously a Managing Director for and a principal of Integra Realty Resources - Los Angeles. In addition, she was the Executive Director of Integra Realty Resources - Orange County. During her career, she has held senior positions with Finestone & Associates and Cushman & Wakefield. ©2024 CBRF INC. 17-233 PROFILES Recognition CBRE - Los Angeles Business Journal 2009 Nominee for Executive of the Year - Women Making a Difference, May 2009 - Designated one of Real Estate Southern California's 2006 Women of Influence, October 2006 Seminar Presentations - Corridors, Crops & Condemnation (IRWA National Conference in San Diego, June 2015) - Eminent Domain Appraisals: Pitfalls & Value -Added Services (RICS - Southern California Chapter, CPD Presentation, April 16, 2015) - Government Buildings (Appraisal Institute, Special Purposes Seminar, July 15, 2014) - The Trouble with Ignoring Building Code Violators (SCCAI 43`d Annual Litigation Seminar, Moderator, November 15, 2013) - Conflicting Mandates & Instructions Between USPAP, Yellow Book, & Caltrans Appraisal Guidelines (IRWA Annual Valuation Seminar, April 24, 2012) - Current Issues in Real Estate Appraisal (Lorman Education Services, live audio conference, March 8, 2012) - The Role of the Appraiser in Construction Defect Litigation: Measuring Damages from Construction Defects (MCLE- approved presentation, January 11, 2012, March 4, 2010, and February 10, 2010) Expert Testimony Ms. Finestone has qualified as an expert witness in real estate matters and has testified before: - Superior Courts: Los Angeles and Orange Counties - Arbitration Hearings: Los Angeles County - Tax Appeal Boards: Los Angeles and San Diego Counties Representative Appraisal Assignments - Appraisal of 50+ single-family residences (SFRs) impacted by the 1-405 Widening Project in Costa Mesa. The acquisitions all involve temporary construction easements (TCEs). This assignment required an analysis of temporary severance damages due to impacts to rear yards as well as a valuation of all site improvements in the TCE areas. Appraisal of 50+ commercial properties impacted by various types of partial acquisitions related to the 1-405. Some of the appraisals were extremely complex with significant severance damage studies required. - Multiple appraisal assignments for LACMTA included: - Appraisal of a 1.25-acre parcel improved with a Class A,12-story, medical office building constructed circa 1962, an adjacent one-story bank building and an attached four-story parking structure known as the Westwood Medical Plaza. It is located along the proposed Purple Line Subway Extension Project Corridor, specifically on the northeast corner of Wilshire Boulevard and Westwood Boulevard in the Westwood neighborhood within the City of Los Angeles. As part of this project, LACMTA is seeking acquire various permanent and temporary property interests, and to relocate existing tenants within the subject property. The purpose of this appraisal was to estimate the fair market value of the property interests (Parts Taken) to be acquired from the Larger Parcel and to make a determination as to the impact of the proposed acquisitions on the Remainder Parcel. - Appraisal of Wilshire Federal Building: Appraisal of a deep tunnel easement on the Wilshire frontage of the Federal Building as part of LACMTA's Purple Line extension. Consideration was given to the redevelopment potential of the site and the benefits to the remainder, as well as to the value of the parts taken. - Appraisal involving the valuation of partial acquisitions impacting the Westfield Mall in Century City as part of LACMTA's Purple Line extension. This assignment was challenging with respect to valuing the underlying land associated with the larger parcel. The property is unique due to its location and its size. Complexities involved determining the number of trips allocated to the site as this in part drives land value. Again, consideration was given to damages and benefits, as well as to the value of the parts taken. 02024 CBRE, INC. 17-234 PROFILES CBRE — Appraisal of numerous surface and subsurface acquisitions were required on the Veteran's Administration property for the construction of a subway station and tunnel easements for LACMTA's Purple Line. Significant research was required relative to the VA specific plan and the highest and best use of the property. Consideration was given to damages and project benefits as well as the value of the parts acquired. — Appraisal of 50± miles of pipeline easement running through UPRR and BNSF rail corridors in Urban Los Angeles. — Multiple appraisal assignments for RCTC included: — Appraisal of parcels under more than 50 separate ownerships affected by acquisitions and easements for the SR-91 Corridor Improvement Project through the City of Corona. The complete summary appraisal reports and appraisal summary statements included a valuation of the properties in the before and after condition. Some of the properties had significant severance damage analyses due to loss of building improvements, parking, loading, etc. — City of Riverside 69 kV Electrical Transmission Line Project: Initially valued 22 residential and commercial properties in the City of Riverside. These properties all had a three -foot -wide partial taking along their frontage to accommodate the construction of a 69 kV transmission line. This represented Phase One of this assignment. Phase Two involved the partial taking of land over seven properties owned by JCR for the construction of a transmission line. The final phase involved approximately 100 properties of various types which were impacted by partial acquisitions for the construction of a transmission line. The final phase involved approximately 90 properties of various types which will be impacted by partial takes for the construction of a transmission line. — Appraisal of in excess of 75 private properties on behalf of CHSRA. The property types included agricultural, commercial and residential. Most of the appraisals involved partial acquisitions. In addition, Ms. Finestone completed the appraisal of over 50 railroad corridor properties in conjunction with the high-speed rail project. — Appraisal of the Del Mar Fairgrounds, Racetrack, and Horsepark (450 acres of land and over 1,000,000 square feet in improvements) for the California Department of General Services. — Completed an appraisal of a property that represents one of the largest parcels of undeveloped and unprotected coastal property in Southern California (Banning Ranch). Much of the site had been occupied by oil operations since the 1940's. The appraisal of this property was very complex in that the highest and best use of the property was not clear at the onset of the assignment. This property consists of degraded wetlands, open space, and a small area with the potential for residential development. The goal of this project was to prepare an appraisal for acquisition purposes such that the buyer and seller could agree on a purchase price and put the property under contract. — West Coyote Hills: Appraised Neighborhoods 1 and 3 of Vested Tentative Tract Map (VTTM)17609. This is commonly referred to as Neighborhoods 1 and 3 of the West Coyotes Hills Property. Neighborhood 1 consists of 10.4± acres and was proposed for development with 16 residential units. Neighborhood 3 is 13.7± acres and was proposed for development with 59 residential units. Neighborhoods 1 and 3 were valued separately. The intended users of the report were the California State Coastal Conservancy, City of Fullerton, Wildlife Conservation Board, Rivers and Mountains Conservancy, California Department of Parks and Recreation, California Natural Resources Agency, and the US Fish and Wildlife Service. This report was prepared to Federal Standards in conformance with Yellow Book guidelines and the acquisition was made based on our appraisal. — Appraisal in Fresno County for the State Department of Water Resources, which included 22 permanent flowage easements and three partial fee acquisitions. Some of the proposed flowage easements overlapped existing road and utility easements which had to be considered. Due to the nature of the flowage easements, substantial severance damages accrued to the remainder parcels which had to be considered. This assignment also included the consideration of orchard and crop values. — Multiple appraisal assignments for the U.S. Department of the Interior, Appraisal and Valuation Services Office (AVSO) prepared to Federal Standards in accordance with Yellow Book guidelines. These were for acquisition purposes related to the San Joaquin River Restoration Project and for the acquisition land to be acquired for National Wilderness areas. 02024 CBRE, INC. 17-235 PROFILES VALUATION & ADVISORY SERVICE Thomas G. Richardson, MAI Vice President E tom.richardson1@cbre.com Professional Experience Thomas G. Richardson, MAI is a Vice President for CBRE's Valuation & Advisory Services (VAS). Mr. Richardson began his career in real estate appraisal in 2012. His experience includes consulting and appraisals for improved properties such as single - and multifamily residences, restaurants, shopping centers, office buildings, warehouses, retail and industrial condominiums, mixed -use commercial and residential buildings, religious facilities, and special purpose properties. Pro Affiliations / He has valued various categories of land including agricultural, residential, commercial, open space/recreational, saltwater marshland, solar farm, and mitigation land. His work has Accreditations been utilized by various public agencies, law firms, financial institutions, and property owners for right-of-way, disposition, bond financing, lease negotiations, and in -lieu fees. - Member: Appraisal Institute, His recent appraisal work for right -of -way -related purposes includes assignments for the February 2021 San Juan Creek Bridge Replacement Project, Los Nietos Safe Routes to School Project, - Licensed: California Certified Playa Del Rey Wastewater Line Project, 1-405 Improvement Project, Culver University General Real Estate Appraiser Improvement Project, Regional Connector Transit Project, Century Boulevard Mobility No.3004940 Improvement Project, Riverside Transmission Reliability Project, Centennial Corridor Expires November 2025 Project, California High Speed Rail Authority, Irvine Business Complex Sidewalk Project, and Mid County Parkway Project. Mr. Richardson was previously an Associate Director of Integra Realty Resources - Los Angeles. Education - B.A., History, University of Training / Courses Completed California, Los Angeles Completed the following courses and seminars: — Advanced Concepts & Case Studies — Basic Appraisal Principles — Basic Appraisal Procedures — Business Practices and Ethics — Commercial Appraisal Review — Expert Witness for Commercial Appraisers — General Appraiser Income Approach, Part I — General Appraiser Income Approach, Part II — General Appraiser Market Analysis and Highest & Best Use — Advanced Market Analysis and Highest & Best Use — General Appraiser Report Writing and Case Studies t2024 CBRE, INC. 17-236 PROFILES General Appraiser Sales Comparison Approach — General Appraiser Site Valuation and Cost Approach — Real Estate Finance, Statistics, and Valuation Modeling — Uniform Standards of Professional Appraisal Practice — Quantitative Analysis — Advanced Income Capitalization CBRE t2024 CBRE, INC. 17-237