Hanley Ind Ct 425 2007 Appraisal

SUMMARY APPRAISAL REPORT

INDEECO, INC. HEADQUARTERS OFFICE/WAREHOUSE PROPERTY 241-281 AND 423-430

HANLEY INDUSTRIAL COURT

BRENTWOOD, MISSOURI 63144 DECEMBER 2007

Effective Date of Valuation November 20,2007

Prepared for

Mr. David Knoebel Chief Financial Officer Indeeco, Inc.

425 Hanley Industrial Court

St Louis, Missouri 63144

Prepared by

R. A. Buckles & Associates, Inc.

Real Estate Appraisers & Consultants 2900 S. Brentwood Boulevard

St Louis, Missouri 63144 (314) 995-3838

TABLE OF CONTENTS LETTER OF TRANSMITTAL

CERTIFICATION OF VALUE ASSUMPTIONS AND LIMITING CONDITIONS SUMMARY OF FACTS AND CONCLUSIONS IDENTIFICATION OF PROPERTY BEING APPRAISED INTENDED USER OF APPRAISAL

2 3 5 7 7

INTENDED USE OF APPRAISAL

7

INTEREST VALUED

7

PURPOSE OF ASSIGNMENT

8

EXTRAORDINARY ASSUMPTIONS

8

HYPOTHETICAL CONDITIONS

8

EFFECTIVE DATE OF VALUATION

8

DATE OF REPORT

8

SCOPE OF WORK.

8

REPORT OPTION

10

DEFINITION OF MARKET VALUE

11

LEGAL DESCRIPTION

11

OWNERSHIP & HISTORY

11

REAL ESTATE TAXES

12

PERSONAL PROPERTY, FIXTURES, AND INTANGIBLE ITEMS

12

ENVIRONMENTAL POLLUTION AND HAZARDOUS WASTE

12

Regional Map / Neighborhood Map

NEIGHBORHOOD DATA DESCRIPTION OF PROPERTY- Site Data

13 15

Flood Plain Map / Tax ID Map

Improvement Data

18

Floor Plan / Aerial Photograph / Photographs of Subject Property

HIGHEST AND BEST USE METHOD OF APPRAISAL VALUATION OF PROPERTY - Land Valuation

23 25 26

Land Sales Adjustment Grid / Map

COST APPROACH INCOME APPROACH

30 32

Rent Comparable Summary / Maps / Photographs

Direct Capitalization SALES COMPARISON APPROACH Improved Sales Adjustment Grid / Map / Photographs RECONCILIATION

39 42

ESTIMATED MARKETING PERIOD / ESTIMATED EXPOSURE TIME

48

APPENDIX

Qualifications:

Richard A. Buckles, MAI Jeffrey L. Hansen, Associate Appraiser

46

R.A. BUCKLES & ASSOCIATES, INC. Real Estate Appraisers and Consultants 2900 S. Brentwood Boulevard. St. Louis, MO 63144 314 995-3838 • Fax 314 995-5353

E-mail: [email protected]

Richard A. Buckles, MAI

December 17, 2007

Mr. David Knoebel

Chief Financial Officer Indeeco, Inc. 425 Hanley Industrial Court St. Louis, Missouri 63144 Dear Mr. Knoebel:

At your request we have appraised the Indeeco, Inc. headquarters office/warehouse facility located at

241-281 and 423-430 Hanley Industrial Court, in the city of Brentwood, St. Louis County, Missouri 63144. In connection with this, we have made an investigation of factors affecting the current market value thereof, and submit the attached report, dated December 17, 2007, which includes analysis leading to conclusions presented herein.

This report, which is presented in summary format, is prepared for Indeeco, Inc. on behalf of Ace Holdings, LP, and Frederick S. Epstein in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation. The purpose ofthe appraisal is to develop an opinion of the market value of the leased fee interest in the property described herein as ofNovember 20, 2007. This date coincides with our inspection of the property.

As a result ofour investigations and analyses, and subj ect to limiting conditions as set out herein, we have formed an opinion of the market value of the leased fee interest in the property in its "as is" condition on November 20, 2007, in the amount of: Five Million Nine Hundred Fifty Thousand Dollars S 5,950,000

Mr. David Knoebel December 17,2007 Page two

The accompanying summary appraisal report, ofwhich this letter of transmittal is a part, will indicate how we have arrived at this value conclusion.

It has been a pleasure working on this assignment for you. If you or your associates have any questions concerning the appraisal, we will be happy to answer them. Yours very truly,

Richard A. Buckles, MAI

Missouri State Certified General Real Estate Appraiser RA001603

Expiration Date: 06/30/08

Jeffrey L. Hansen Associate Appraiser

Indeeco Headquarters Property - 241 -281 & 423-430 Hanky Industrial CL, Brentwood, MO

CERTIFICATION OF VALUE The undersigned officers and appraisers of R. A. Buckles & Associates, Inc., do hereby certify that to the best of our knowledge and belief,

■

the statements of fact contained in this appraisal report, upon which the analyses, opinions and conclusions expressed herein are based, are true and correct.

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the reported analyses, opinions and conclusions were developed and this report has been

prepared in compliance with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute.

■

the report conforms to the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation, except that the Departure

Rule of the USPAP shall not apply to federally related transactions.

■

the reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, unbiased professional analyses, opinions and conclusions.

■

I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved.

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my compensation is not contingent on an action or event resulting from the analyses, opinions or conclusions in, or the use of, this report.

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the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

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as of the date of this report, Richard A. Buckles has completed the requirements of the continuing education program of the Appraisal Institute and is currently certified under the continuing education requirements.

«

Jeffrey Hansen has made a complete inspection of the property that is the subject ofthis report. Richard Buckles made only an exterior inspection of the property.

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no one provided significant real property appraisal assistance to the persons signing this certification.

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the appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan.

aJ-Jl A.

Richard aT Buckles, MAI

Jeffrey/ L. Hansen

Missouri State Certified General

Associate Appraiser

Real Estate Appraiser RA 001603

Expiration Date: 06/30/08

Dated this

day of

R. A. Buckles &. Associates, Inc.

-2007

Tndeeco Headquarters Property- 241-281 & 423-430 Hanlev Industrial Ct. Brentwood, MO

ASSUMPTIONS AND LIMITING CONDITIONS

We certify that, to the best ofour knowledge, statements contained in this appraisal are correct We IVc^Tatthis appraisal has been made m conformity with the Code ofProfessional Ethics and Standards ofProfessional Practice of the Appraisal Institute.

No responsibility is to be assumed for matters legal in nature, nor is any opinion of title rendered herewith. Good title is assumed.

The property is appraised free and clear ofany or all liens or encumbrances unless otherwise stated. Responsible ownership and competent property management are assumed.

The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.

All engineering is assumed to be correct. The plot plans and illustrative material in this report are included only to assist the reader in visualizing the property. Itis assumed thatthere are no Mdden or ur*pparent^^^

mS^nder it more or less valuable. No responsibiUty is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

contained in this report is based.

It is assnmed to the utilization ofthe land and improvements is within the boundaries or property

i^ property described and to there is no encroachment or trespass unless noted m the

report

This appraisal report has been made with the following general limiting conditions:

1

The distribution, if any, of the total valuation in this report between land and ^provemente

R. A. Buckles & Associates, Inc

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Cty Brentwood, MO

ASSUMFnONS AND LIMITING CONDITIONS, Continued 2.

Possession ofthis report, or a copy thereof, does not carry with it the right ofpublication. It may

not be used for any purpose by any person other than the party to whom it is addressed without the written consent ofthe appraiser, and in any event only with proper written qualification and only in its entirety.

3.

The appraiser herein by reason of this appraisal is not required to give further consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made.

4.

Neither all nor any part of the contents ofthis report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be

disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser. 5.

The physical condition of the improvements described herein is based on an inspection of the architectural drawings as well as a physical inspection. No liability is assumed for the soundness of structural members, including roof (wear and leakage), foundation (leakage), footings, exterior and interior walls, partitions, floors, or any other part ofthe structure, since no engineering tests were made ofsame and no termite inspection was conducted. Furthermore, we accept no legal responsibility for the efficiency of the plumbing and electrical systems, the heating and air-conditioning equipment, or any major appliances. Unless otherwise noted, all of these items appeared adequate and operational.

6.

This appraisal report covers the property herein described only. Neither the appraised value herein, nor any analysis ofthis value, nor any unit values derived from it are to be construed as applicable to any other property under any circumstances. The analysis, arithmetic and computations in this appraisal report deal only with and are applicable to only the subject property. We have no present or contemplated future interest in the property appraised, and the compensations for making this appraisal is in no way contingent upon the value concluded.

7.

The appraisers are not qualified to detect hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment The presence of potentially hazardous materials may affect the value of the property. The market value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss of value.

8.

This appraisal report is prepared for the sole and exclusive use of Indeeco, Inc., Ace Holdings, LP, and Frederick S. Epstein.

9.

The purpose of the appraisal is to develop an opinion of the market value of the leased fee interest in the property described herein, as of November 20,2007, which coincides with the date of our inspection of the property.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

SUMMARY OF FACTS AND CONCLUSIONS Property Appraised:

Indeeco, Inc. Headquarters

Office/Manufacturing/Warehouse Property 241-281 and 423-430 Hanley Industrial Court Brentwood, Missouri 63144 Tax I.D. #'s:

Tax Locater No. 21K641044 21K640809 21K631067 21K631397

Total Land Area:

Acreage 4.70 1.03 0.63 1.01 7.37 Acres

Intended Users of Appraisal:

Indeeco, Inc., Ace Holdings, LP, and Frederick S. Epstein

Intended Use of Appraisal:

To serve as a basis ofvalue for internal decision making purposes and/or asset management considerations

Date of Valuation: Date of Inspection Date of Report:

November 20,2007 November 20,2007 December 17,2007

Interest Appraised:

Leased fee estate

Purpose of Appraisal:

To develop an opinion of the market value of the above stated interest in the subject property in its "as is" condition

Extraordinary Assumptions:

None

Hypothetical Conditions:

None

Owner of Record:

Ace Holdings, LP, Frederick S. Epstein, principal

Zoning:

"LID" Industrial District

Lot Size:

7.37 acres or 320,902 square feet

Building Improvements:

One-story, brick and concrete block, multi-tenant, office/ manufacturing/warehouse building, built in stages between 1958 and 1985, containing a gross floor area of 122,326 square feet, of which 113,023 square feet is considered rentable space.

Approximately 28,588 square feet or 25.3% of the building consists of finished office and/or support space while the remaining 93,738 square feet consists of manufacturing, and warehouse space.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

SUMMARY OF FACTS AND CONCLUSIONS, Continued Site Improvements:

Approximately 67,760 square feet oflighted and striped, asphaltpaved surface parking lot, located west of the building across Hanley Industrial Court that accommodates parking for 229 cars. Additionally, approximately 25,000 square feet of concrete and asphalt-paved surface parking areas, drives, walks and truck aprons are located on the north and east sides ofthe building that accommodate employee and customer parking for 38 cars.

Land-to-Bldg. Ratio:

2.62:1 (GBA)

Construction Quality: Overall Condition:

Average Average

Highest & Best Use:

As Vacant As Improved

As a site for light industrial or office development Continued use as multi-tenant office/warehouse building or alternatively, once the existing leases expire, as single tenant office/warehouse facility

Value Summary:

Cost Approach Income Approach Sales Comparison Approach

Value Conclusion:

$ 5,950,000

Marketing Period:

12 months or less

Exposure Time

12 months or less

R. A. Buckles & Associates, Inc.

$5,860,000 $ 6,000,000 $ 5,875,000

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct, Brentwood, MO Identification of Property Being Appraised

The subject of this appraisal is the Indeeco, Inc. headquarters office/manufacturing/

warehouse facility located at 241 -281 and 423-430 Hanley Industrial Court in the city ofBrentwood, St Louis County, Missouri 63144. Briefly, the property consists of a7.37 acre tract ofindustrially zoned land that is improved with a full masonry, office/manufacturing/warehouse building,

constructed in stages between 1958 and 1985, with neighboring off-street parking for 229 cars. The building contains a gross floor area of 122,326 square feet, ofwhich 113,023 square feet is rentable space.

Intended User of Appraisal

The intended users of the appraisal are Indeeco, Inc., Ace Holdings, LP, and Frederick S. Epstein, principal.

Intended Use of Appraisal

It is our understanding that the function of the appraisal is to serve as a basis of value for internal decision making purposes and/or asset management considerations relating to possible disposition of the property.

Interest Valued

The realty interest valued herein is the leased fee interest held byAce Holdings, LP. A leased fee estate is defined as "an ownership interest held by a landlord with the right ofuse and occupancy conveyed by lease to others."

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial CU Brentwood, MO Purpose of Assignment

The purpose of the appraisal is to develop an opinion of the market value of the leased fee

interest in the building and site improvements described herein, in their "as is" condition as of November 20,2007.

Extraordinary Assumptions

An extraordinary assumption is something that is assumed to be true but is not a certainty. If

an extraordinary assumption turns out to be untrue, the value conclusion would be impacted. The appraisal of the subject property is not based on extraordinary assumptions. Hypothetical Conditions

Hypothetical conditions are known to be false but are presumed to be true for the purpose of reasonable analysis. In this case, the appraisal of the subject property is not based on any hypothetical conditions.

Effective Date of Valuation

The effective date of valuation is as of November 20,2007. This date coincides with our inspection of the property.

Date of Report

The appraisal report is dated December 17,2007. Scope of Work

Richard Buckles and Jeffrey Hansen, accompanied by Ken Kaller of Coldwell Banker

Commercial, inspected the property on November 20, 2007. This involved a complete interior inspection of the building, as well as an exterior inspection of the building and grounds. Jerry Worley, Property Manager for Coldwell Banker Commercial, provided a site plan, interior floor

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial CtM Brentwood, MO plans, current lease documents encumbering the property, and income and expense statements for review. Basic data were gathered from a variety of sources including public records at the city of

Brentwood and St Louis County government offices as well as from various publications. Specific information concerning the subject property was obtained by personal inspection of the property,

from interviews with the owner's representatives and from review of available plans and public

records. Applicable market information was gathered from several sources, including area real estate

brokers, appraisers, property managers and owners.

Aerial photographs of the property were

obtained from Internet sources.

The three standard methods of appraisal were employed in valuing the property. The Cost

Approach was applied by analyzing local land sale transactions in order to estimate the contributory

value ofthe 7.37 acres ofunderlying land comprising the property. Next, the replacement cost ofthe building and site improvements was estimated based on published cost figures taken from the

Marshall Valuation Cost Manual, adjusted for the St. Louis area as of November 2007. From the indicated replacement cost was then deducted estimated accrued depreciation affecting the property from all causes, resulting in a current value estimate of the property.

The Income Approach is based on direct capitalization methodology, which is based, in part,

on ascribed economic rent attributable to the owner-occupied space and vacant portions of the building and, in part, on actual contract rent applicable to those parts of the building that are presently encumbered by leases. This involved collecting and confinning recent lease data involving light industrial properties located in an around the subject neighborhood. The collected data was analyzed and compared to the subject based on the property's present condition. Stabilized vacancy

allowances and applicable operating expenses were deducted from potential rental income in order to

R. A. Buckles & Associates, Inc.

Tndeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct. Brentwood, MO estimate net annual income attributable to the property. Net annual income was then capitalized into an indication of value utilizing a market derived capitalization rate.

The Sales Comparison Approach was applied by collecting and confirming market data

relating to recent sales involving industrial properties having similar utility and market appeal to the subject property. The collected data were analyzed forpurposes ofestimating the appropriate square

foot value attributable to the subject property, then applying the concluded unit value against the subject's rentable building area.

In concluding a value for the property, the applicable approaches were analyzed and correlated with the most meaningful data given greatest weight in the valuation process. Report Option

The appraisal report is prepared in summary format. A summary appraisal report is a document designed for the use ofan individual or group ofindividuals not necessarily having direct knowledge of the location, physical attributes, and basic economic characteristics of the property

being appraised. As such, the report identifies and briefly describes the real estate being appraised, and summarizes the information considered, the appraisal procedures followed, and the reasoning

that supports the analysis, opinions, and conclusions so someone not familiar with it can form a basicunderstandingofmev^^ andreportmgapplicablemarketdata^

all of the information gathered and analyzed during the course of the assignment However, all information pertinent to the appraisal process is contained in our work file.

R. A. Buckles & Associates, Inc.

10

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct., Brentwood, MO Definition of Market Value Market value is defined as the most probable price which a property should bring in a

competitive and open market under all conditions requisite to a fair sale, the buyer and seller each

acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation ofa sale as ofa specified date and the passing of title from seller to buyer under conditions whereby. a.

Buyer and seller are typically motivated;

b.

Both parties are well informed or well advised and acting in what each considers his best interest;

c.

A reasonable time is allowed for exposure in the open market;

d.

Payment is made in terms of cash in U.S. dollars or in terms of financing arrangements comparable thereto; and

e.

The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Legal Description

A full metes and bounds legal description of the subject property was not provided for review. However, according to the St. Louis County Assessor's records the property is briefly identified as "Part ofLot 7, all ofLots 9 & 10, part ofLots 11 & 12,allofLots 13 & 14, part ofLots

12 & 15, all ofLots 20-23 and part ofLot 24 in Hanley Industrial Park, St. Louis County, Missouri. Ownership & History

Title to the property is held in the name of Ace Holdings, LP, a Missouri Corporation,

Frederick S. Epstein, principal. There have been no sales of the property within the past 3-year USPAP-required reporting period.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

Real Estate Taxes The subject property is classified by St. Louis County as commercial for taxation purposes

and is assessed at the required rate of32% ofmarket value as determined by the local assessor. The current assessment and taxes are noted below:

Real Estate Tax & Assessment Summary 2007

Assessed Valuation - 2007 TaxID# 21K641044

Land

$436,640

Total

Improvements

Tax Rate

Total Taxes $102,019.81

$875,360

$1,312,000

$0.077759

71,780

$0.077759

$

5,581.56

21K640809

$ 71,780

$

0

$

21K631067

$ 43,900

$ 11,360

$

55,260

$0.077759

$

4,296.98

89.850

$0.077759

$

6.986.67

21K631397

$ 70.140

$ 19.710

$

Totals

$622,460

$906,430

$1,528,890

$118,885.02

According to the St Louis County Collector ofRevenue's records, real estate taxes for 2007 have not yet been paid. However, taxpayers have until December 31 to pay the current tax levy. There is no prior tax lien filed against the property.

Personal Property, Fixtures, and Intangible Items Personal property, fixtures, and intangible items are not included in the appraised values

identified in this report. The inclusion or exclusion ofany or all ofthese items would have no effect on the market value estimates herein.

Environmental Pollution and Hazardous Waste This appraisal is based on the assumption that the subject property has never been used as a

sanitary or hazardous waste landfill. It is also assumed that there are no manmade pollutants or

contaminants present in the soil or ground water that would be considered dangerous to the public or that would create any liability to the past, present, or future owners of the property.

R. A. Buckles & Associates, Inc.

12

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Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct., Brentwood, MO

NEIGHBORHOOD DATA The subject property is located in the City ofBrentwood in Hanley Industrial Park, the main entrance of which is at the southwest corner of S. Hanley and Litzsinger Roads. This is a wellestablished business park located just west of the Maplewood City Limits, south of the Richmond

Heights City Limits, approximately one-half mile south of Highway 40 (aJca. 1-64) and approximately one mile southeast of the Highway 40/1-170 interchange. US Highway 40 runs east

and west from downtown St. Louis through central and west St. Louis County to St. Charles County,

and 1-170 runs north and south from Highway 40 to 1-270, about ten miles to the north. The subject's immediate neighborhood is generally bounded by Highway 40 on the north, Manchester Road on the south, Brentwood Boulevard on the west and Big Bend Boulevard on the east.

Existing development in the immediate vicinity of the subject involves primarily light

industrial land uses. Besides Hanley Industrial Park, there are two other smaller business parks located south ofManchester Road and east ofLaclede Station Road, which is an extension ofHanley

Road, south of Manchester. These include the Breckenridge and Brentwood Industrial Parks. The

peripheral areas are generally commercial in nature with modestly priced single family and multifamily housing also present throughout the area.

Retail and service-oriented commercial land uses are typically located along the major thoroughfares. An expansion of the retail sector in the area has occurred to the east of the subject

with the development ofMaplewood Commons (Wal-Mart, Sam's Club and Lowe's stores), and to the north with Brentwood Pointe (Dierberg's and DSW) and The Meridian (Best Buy and Sports

Authority). Other nearby retail activity is dominated by the Saint Louis Galleria, a super-regional shopping mall containing in excess of 1,500,000 square feet of retail space, anchored by Dillard's,

Famous Barr, and Lord & Taylor. Across from the Galleria is a new mixed-use development within

R. A. Buckles & Associates, Inc.

^

Indeeco Headquarters Property - 241-281 & 423-430 Hanky Industrial Ct, Brentwood, MO city of Richmond Heights called Boulevard St. Louis. This is an example of the "new urbanism"

movement, featuring retail establishments like Crate & Barrel, Jared Jeweler's and Bombay

Company, chain-affiliated restaurants like Maggianos and P.F. Chang's, nestled in the midst of

luxury residential condominiums. Another development in the "new urbanism" vein is MLP's $85 million Hanley Station project that is currently underway at the intersection of Hanley Road and Strassner Dr. This is the first of a kind development in St. Louis, incorporating condominiums, retail/restaurants, a Marriott Hotel and two, 5-story parking garages designed around a new MetroLink mass transit station.

Expansion of the infrastructure to support all of the new development, coupled with the upcoming closing of Highway 40 includes the extension of Strassner Dr. from Hanley Road (at W.

Bruno Ave.), west to Brentwood Boulevard, hi fact, the center leg of Hanley Industrial Court has

already been renamed Strassner Dr. in anticipation of this stretch of road becoming a major connector route between Hanley Road and Brentwood Boulevard during the shutdown ofHighway 40.

A densely populated and affluent residential housing base supports the commercial

businesses.

The five neighboring suburbs of Maplewood, Brentwood, Clayton, Ladue, and

Richmond Heights lie within a four-mile radius of the subject and reflect widely varied incomes, household size, and purchasing patterns.

hi summary, the subject neighborhood is well established and continuing to prosper. As

such, there are no apparent physical, social or economic forces which would have an adverse effect on property values in the neighborhood in the foreseeable future.

R. A. Buckles & Associates, me.

14

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

DESCRIPTION OF PROPERTY Site Data

As shown by the accompanying tax plat and aerial photo, the subject property consists oftwo irregular shaped tracts of land located across the western leg of Hanley Industrial Court from one

another. In the aggregate, the two tracts contain a total area of 7.37 acres. The front ofthe building is oriented west, and is thus said to be located on the east side of Hanley Industrial Court, while the

parking lot serving the property is located across the street from the building on the west side of Hanley Industrial Court However, until just recently, when the center leg ofHanley Industrial Court

was renamed Strassner Dr., all the interior streets in Hanley Industrial Park were named Hanley

Industrial Court, comprising northern, southern, center, eastern and western legs. As such, the subject property's actual building site has frontage on two of the legs of Hanley Industrial Court (western and eastern) and thus can be said to have frontage on both the east and west side of the street, depending on which interior leg of Hanley Industrial Court is referenced. Main Site

The main portion ofthe subject site, which actually fronts on the eastern and western legs of Hanley Industrial Court encompasses an area of 5.73 acres that comprises Tax Parcels 21K641044

(4.70 acres) and 21K640809 (1.03 acres).

All ofthe building improvements are contained within

the 4.70-acre portion, which has a mailing address of 425 Hanley Industrial Court. The 1.03-acre

portion, which consists ofvacant, unimproved land at the southeast corner ofthe site, is known and numbered 241 Hanley Industrial Court. Overall, the main site has approximately 420 feet offrontage

along the western leg ofHanley Industrial Court and about 600 feet offrontage along the eastern leg of Hanley Industrial Court, by a depth of roughly 470 feet, from east to west, at its widest point.

R. A. Buckles & Associates, Inc.

*^

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO Parking Lot Site

As previously noted, this portion of the property, which is the site of the surface parking serving the property, is located along the west side of the western leg of Hanley Industrial Court

across from the main site.

It contains a total land area of 1.64 acres or 71,303 square feet,

encompassing two tax parcels (21K631397 & 1067) having mailing addresses of 424 and 430

Hanley Industrial Court, respectively. Overall, the site has 407 feet offrontage on Hanley Industrial Court over a rear line of approximately 420 feet, abutting Black Creek, by a depth on the north of 238 feet and a depth on the south of 139 feet. Topography

Terrain throughout the main site slopes gently downward from east to west, lying basically at grade with the abutting streets. Terrain throughout the parking lot is also basically level and at grade with the abutting street. Drainage appears adequate. Access

Vehicular access to the main site is from three curb cuts located at the northwest, northeast and southeast corners ofthe site. Vehicular access to the parking lot is from one curb cut located on the east side, near the center of the site. Easements and Utilities

Public utilities available and connected to the property include telephone, electric, natural gas, water and both storm and sanitary sewers. Research of public records was not conducted to

determine the presence ofany adverse easements impacting the site. However, it is assumed that all

existing utility and roadway easements are normal and have no adverse impact on the use or value of the site.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

The property is zoned "LID" Industrial District by the City of Brentwood. Specifically, "LID" zoning permits a wide range ofuses from office to manufacturing, as well as retail and storage yards. The improvements constructed on the site represent a legal conforming use within the guidelines of the "LID" zoning ordinance. Flood Plain Status

Based on visual examination of the Flood Insurance Rate Map for Community Panel

29189C0302 H, dated August 2,1995, the portion of the property lying east of the western leg of

Hanley Industrial Court, where the building is located, appears to lie partly in "shaded" Zone X and partly in "un-shaded" Zone X. These classifications designate those areas determined to be outside the 100-year flood plain. On the other hand, entirel .64-acre parking lot site abutting Black Creek

lies within Zone AE. This classification applies to those areas whose elevations are determined to be within the 100-year flood plain.

R. A. Buckles & Associates, Inc.

17

Tributary

RM504 to Black

CITY

OF BRENTWOOD 290338 I i,ll!i!i(.L ELDOr INSURANCE PiJDEKAJ.

FIRM RDOD INSURANCE RATE Y.I' ST. LOUIS COUNTY, MISSOURI AND INCORPORATED

AREAS

HUP K1IKBIH

EfTECTlVt DtTI AUGUST 2.199;

LITZSINGEF

ROAD

RM506

ZONE X

Flood Plain Map

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO Improvement Data

The 4.7-acre main building site previously described is improved with a one story, brick and

concrete block office/nianufacturing/warehouse building that contains a gross floor area of

approximately 122,326 square feet, of which approximately 113,023 square feet is considered rentable space. The building was constructed in stages between 1958 and 1985. However, the northeast comer of the building, containing some 25,500 square feet was extensively renovated in

2005 for W. W. Grainger Inc., who signed a 12-year lease in October 2005. While the quality of

interior finish varies throughout the building, office and/or support space amounts to approximately 28,588 square feet or 25.3% of the building's rentable area.

At the present time Indeeco, an entity of the owner, occupies 18,200 square feet of headquarters quality office space, at the southwest corner of the building. At one time Indeeco

occupied the entire building, but some time ago the company moved all manufacturing and warehouse operations to satellite locations with only administrative functions now being handled in the building. W.W. Grainger, Inc. occupies 25,500 square feet ofleased showroom/warehouse space

at the northeast corner of the building, of which 5,151 square feet is showroom/sales space and 20,349 square feet is warehouse space with 24' ceiling height and enclosed loading dock with two

dock doors. J. & V. Zimmermann, d/b/a Business Cards Tomorrow (BCT) leases 14,911 square feet of space abutting the east side ofthe Indeeco office area. The BCT space has approximately 2,237 square feet, or 15.0%, of finished office space and 12,674 square feet ofwarehouse space with 15' ceiling height and three shared loading docks.

The remaining 54,412 square feet ofrentable space in the building, which is located toward

the center and western portions of the building, comprises vacant office, warehouse and manufacturing areas that were formerly owner-occupied by Indeeco. This represents an overall R. A. Buckles & Associates, Inc.

18

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO building vacancy rate of48.1 %. For marketing purposes, the vacant areas are logically divided into two separate sections. One of these areas comprises 12,560 square feet of office/warehouse space

(3,000 SF office/9,560 SF warehouse) with 15' ceiling heights and shared loading docks at the northwest corner ofthe building. The other vacant area comprises approximately 41,852 square feet ofmanufacturing/warehouse space in the center and east end of the building with 15' - 24' ceiling heights and shared dock loading.

The breakdown of space in the building is summarized in the following table.

Space Allocation Finished

Finished

Rentable

Space

Space

Area (SF)

fSF)

(%)

Indeeco, Inc. (owner occupied)

18,200

18,200

100.0%

J & V Zimmermann Printing

14,911

2,225

15.0%

W. W. Grainger, Inc.

25,500

5,163

20.2%

Office/Warehouse (Vacant)

12,560

3,000

23.9%

41.852

Q

0.0%

113,023

28,588

Occupant

Manufacturing/Warehouse (Vacant) Total

25.3% (avg.)

General construction features of the building include reinforced concrete footings and foundation with dock-height, reinforced concrete floors and structural steel framing and roof deck. The roofis offlat, built-up design and is covered with rubber membrane roofing material and fitted with galvanized gutter and downspouts. Plumbing service includes two multi-fixture restrooms in

each tenant space with the exception ofthe Indeeco and Business Cards Tomorrow space that share restrooms located along an interior wall accessible from both sides. The building is 100% wet sprinklered.

hi general, interior finishes in the front office areas vary from tenant to tenant, exhibiting a

combination of commercial grade carpeting, vinyl and ceramic tile floor coverings, painted

R. A. Buckles & Associates, Inc.

19

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct. Brentwood, MO

plasterboard walls, and suspended acoustical ceiling with a combination of recessed and ceiling

mounted fluorescent lighting. The Indeeco office includes a computer room with raised flooring and an employee lounge/lunch room with full kitchen.

The office areas throughout the building are centrally heated and air-conditioned by roof-

mounted, packaged HVAC systems with zoned, forced air distribution. As previously noted, ceiling heights vary from 15 feet in the center warehouse and manufacturing areas to 24 feet in the Grainer

warehouse and in 8,500 square feet ofvacant warehouse space at the east end ofthe building. The

building is served by 5 truck docks and 4 drive-in truck doors. The Grainger space has privateuse of the two covered docks and one drive-in door which serve a large interior concrete loading platform

located on the north side ofthe building. Due to the configuration ofGrainger's dock addition that was built in 2005, two existing drive-in truck doors along the north side ofthe building are no longer

useable. All other tenants share the use ofcommon loading facilities that includethree covered truck docks and one drive-in truck door on the east side of the building abutting an interior concrete loading platform with concrete ramp.

Manufacturing and warehouse area finish consists of sealed concrete floors, brick and concrete block perimeter walls and unfinished, exposed ceilings with strip fluorescent lighting. Heat throughout the plant is provided by several ceiling hung, gas-fired unit heaters. Apparently, the plant

was previously air-conditioned by roof-mounted HVAC units with forced air distribution provided through standard sheet metal duct-work, although the cooling system is reported to be inoperable. However, since air conditioned plant space is not usually a requirement ofmost industrial users, the roof-mounted compressor units serving the plant maynot need replacing. Ofcourse, anymechanical

equipment installed on the roofis a potential source ofwater leaks. Thus, the presence ofthe plant air conditioning is considered a form of functional obsolescence in this case.

R. A. Buckles & Associates, Inc.

It is our further 20

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct, Brentwood, MO understanding that some electrical distribution systems within the plant that were used for various

former machine operations are in need of repair or replacing. This may be qualify as deferred maintenance or possibly could be considered a form of functional obsolescence.

Site improvements consist of approximately 67,760 square feet of lighted and striped,

asphalt-paved, surface parking lot that accommodates parking and circulation for 229 cars. The lotis located west of the building across the western leg of Hanley Industrial Court. In addition,

approximately 25,000 square feet ofconcrete and asphalt-paved surface parking areas, drives, walks

and truck aprons are located on the north and east sides ofthe building that accommodate employee and customer parking for an additional 38 cars. There is attractive landscaping along the northeast and west sides of the building.

The construction quality of the building and site improvements is considered average and

their overall physical condition is also rated average. Even though the property has received adequate on-going maintenance, it suffers from some deferred maintenance as identified in an Observation Report - 2007 prepared by the facilities manager for Coldwell Banker Commercial. Although, an itemized list estimating the cost to cure identified deferred maintenance was not

provided for review, for appraisal purposes wehave estimated combined deferred maintenance in the amount of $50,000.

Besides deferred maintenance, accrued depreciation fornormal wear and tear ofthe building

components is estimated at 35% or in excess of $2,600,000, based on observed condition of the property at the time of inspection. Approximately $500,000 of that amount is attributable to roof replacement that is reportedly scheduled to be undertaken in 2008.

As previously noted, the building also suffers from functional obsolescence due to various

alterations and renovations to the building over the years that has resulted in the interior layoutofthe

R. A. Buckles & Associates, Inc.

21

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial CL. Brentwood, MO

plant being somewhat haphazard and lacking good loading facilities. Another negative attribute of

the property is the fact that the employee parking lot is not on-site, but located across the street, due to poor interior circulation in the plant areas and inefficient truck loading, primarily because ofthe

way the building has been expanded over the years. In any event, for appraisal purposes, functional obsolescence is estimated at 20%.

R. A. Buckles & Associates, Inc.

8820 Lsdue Road, Suite J200

Si Louis, WO 63124

Bua (314) 206-4600 Fox (3141 206-4666

425 HANLEY INDUSTRIAL COURT BRENTWOOD, MISSOURI

Floor Plan

Photographs of Subject Property

View of west side main entrances of subject suites 423 and 425 lookinc east from Hanley Industrial Court

View of north side main entrance of subject suite 281

looking southwest from Hanley Industrial Court

Photographs of Subject Property

View of east side main entrance of subject suite 261

looking west from Hanley Industrial Court

Exterior view of common area loading facilities

Photographs of Subject Property

Indeeco Inc. suite 425 main entrance lobby

Indeeco Inc. suite 425 typical office space

Photographs of Subject Property

BCT suite 423 typical office space

Grainger suite 281 typical showroom space

Photographs of Subject Property

Grainger suite 281 typical warehouse space

Vacant interior warehouse space

Photographs of Subject Property

Common area interior loading facilities

Interior ramp

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct., Brentwood, MO

Highest and Best Use Highest and best use is defined as "that use which will support the highest present value as of

the date of appraisal." An analysis ofhighest and best use should include consideration of a number

of factors such as area trends, neighborhood development patterns, physical features ofthe site and building, zoning, and economic and social forces at work in the area. Vacant Site Analysis

The subject site is zoned "LID" Industrial District by the city of Brentwood. Land uses in and around the neighborhood are homogeneous, featuring a complementary blend of owner and tenant-occupied single and multi-tenant light industrial businesses.

The subject site encompasses a land area of 7.37 acres, which is of sufficient size to

accommodate a variety of industrial uses similar in design and utility to other buildings in the area

with sufficient land for on-site parking, loading and truck circulation. Access to highways is readily available, and all necessary support services are within a short distance of the site.

Based on the above factors, it is our opinion that ifthe subject site were vacant and available

for development, its highest and best use would be achieved by development consistent with existing industrial zoning regulations and surrounding land uses. Improved Site Analysis

The subject building was originally designed and built in 1958 for single tenant use as an

office/manufacturing/warehouse plant.

Over the years various expansions, alterations and

renovations to the building have taken place resulting in an overall building design that is somewhat

haphazard resulting in inadequate loading facilities and poor interior circulation, hi addition, the rooftop HVAC systems serving the manufacturing/warehouse areas are inoperable and some electrical distribution systems are in need of repair or replacing. On top of this, the employee

R. A. Buckles & Associates, Inc.

23

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

parking lot is not on-site, but across Hanley Industrial Court from the building. All ofthese factors represent functional obsolescence impacting the property.

By comparison, the cost to cure deferred maintenance and improve the functional utility and

marketability of the existing vacant space in the building would be substantially less than

demolishing the building and replacing it with a new, modem building of similar size. In fact, the contributory value of the 7.37-acre site, assumed to be vacant and available for development, is

estimated herein in the amount of $1,960,000. This is substantially less than the value of the developed property by each of the three approaches utilized in the appraisal. Accordingly, it is our

opinion that the existing building still contributes to value and achieves the highest and best use of the site.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property- 241-281 & 423-430 Hanlev Industrial Ct, Brentwood, MO Method of Appraisal

The valuationofreal estate typically involves three basic approaches to value, these being the Cost, Income, and Sales Comparison Approaches.

The value estimate by the Cost Approach incorporates separate estimates of the land,

assumed to be vacant, and the depreciated value of the improvements. The latter represents the replacement cost new, less any estimate of physical deterioration and/or functional or economic obsolescence of the property, its plan, its competition or its environment

The Income Approach involves an analysis ofthe future benefits of a property in terms ofits

ability to provide a net annual income to the owner. Estimated net annual income is then capitalized ataiBtearamensuratewthte return offered by alternative investments.

The Sales Comparison Approach is an appraisal technique whereby the market value estimate

is predicated upon the prices paid in actual market transactions and current listings. It is aprocess of

evaluating the property being appraised by comparing it with others recently sold in the market and others offered for sale.

In concluding a value for the property, the applicable approaches are then analyzed and correlated with the most meaningful data given the greatest weight in the valuation process.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct, Brentwood, MO VALUATION OF PROPERTY Land Valuation

The first step in the Cost Approach is to estimate the value of the land as if vacant and available for development.

As previously noted, the property encompasses a total land area of 7.37 acres or 320,902

square feet. In order to estimate the value of the land we have identified one current offering and

four recent sales that are meaningful for comparison purposes. These are summarized in the in the following Land Sales Adjustment Grid. The adjustment grid summarizes the pertinent details ofthe sales transactions and identifies those adjustments recognized in comparing the properties to the

subject. Following the grid is a location map that indicates the location of the subject and the comparable properties.

R. A. Buckles & Associates, Inc.

26

INDEECO HEADQUARTERS OFFICE WAREHOUSE FACILITY

241-281 & 423-430 HANLEY INDUSTRIAL COURT, BRENTWOOD, MISSOURI 63144 LAND SALES ADJUSTMENT GRID

SUBJECT

Sale No.

Ksnley Industrial 42S Hanley Industrial Ct

Business Paik Address

Brentwood, MO. 63144

Municipality

21K641044.0809 21K631O67.1397

Tax mil

N/A N/A

Date or Sole Grantor

N/A 7.37

Grantee

Lot Size (AC) Lot Size (SF)

320,902 Gently Sloping "LTD" Industrial All Available

Topography

Zoning Utilities Proposed use Sale Pried'Asking Price

Industrial/Flex use

N/A N/A

Price/SF Comments

Owen Ridge

373 Marshall Ave Lot #M Webster Groves, MO. 63119 Part of 21K310450

Current Listing

Owen Ridge Associates, LLC

N/A 3.64

158,705

Gently Sloping "E" Industrial

All Available Industrial/Flex use $1,587,030 $10.00

South Towne Square

I ] 115 South Towne Square Green Paik, MO. 63123 28K340344.0498 11/21/05

Hotel Real Estate Acquisition, LLC

National Rental Alliance, LLC 1.54 67,147 Generally Level

•M-l" Industrial District All Available Industrial Development $350,000

$5.21

Maryland Heights. MO. N/A 03/22/05

Duke Construction, LP Tho Printine Source. Inc. 3.33

145.055 Generally Level TDM" Planned Development Ail Available Office/Warehouse $5.60

This is one of 13 infill lots being offered for sale less than one

Sole Negotiations

Conditions of Sale

-100% $9.09

Adjustment

Adjusted Price/SF Land Area Market Conditions @ 3.5%/Yr

0,90%

Adjustment

59.09

Adjusted Price/SF Land Area

OllAIJTATTVEAnitlSTMENTS

Similar

Location

Similar

Access/Exposure

Superior

Size/Shape Topography

Similar Similar

Zoning Utility Availability

Similar Superior

Weighted Avg. Adjustment

Concluded Value • Subject Site: Mdn SUe A Abutting Vaautt Land

Call

$1.750400

Call

5210,000

Parking lot 71,303 [email protected]' Total Land Contribution

Maryland Heights, MO. 63146 15N14I232

Hanley Industrial 272 Hanley Industrial Cl

Brentwood. MO. 63144 20K32059I

02/17/05

National Benevolent Association Thomas White, Co. 2.18

95,091

Generally Level

"M-3" industrial District All Available Industrial Development 5551,250 $5.80

City of Brentwood I.O3 44.867 Generally Level

"LID* Industrial All Available Police Department

$316,463 $7.05

Located in the Woodlands

Business Park on the periphery ofW

Normal 0.00% 55.21

Normal

Normal

000%

OOOVc

$7.05

$5.60

$5.58

$7.13

Avg. Adj. Price-All Sales

249,599 [email protected]/SF=

11786 Borman Dr.

5812,308

mile from the subject

QUANTITATIVE ADJUSTMENTS

Woodlands

Lakeside Crossing 2373-75 Ball Drive

$1,960,000

Similar Similar Superior Similar Similar Similar

Superior

Similar

Similar Superior

Similar Similar

Similar Similar Superior Similar Similar

Simitar Similar

Superior Similar Similar

LAND SALES MAP

ST.

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AC

Spanish Lake

Glasgow Vill.vjl-

aryland

Bel-Ridge

Overland

Chesterfield

Sycamore Hilts

'Country Club Hills

Granite

^

Pine Lawn

.Subject

^ 42S Hsnley Industrial ct i Brentwood, Missouri 63144 mond

eights

340 Ciarkson VaUey

StU

Louis

1in

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Ballwrn Wlldwood

so

Concord

recn Pai

Millstadt Columbia

15E

Byrnes Mill J

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F

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Omi nohts ro^o^od hup tfwww mjcrosofl com/slfeals'

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Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO Land Sales Summary

The foregoing land sales and recent offering are meaningful for valuing the subject site since

they represent transactions involving the acquisition ofland with similar neighborhood and economic influences to those impacting the subject property. As noted, the market data reflect unadjusted prices ranging between $5.21 and $10.00 per square foot of land area.

In comparing the sale properties to the subject, quantitative adjustments are, first of all,

considered for conditions of sale, if appropriate, and also for changing market conditions since the

sale transactions took place. In this case, since Sale #1 represents an asking price, a downward

adjustment, estimated at 10%, is recognized for typical negotiations between buyer and seller. However, Sales #2, #3, #4, and #5 represent consummated sales, so adjustments for conditions of sale are not recognized. With respect to market conditions, time adjustments, estimated at 3.5% per

year, are recognized for upward trending property values since the sales occurred. Obviously, a time adjustment is not recognized for Sale #1 since it represents an asking price. Other considerations recognized in the comparison analysis include qualitative adjustments for location and physical characteristics. These adjustments are somewhat subjective, but we have attempted to be consistent in adjusting for all items of comparison.

With respect to the qualitative adjustment process, we have identified six (6) items of comparison, recognizing location, access/exposure, size/shape, topography/site development

conditions, zoning and utilities/infrastructure. The individual items of comparison for each sale property are rated as similar, superior or inferior as compared to the subject property's characteristics. A brief discussion of the sale comparison analysis follows.

R. A. Buckles & Associates, Inc.

27

ideeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct, Brentwood, MO Location

Location attributes relating to each sale property are considered similar to the subject, so adjustments are not warranted for this item of comparison. Access/Exposure

Access/exposure attributes relating to each sale are considered similar to the subject, so adjustments are not warranted. Size/Shape

All of the sale properties are considered smaller than the subject site. As such, downward adjustments are recognized for each ofthe comparable properties to account for their smaller size, since a smaller property will generally command a higher square foot price than a larger, but otherwise similar, property. Topographv/Site Development Conditions

All ofthe sale properties have generally level to gently sloping topography/site development

conditions which are considered similar enough not to warrant adjustments for this item of comparison.

Zoning

Each sale property is similar to the subject with respect to zoning, so adjustments are not recognized for this factor. Utilities/Infrastructure

All ofthe sale properties have similar utilities and infrastructure as the subject and therefore adjustments are not warranted.

After adjusting for conditions of sale and for upward trending market conditions, the sale

transactions reflect land values ranging between $5.58 and $9.09 per square foot ofland area, with the average time-adjusted price for all sales being $7.13 per square foot. Each ofthe sale properties is considered slightly superior to the subject as to overall comparability.

In the final analysis we believe the surveyed data suggests that the 5.73-acre main building

site has a current market value of $7.00 per square foot of land area. Since this portion of the

property contains 249,599 square feet, its contributory value is estimated at $1,747,193, call R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct. Brentwood, MO

$ 1,750,000. With respect to the 71,303 square foot parking lot site that lies within the flood plain of abutting Black Creek, we have ascribed a value of $3.00 per square foot ofland area. This indicates a contributory value of approximately $213,909, call $210,000, for this portion of the property.

The combined land value ofthe entire 7.37-acre subject property thus amounts to estimated value for the entire site thus amounts to $1,960,000.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct. Brentwood, MO COST APPROACH

Cost figures used in this analysis are based on construction cost data published by the

Marshall Valuation Service, adjusted for the St Louis area as ofNovember 2007. These figures

reflect both direct and indirect costs of construction of Average Quality, Class "C" Light Manufacturing Building (Section 14, Page 14). The pubUshed cost indices include developer's overhead, but not profit.

Therefore, for purposes of this appraisal, entrepreneurial return

(developer's profit) is estimated at 10%.

Deferred maintenance expenditures previously discussed in the Description ofImprovements

section ofthe report are estimated at $50,000. Accrued depreciation charged against the building and site improvements for physical wear and tear is estimated at approximately 35.0% based on the observed condition of the property at the time of inspection. In addition, the property suffers from functional obsolescence, estimated at 20%, due to poor interior circulation, insufficient loading facilities and no on-site employee parking.

A summary of the Cost Approach is set out on the following page.

R. A. Buckles & Associates, Inc.

30

Tndeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct. Brentwood, MO

Cost Approach Summary Replacement Cost:

Average-Quality, Class "C"

Light Manufacturing Building Rnildinfi Imorovements

Building Shell (Gross Bldg. Area) Office Finish Display/Showroom

Size (SF)

SFCost

122,326 26,068 2,520

$44.43

$5,434,944

$63.61

1,658,185

$41.71

105.109

80,260

$2.05

$164,533

12,500

$3.85

$48,125

5

$1,575

$7,875

Lump Sum

$ 30.000

$ 7,198,239

Replacement Cost - Building Improvements Site Improvements

Asphalt Paving Concrete Paving

Pole Mounted Lights (dual fixture) Landscaping Replacement Cost - Site Improvements

$

250.533

$ 7,448,772

Replacement Cost - All Improvements

$

Entrepreneurial Return -10.0% Total Cost of Construction

744.877

$ 8,193,649

Less:

-$ 50.000 $ 8,143,649

Deferred Maintenance

Sub Total Accrued Depreciation

35.0%

- $ 2.607.070

Sub Total Functional Obsolescence

20.0%

-$ 1.638.730

$ 5,536,579

$ 3,897,849

Depreciated Value of Improvements Land Area

Add:

Land Contribution - Main Site - Parking Lot

SF Value

249,599

$7.00

$1,750,000

71,303

$3.00

$210.000 $1.960.000

Total Land Contribution

$5,857,849

Value by Cost Approach CALL

R. A. Buckles & Associates, Inc.

$5,860,000

31

Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Ct., Brentwood, MO

Income Approach The Income Approach involves the process ofconverting to present worth the future benefits

of a property and in many instances is the most applicable method of valuing real estate. In the Income Approach, appropriate operating expenses are deducted from gross rental income to arrive at

the net annual income generated by the property. Net income is then converted into a measure of value by means ofeither (1) discounting the projected annual income stream over a multi-year period ofanalysis to a net present value, or (2) by direct capitalization of stabilized net income at an overall

rate. For purposes of this report we have utilized direct capitalization with net income estimated based on actual contract rents currently in effect coupled with ascribed economic rent for the owner occupied and vacant space.

The current rent roll showing the escalations of the contract rent for the leased space along with the blended rental rate for tenants if applicable is set out in the following table.

R. A. Buckles & Associates, Inc.

32

Indeeco Headquarters

'- 241-281 & 423-430 Hanlev Industrial Ct.. Brentwood, MO

Rent Roll Size fSF)

Tenant

Lease Rate

Indeeco, Inc., Suite #425 (Owner Occupied) - General Office 18,200

W. W. Grainger, Inc., Suite #281 - Service Center 10/4/05-10/03/09 25,500 10/4/09-10/03/13 10/4/13-10/03/17 Remaining Blended Rate

25,500 25,500 25,500

N/A

N/A

$U.00/SF

$280,500

Net

$12.25/SF

$312,375

Net

S13.66/SF

$348,330

Net

S12.59/SF

$321,057

Net

4M TVCT7 S4.22/SF

$63,050

Net

S4.67/SF

$69,438

Net

S5.10/SF

$76,041

Net

$5.59/SF

$83,283

Net

S5.41/SF

$80,697

Net

N/A

(avg.)

J & V Zimmermann Printing, LLC, Suite #423 - Office/Warehouse 8/01/04-7/31/05 8/01/05-7/31/06 8/01/06-7/31/09 8/01/09-7/31/12 Remaining Blended Rate

» * /->i i

14,911 14,911 14,911 14,911 14,911

Vacant Suite #261 - Office/Warehouse

12,560

Vacant Suite #425-A - Manufacturing/Warehouse 41.852

Total Net Rentable Area

(avg.)

N/A

N/A

N/A

N/A

N/A

N/A

113,023

Determination of Economic Rent

In order to determine whether or not the contract rents are at an economic level and to ascribe economicrenttotheowner occupied and vacant portions ofthe building, we have investigated lease

rates charged at other buildings in the St. Louis metropolitan area with similar utility and market

appeal to the respective types of space contained in the subject building. As noted, all surveyed leases are either based on net rental terms or have been adjusted to an equivalent net rate as are the subject leases. Lease data pertaining to those properties considered meaningful for comparison R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct.. Brentwood, MO purposes are summarized in separate groupings presented for general office, office/warehouse,

manufacturing/warehouse and service center spaces in the following Rent Comparable Summary

table. Accompanying the summary table are photographs of the comparable properties and a location map indicating the relative location ofthe subject and the comparable properties surveyed.

R. A. Buckles & Associates, Inc.

34

INDEECO HEADQUARTERS MULTI-TENANT OFFICE-WAREHOUSE BUILDING 241-281 & 423-430 HANLEY INDUSTRIAL COURT, BRENTWOOD, MISSOURI 63144 RENT COMPARABLE SUMMARY Size Address/Location

Subject 241-281 & 423^30 Hanlcy tad. Ct. Indeeco. Inc. (Owner Occupicd> Brcntwood, MO. 63144

Office/

Lease Term

SF Rent

Rental

Rate

Terms

Suite ft

(SF-NRA1

Showroom

425

18,200

100.0%

N/A

N/A

N/A

423

14,911

15.0%

8/01/04-7/31/05

$4.23

Net

8/01/05-7/31/06 8/01/06-7/31/09

$4.66 $5.10

8/01/09-7/31/12

$5.59

10/04/05-10/03/09

$11.00

10/04/09-10/03/13

$12.25

10/04/13-10/03/17

$13.66

OffUxSpace

J & V Zimmermann Printing, LLC d.b.a. - Business Cards Tomorrow-

Offlce/Warehouse Space

W. W. Oraingcr, Inc.- Showroom/

281

25,500

20.2%

Flex Space

Brcntwood, MO. 63144

469S Crossroads Industrial Dr.

Scotls Lawnscrvicc

Net

Mi*

Vacant - Office/Warehouse Space

14

Comments

13,500

43.2%

SL Louis County, MO.

01/01/05-1201/07

$9.22

01/01/08-12/31/09

$9.67

01/01/10-12/31/12

$10.12

01/01/13 - 12/31/14

$10.85

Net

on 1.25 acres. 18" ceilings

Built 1999; renovated 2004; Concrete tilt-up; 18' ceilings

$9.97

15

17485 N. Outer 40

Available Space

35,000

33.7%

3-5 Years

$14.00

Net

Office/Warehouse Space (#4-#8) - Average

Manufacturing Warehouse Space («9-#12) • Average Showroom Flex Space (#13-#15) - Average

Equipment. 35,000/SF single-tenant service center

building built in 1989 on 4.02 acres. 22' ceilings,

Chesterfield, MO. 63005

Office Space (SI-S3) - Average

This property was formerly known as Outdoor

fenced outside storage al rear of lot

8,053

9,740

27356 22,000

$13.17

Net

$4.45

Net

$232

Net

$11.16

Net

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RENT COMPARABLE MAP - OFFICE/WAREHOUSE Wellington "WayYorfc-Dr Cromwell--Df^

Bryan Ave

Subject

425 Hanley Industrial Court Brcntwood. Missouri

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RENT COMPARABLE MAP - MANUFACTURING Florissant

'Vlazetwood

Mollne Acres

»

Cool

Valley

K

Overland

Svcamore

Greendalc

/ Jennings,

Pine Lawn Uplands Park

Fairmont City

425 Hantey Induslrial Court , Brentwood, Missouri

Huntleigh Des Peres

100

61 Glendale

Cahokia

Crestwood

Affion

Wilbur-Rark

Couniy Park 267

JEFFERSON )

Columbia

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RENT COMPARABLE MAP - SERVICE CENTER

Rosedale

Batchtown«

St CharkwCounty Smart! Auport _

-

M. A

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Portage

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Spanish

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Lake

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n

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Harvester

94

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Weldon Spring

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Dvertand SY^ 425 Hanky Industrial Court HanlevHilis

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ba

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DBaltwin

Wikhwod

.

Sock Hill

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W^P^J

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Labadie

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Brentwood, Missouri

B»ter"CTY:-J

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Lakeshire

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Affton

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-is-^i

Green Par*

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St.

Gray Summit Bus

Bymes Mill

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Smithton

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Freeburg

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Photographs of Rent Comparables - Office Space

Rent Comparable #1- 345-385 Marshall Avenue Webster Groves. Missouri 63119

Rent Comparable #2- 3934 Union Boulevard St. Louis Count\;. Missouri 63125

Photographs of Rent Comparables - Office Space

Rent Comparable #3 - 2937 Brentwood Boulevard Brentwood, Missouri 63144

Photographs of Rent Comparables - OfficeAVarehouse

Rent Comparable #4- 2641-45 S. Hanley Road Brentwood, Missouri 63144

Rent Comparable #5- 829 Hanley Industrial Court Brentwood. Missouri 63144

Photographs of Rent Comparabies - OfficeAVarehouse

Rent Comparable =6 - 8236 Brentwood Industrial Drive BrenUvood. Missouri 63144

Rent Comparable #7 -2601-05 S. Hanley Road Brentwood. Missouri 63144

Photographs of Rent Comparables - OfficeAVa rehouse

Rent Comparable #8 - 8046-50 Litzinger Road Brentwood, Missouri 63144

Photographs of Rent Comparables Manufacturing /Warehouse

Rent Comparable #9- 1333 Macklind Avenue St. Louis. Missouri 63110

■a

Rent Comparable #10- 5525 West Park Avenue St. Louis, Missouri 63110

Photographs of Rent Comparables Ma nufactu ringAVa rehouse

Rent Comparable #11 -2600 S. Hanley Road, Unit 410 St. Louis Countj'. Missouri 63144

Rent Comparable #12 - 1157-73 Reco Avenue Crestwood, Missouri 63126

Photographs of Rent Comparables - Service Center

Rent Comparable =13- 1326-36 Strassner Drive Brentwood, Missouri 63144

1 -.-v^3 SmiS*-^^^^ ■-'■'-■-•^^-—-

^

-

'

™"

.

"

;

"ill

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[| Rent Comparable #14- 4695 Crossroads Industrial St. Louis County, Missouri 63125

Photographs of Rent Comparables - Service Center

Rent Comparable #15 - 17485 N. Outer 40 Chesterfield, Missouri 63005

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct., Brentwood, MO Rent Analysis - General Office Space

The foregoing lease data indicates annual rental rates for general office properties having

similar utility and market appeal to the subject (8,053/SF average), located throughout suburban St.

Louis County ranging from $12.50 per square foot to $14.00 per square foot ofbuilding area. After

analyzing the surveyed data and recognizing similarities and differences in location and other physical attributes between the comparable properties and the subject, an economic rent of $ 12.50

per square foot, net, is ascribed for the 18,200 square feet of owner occupied space in Suite #425. Ttmt Analysis - Office/Warehouse Space

The foregoing lease data indicates annual rental rates for light industrial properties having

similar utility and market appeal to the subject (9,740/SF average), with similar office finish (27.0%

average), located throughout suburban St. Louis County ranging from $3.56 per square foot to $5.45 per square foot of building area.

After analyzing the surveyed data and recognizing similarities and differences in location and other physical attributes between the comparable properties and the subject, it appears that current

contract rent of $5.41 per square foot, net, for the 14,911 square feet of space located in Suite #423, tends to be in line with prevailing market rents. Furthermore, in connection with the survey findings, an economic rent of$5.00 per square foot, net, is ascribed for the 12,560 square feet ofvacant space in Suite #261.

Rent Analysis - Service Center Space

The foregoing lease data indicate annual rental rates for service center properties having

similar utility and market appeal to the subject (22,000/SF average), with total finished space (42.3% average) located throughout suburban St Louis County ranging from $9.50 per square foot to $14.00 per square foot ofbuilding area.

R. A. Buckles & Associates, Inc.

35

Indeeco Headquarters Property - 241 -281 & 423-430 Hanley Industrial CtT Brentwood, MO After analyzing the surveyed data and recognizing similarities and differences in location and other physical attributes between the comparable properties and the subject, it appears that current contract rent ofSll.OO per square foot, net, for the 25,500 square feet ofspace located in Suite #281 tends to be in line with prevailing market rents. Rent Analysis - Manufacturing/Warehouse Snace

The foregoing lease data indicates annual rental rates for manufecturing/warehouse properties

having similar utility and market appeal to the subject located throughout the St. Louis metropolitan area ranging from $1.76 per square foot to $3.25 per square foot ofbuilding area.

After analyzing the surveyed data and recognizing similarities and differences in location and

other physical attributes between the comparable properties and the subject, an economic rent of $1.50 per square foot, net, is ascribed for the 41,852 square feet ofvacant space in Suite #425-A. Stabilized Revenue Projection

Based on the foregoing discussions regarding general office, office/warehouse,

manufacturing/warehouse and service center rental rates, potential annual income for the subject

property is estimated in an amount of $754,832, calculated as follows. In connection with this, it

should be noted that we have recognized blended rental rates for the Grainger Inc. and J & V Zimmermann, LLC leases reflecting the scheduled rental increases. As such, a pro forma rent roll for the subject is presented on the following page.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

Pro Forma Rent Roll Size (SP)

Indeeco, Inc., Suite #425 - General Office 18,200

Lease Rate

S12.50/SF* $227,500 (♦Owner Occupied Ascribed SF Rate)

W. W. Grainger, Inc., Suite #281 - Service Center 10/4/05-10/03/09 25,500 10/4/09-10/03/13 25,500 10/4/13-10/03/17 25,500 Remaining Blended Rate 25,500

Sll.OO/SF

$280,500

Net

S12.25/SF

$312,375

Net

S13.66/SF

$348,330

Net

S12.59/SF

$321,057

Net

S4.22/SF

$63,050

Net

S4.67/SF

$69,438

Net

S5.10/SF

$76,041

Net

S5.59/SF

$83,283

Net

S5.41/SF

$80,697

Net

$62,800

Net

$62.778

Net

(avg.)

J & V Zimmermann Printing, LLC, Suite # 423 - Office/Warehouse 8/01/04-7/31/05 8/01/05-7/31/06 8/01/06-7/31/09 8/01/09-7/31/12 Remaining Blended Rate

14,911 14,911 14,911 14,911 14,911

Net

(avg.)

Vacant Suite #425-A - Office/Warehouse 12,560

S5.00/SF* (*Ascribed SF Rate)

Vacant Suite #425-A - Manufacturing/Warehouse 41.852

$1.50/SF*

(♦Ascribed SF Rate) Stabilized Totals

113,023

S6.62/SF

$754,832

Net

(avg.)

Vacancy/Collection Loss Allowance

The property currently has two vacant spaces totaling 54,412 square feet, which reflects a

vacancy rate of48.1 %. It should be noted the ascribed rents for the vacant space in the building are

the estimated net rents after expenses of the required infusion of capital necessary to make the subject's vacant space more marketable. As such, stabilized vacancy and collection losses are

R. A. Buckles & Associates, Inc.

37

Indeeco Headquarters Property - 241 -281 & 423-430 Hanlev Industrial Ct, Brentwood, MO recognized by the market, in general, and are estimated at 10% of potential annual income or

$75,483 per year. Deducting this from total potential annual income of$754,832 indicates effective gross revenue in the amount of $679,349 per year. Expenses Analysis

As previouslynoted, contract leases and ascribed rents are based on net rental terms, whereby

the tenants are responsible for payment of all expenses except management and roofand structural maintenance. The amount ofmanagement involved in overseeing a multi-tenant property such as the

subject typically ranges from 3% to 5% of effective gross income. As such, a management fee is estimated at 4.0% ofeffective gross income or $27,174, annually. The structural reserve allowance

covers such items as roof repair and perimeter wall maintenance. Expenses for adequately maintainedproperties such as the subject generally rangebetween $0.15 and $0.25 per square foot of building area, thus a structural reserve allowance equal to $0.20 per square foot or $25,350 per year

is reasonable. Additional obligations ofthe owner to payreal estate tax, building insurance costs and common area maintenance charges duringperiods ofvacancy are estimated at $11,889, $3,803 and

$6,338 per year, respectively, assuming stabilized vacancy of 10% per year. As such, total annual ownership expenses are estimated at $74,554. Net Operating Income

Deducting ownership expenses in the amount of $74,554 from effective gross income of $679,349 reflects net operating income in the amount of $604,795 per year. The $604,795 net annual incomeestimatecanbe converted to an indication ofvaluebymeans ofdirect capitalization as discussed below.

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct. Brentwood, MO Direct Capitalization

Direct capitalization is the process of capitalizing stabilized net operating income into an

indication of value by application of an overall rate. In applying this methodology, we have capitalized the $604,795 stabilized net operating income estimate at an overall rate of 10.0%. This

rate is derived, in part, from actual local market transactions involving the sale ofleased industrial

properties located throughout the St. Louis metro area. The table set out below summarizes six sale transactions whereby overall capitalization rates can be extracted for each sale. Overall Capitalization Rate Analysis St Louis Industrial Property Sales St Louis Metropolitan Area

Sale Address

Date

Building Size fSF)

Sale

Price

Income

Net

Overall Cap Rate

1424 Tahnage Ave. St. Louis, MO

03-07

51,400

$1,500,000

$139,045

9.27%

HOOKosciuskoSt. St. Louis, MO

03-07

85,194

$2,000,000

$178,907

8.95%

2053 Congressional Dr.

03-05

64,701

$2,625,000

$279,360

9.40%

401 W. South Service Rd. Wright City, Warren Co., MO

02-05

130,000

$3,800,000

$349,354

9.19%

10370 Page Industrial Blvd.

05-04

39,100

$1,075,000

$110,027

10.24%

04-04

165,917

$8,000,000

$720,974

9.01%

Maryland Heights, MO

Overland, MO

160-275 Corp. Woods Ct. Bridgeton, MO Average Sampling

934%

As noted, the above data reflect overall rates ranging between 8.95% and 10.24%, with the

average capitalization rate for the six transactions being 9.34%. The sales presented are meaningful

R. A. Buckles & Associates, Inc.

39

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct, Brentwood, MO

because of their geographic locations in and around the St. Louis metro area representing local investment grade properties.

Based on the foregoing data, it is our opinion an overall capitalization rate of 10.0% is appropriate for valuing the subject property. Capitalizing estimated annual net income of$604,795

at an overall rate of 10.0% indicates a market value estimate for the property, assuming all deferred maintenance was cured, in the amount of $6,047,950, call $6,050,000. Deducting the $50,000 estimated cost to cure deferred maintenance indicates an "as is" value of$6,000,000, for the property by the Income Approach.

A summary ofthe Income Approach using Direct Capitalization is set out on the following page.

R. A. Buckles & Associates, Inc.

40

Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

Income Approach Summary Rentable

Potential Annual Income

Suite#

AreafSF) ]Lease Term

#425

W. W. Grainger, Inc.

#281

25,500

J & V Zimmermann

#423

Vacant Office/Warehouse #261

14,911 12,560

Variant y hCHTiT XAaniif/WflfYthfYIICP JYUHlllI/ WcllwXIULwC £4?S-A tr*TJi*J i*

41 852

Potential Rental Income

3-5 Yrs.

18,200

Indeeco, Inc. (*)

10/05-10/17 8/04-7/12

3-5 Yrs. 3-5 Yrs.

Potential

Annual

Lease

Annual

Rent/SF

Tvoe

Income

$12.50

Net

$ 227,500

$12.59 $5.41

Net

$ 321,057

Net

$ 80,697

$5.00 $1.50

Net

$ 62,800

Net

113,023

- $ 75.483

10.0%

Less: Vacancy/Collection Loss

$ 679,349

Effective Gross Revenue (EGR) Annual

Less: Expenses

Management - 4% EGR Real Estate Taxes - 2007 Insurance - Est @ S0.30/SF CAM-Est.@ S0.50/SF RooffStructural Reserve @ S0.20/SF

Cost

$ 27,174 $118,885 $ 38,025

$ 63,375 $ 25.350

Expense Stop

None Vac. Periods Vac. Periods Vac. Periods None

(Owner's Share

$ 27,174 $ 11,889 $ 3,803 $ 6,338 $ 25.350

CT70 flfiQ 3>Z //,OU7

-$ 74.554

Total Annual Expenses

$ 679,349

Net Annual Income

$6,047,950

Capitalize @ OAR of 10.0%. This indicates renovated property value of: CALL Less: Cost to cure deferred maintenance

"As Is" Value by Income Approach

R. A. Buckles & Associates, Inc.

$ 62.778 $754,832

$6,050,000 -$50,000 $6,000,000

41

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial Ct,, Brentwood, MO Sales comparison Approach

The Sales Comparison Approach in appraisal analysis is based on the assumption that an

informed purchaser wouldpay no more for aproperty than the cost ofacquiring a substitute ofequal utility. As such, application ofthis approach involves comparison ofthe subject propertywith other properties having similar utility and market appeal that are located in the St. LouismetropoUtan area.

For purposes of this analysis we have considered four recent sales involving industrial properties in themetro area, although varied in size and/or age, that provide meaningful evidence for valuing the subject property. These sale transactions are summarized in the accompanying Improved

Sales Adjustment Grid. Along with the sales data are photographs ofthe comparable properties and a location map that indicates the relative locations ofthe subject and the comparable properties.

R. A. Buckles & Associates, Inc.

42

INDEECO HEADQUARTERS MULTI-TENANT OFFICE-WAREHOUSE BUILDING

241-281 & 423-430 HANLEY INDUSTRIAL, BRENTWOOD, MISSOURI 63144 IMPROVED SALES ADJUSTMENT GRID

Subject

SALE NO.

241-281 &423-430 Hanley

Address/Location

Industrial Court

Brentwood, MO. 63144

Municipality Tax ID #

Date of Sale Grantee

Land Size (SF)

Gross Building Arca/SF (GBA) Net Rentable Bldg Area/SF (NRA) Land/Bldg Ratio (GBA) Year BaWRenavated Exterior Construction

21K63I067,1397 N/A

Under Contract; to close 1/08

320.902 122,326 113,023 2.62 195&/1985/2005

Brick and Concrete Block 25.3% 15"-2r

% Finish Space Ceiling Height (Ft.)

Yes, Wet System 5/4

Sprinklered No, Docks/Drivc-in doors Construction Quality

Below Average Average

Condition

N/A N/A

Sale Price

Sale Price/SF GBA

Haphazard interior bldg

Comments

St. Louis, MO 63110

21K641044,0809

737

Land Area (Ac.)

layout resulting in poor loading facilities

QUANTITATIVE ADJUSTMENTS

Adjusted Pricc/SF NRA

Market Conditions @ 3.5%/Yr. Adjusted Pricc/SF GBA

11800446 Borman Drive

Brentwood, MO 63144 20K310314

Hazelwood, MO. 63042

Maryland Heights, MO. 63146

1OM63035O

15N1I1844

8/15/2005

8/1/2005 Glenborough Fund Vt LP

07/27/06

Greater St Louis Realty & Inv.

119,124

66,150

2.21

1956 (80,624 SF) & 1988 (38,500 SF) Brick (Off Area) Metal Siding (Whsc)

HIC Real Estate LLC 3.55 154,638 66,150

Critical Facilities Services WMI05 Hazelwood MO, LLC 5.27 229,561

51,708 51,708

2.34

4.44

1971 Concrete Block

1977 Concrete Block ft. Metal 17.5%

Winchester Plan, 1.1 jC/Dnug Draper

7.75 337,590 100,000 98,509 3.38 1985 Brick and Concrete Block 40.0%

23.0% 13'-20"

14.3% 19*

19--401

15*

Yes, Wet System 10/5

No

Yes, Wet System

70%-Wet System

9/3

2/8 Below Average

Average

Average $4,875,000

$40.92

2-building, owner-occupied office/warehouse facility

Average

Average

Average

$3,150,000

$3,319,365 $50.18

$60.92

2 single-tenant buildings

Interior layout very

on same site. Located in Hanley Industrial Park.

cut up

10/4 Average $6,400,000

$64.97

Located in West Plains Industrial Pork on periphery of Westport 2-tcnant bldg., owner user

$40.92

0.0% $50.18

0.0% $60.92

"Arms-Length" 0.0% $64.97

0.00% $40.92

4.61% $52.49

7.93% $65.75

8.06% $70.21

Similar

Similar

0.0%

Adjustment

5656 Campus Parkway Drive

Koch Air. LLC Undisclosed 6.04 263.190 119,124

"Arms-Length*

Conditions of Sale

1425 Streamer Dr.

5200 Bcrthold Ave.

40000000100

N/A N/A

Grantor

1100 MacUind Avc. &

"Arms-Length"

"Arms-Length"

$57.34

AVG.-ALL SALES

QUALITATIVE ADJUSTMENTS

Inferior Simitar Similar Similar Superior Similar Similar Similar

Location/Access Building Size

Land:Bldg. Ratio % of Finished Space

Construction Quality Age/Condition

Ceiling Height

Sprinkler System Loading Facilities

Inferior

Overall Comparability Valne Concluded for Subject 113,023 SF @ S52.00/SF NRA

$5,877,196 CALL

$5,875,000

Similar Superior Similar

Similar Superior Similar Similar Inferior Similar

Similar

Superior

Superior Simitar Similar

Similar

Similar Similar Superior

Superior Superior

Similar

Similar Similar

Superior

Superior

Similar

IMPROVED SALES MAP

\

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v*? 37D

Parker Rd Black Jack.

Spanish.

□_

Florissant

□

Hazerwood

* •"

Bridge ton

i?

Char

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Terrace

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EC

Cool Valley

Wood

Breckenridge 67

Dellwood

Ferguson

Edmundson^nbe:LSL 1U15 lnte™"°nal ***** StAnn

Maryland =.ett.

'-

Kinloch

Bel

160

^•"SL John

Pasadena Park

I

Pine Lawn

Wellston

y

Ladue Rd..

ABI

' d Subject

Frontenac

Crystal Lake Park HunUeigh

Hill

Warson Woods

Glendaie

—Arsenal

Pwpffli

Webster Groves

61

■%

Richmond Heights

Brentwood

Da

Des Peres

J S-

Brentwood. Missouri 63144

Ladue

100:

O U

42SHaniey Industrial CL

Westwood

Queen y Park

A

City'

Corway_Rd

HH

\

f

Creve Coeur

Town and Country!

Baden,

Uplands Part

Ollvefle

xnchester

^

: Vinlta

Hanley Hills

:

3«

\gf

Groendale

Us

MI 9 S O1. U/R

^

Northwobds

Normandy

Sycamore

'

Neighbors

Jennings

1 *r

115

'

Bellefontalne

,, '

Shrewsbury

DKirkwood Twin Oaks

Martborough

- 366 -j

Bend Rd

Crestwood

Sunset Hills

Lone Elk Park

e

50

Sapplngton

Concord

- p -. /

Afftono

- ?°; :

^-^^^T" 231 // V

Grantwood VHIagtX;

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Villa

Lokeshlr

East

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a-jlliori:ies © Her Majesty the Quean in Right of Canada

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ILLINOi!

.i

Photographs of Improved Sales

Improved Sale #1 - 1100 Macldind Avenue & 5200 Berthold Avenue St. Louis. Missouri 63110

!.;■

\

Improved Sale #2 - 1425 Strassner Drive Brentwood. Missouri 63144

,

.

Photographs of Improved Sales

^■j^*"" n I"1*].

'-

■

Improved Sale #3 - 5656 Campus Parkway Drive Hazehvood, Missouri 63042

Improved Sale =4-11800-846 Borman Drive Man-land Heights. Missouri 63146

;

Indeeco Headquarters Property - 241-281 & 423-430 Hanlev Industrial CL. Brentwood, MO Improved Sales Analysis

The foregoing sales reflect prices recently paid for industrial properties similar to the subject

As noted, before adjusting for conditions of sale and changing market conditions since the

transactions occurred, the data indicates prices ranging between $40.92 and $64.97 per square foot of rentable building area.

In analyzing the data, quantitative adjustments are, first of all, considered for conditions of sale, if appropriate, and also for changing market conditions since the sale transactions took place. With respect to market conditions, i.e. time adjustments, we have adjusted all Sales upward at a rate

of 3.5% per year to account for increasing property value trends since the transactions occurred. After making time adjustments, the indicated value range falls between $40.92 and $7021 per square

foot of building area with the average adjusted value for the four transactions being $57.34 per square foot.

Other considerations recognized in comparing the sale properties to the subject reflect

qualitative, rather than quantitative, adjustments for location and physical characteristics. These

adjustments are, by necessity, somewhat subjective, but we have attempted to be consistent in adjusting for all items of comparison. With respect to the qualitative adjustment process, we have identified nine items of comparison that impact the market value of industrial properties. These

include location, building size, land to building ratio, percentage of office space, construction

quality, age/condition attributes, ceiling heights, sprinkler system and loading facilities. The individual items of comparison are rated as similar, superior, or inferior compared to the subject. A brief discussion of the comparison analysis follows.

" R. A. Buckles & Associates, Inc.

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Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO Location

The subject is located in an industrial park environment, as are Sales #2, #3 and #4, so a location adjustment is not required. Sale #1 is located in older, inner city area, considered inferior to the subject's location in St. Louis County, thus warrants an upward adjustment. Building Size

With respect to building size, Sales #1 and Sale #4 are similar enough in size to the subject so as to not warrant adjustments. The buildings comprising Sales #2 and #3 are sufficiently smaller than the subject building to warrant downward adjustments since a smaller building will typically sell at a higher square foot price than a larger but otherwise similar property. This is labeled a "superior" adjustment on the adjustment grid because of the requisite downward adjustment. Land to Building Ratio

The land to building ratio of the subject property is 2.62:1, which is normal for industrial properties. By comparison, Sales #1, #2 and #4 with land to building ratios of 2.21:1,2.34:1 and 3.38:1, respectively, also have normal land to building ratios. As such, no adjustments are required for these properties. Sale #3, on the other hand, has a relatively high land to building ratio of 4.44:1, thus warranting a downward adjustment in the comparison analysis. Office Percentage

The subject has about 25.3% finished office space, which is similar to the amount of finished area indicated by Sales #1, #2 and #3. Sale #4 with about 40.0% finished office space is considered superior to the subject, therefore warranting a downward adjustment for this item of comparison. Construction Quality

Generally speaking, the subject building incorporates average quality interior and exterior decor. However, the subject building as presently designed suffers from some functional obsolescence due to its poor internal circulation attributes, resulting in overall below average construction quality. The same could be said for Sale #3, so a construction quality adjustment is not required. Sales #1, #2 and #4, on the other hand, are of average construction quality, thus warranting downward adjustments in the comparison analysis. Age/Condition

The subject property was built in two phases 1958 and 1985 and is considered in average condition for its age. Sales #1, #2 and #3 are considered similar enough in

R. A. Buckles & Associates, Inc.

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Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO age to the subject as to not warrant an adjustment for this item of comparison. By comparison, Sale #4 constructed in 1985, is newer than the subject with respect to age, thus warranting a downward adjustment in the comparison analysis. Loading

With respect to loading, the interior portion ofthe subject building has poor loading, while other portions ofthe building do not A quantitative adjustment was recognized in part, for inferior loading facilities in the construction quality analysis above. As

such, each of the sale properties is similar enough to the subject as to not warrant an adjustment for this item of comparison.

Sorinkler System

The subject building is 100% wet sprinklered, as are Sales #1 and #3. Sale #4 is about 70% wet sprinklered. Sales #1, #3 and #4 are considered similar enough the subject with respect to wet sprinklered as to not warrant an adjustment for this item of comparison.

By comparison, Sale #2 is not wet sprinklered, thus warrants a

downward adjustment in the comparison analysis. Ceiling Height

The subject has 15'- 21' ceiling heights. By comparison, the sale properties with ceiling heights for the most part between 15' - 20', with the exception of Sale #3 which has a small portion with ceiling heights around 40'. With respect to a marketability standpoint are Sales are considered similar enough to the subject as to not warrant an adjustment for this item of comparison. Conclusion

In terms of overall comparability, Sales #3 and #4 are judged to be superior to the subject,

Sale #1 is considered inferior, and Sale #2 is considered similar to the subject. As such, in the final analysis, most weight is placed on Sale #2 located in the subjects industrial park, in concluding a

market value of$52.00 per square foot ofrentable building area for the subject property in its "as is" condition. Since the building contains 113,023 square feet of rentable area, the indicated market

value for the property is estimated at $5,877,196, call $5,875,000, by the Sales Comparison Approach.

R. A. Buckles & Associates, Inc.

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Indeeco Headquarters Property - 241-281 & 423-430 Hanley Industrial Ct, Brentwood, MO

Reconciliation The values indicated by the three approaches used in valuing the subject property are summarized below:

COST APPROACH

$ 5,860,000

INCOME APPROACH

$ 6,000,000

SALES COMPARISON APPROACH

$ 5,875,000

The three approaches reflect a value range ofless than 3.0% between the high and low value conclusions. As such, any one ofthe approaches could be said to represent the value ofthe property,

although the Cost Approach is subject to more limitation and is given least weight in the valuation analysis due to the difficulty in accurately estimating both the physical depreciation and functional obsolescence affecting the subject As such, this approach is used mainly as a check on the other approaches.

The Income Approach is based on both contract rents and market-derived, ascribed rental rates for the building and reflects the value an investor might be willing to spend for the property.

The Sales Comparison Approach, which reflects the actions of typical buyers and sellers in the

market, is afforded substantial weight in the valuation analysis, since it is based on recent sales of properties having similar utility and overall market appeal to the subject.

In the final analysis, after considering all available data, approximately equal weight is placed on the Income and Sales Comparison Approaches in concluding a current market value for the subject property in the amount of:

R. A. Buckles & Associates, Inc.

Indeeco Headquarters Property- 241-281 & 423-430 Hanlev Industrial Ct. Brentwood, MO

Five Million Nine Hundred Fifty Thousand Dollars $5,950,000

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Indeeco Headquarters Property- 241-281 & 423-430 Hanley Industrial Ct. Brentwood, MO Estimated Marketing Period

Well located, light industrial properties like the subject typically do not require extended marketing periods. The process of evaluating the property, selecting a marketing company,

negotiating a listing agreement, preparing marketingmaterials, negotiating a sale agreement, waiving contingencies, and allowing time for inspections and to arrange financing should not be protracted for this type ofproperty. As such, marketing ofthe subject should not require an inordinate amount of time and effort.

In order to estimate an appropriate marketing time for the subject property, marketing periods

have been analyzed for other commercial properties in the area that have recently sold. The subject

property was described to several local real estate brokers in order to get an idea of the level of demand itmight attract. Thebrokers indicated properties like the subject should require a marketing period of twelve months or less. Accordingly, it is our opinion that a reasonable period of time to

effectively market and sell the subject property under currently prevailing market conditions would be between six and twelve months.

Estimated Exposure Time

Exposure time is a concept that is closely related to estimated marketing time. In the

appraisal process, exposure time is assumed to have already occurred as of the date of appraisal, whereas marketing time is the amount oftime it might take to sell aproperty at the concluded market value immediately after the effective date of appraisal. When market conditions and trends have been, and are expected to remain, relatively constant, estimated marketing time and exposure time are often similar.

Reasonable exposure time can vary for different types ofproperty, in different market areas,

and its estimation requires a review of available information gathered during the appraisal R. A. Buckles & Associates, Inc.

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Indeeco Headquarters Property- 241-281 & 423-430 Hanlev Industrial Ct, Brentwood, MO assignment In this instance, the estimate of reasonable exposure time is based on the preceding

discussion concerning the marketing period. As such, a reasonable exposure time for the subject property is also assumed to be six to twelve months.

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APPENDIX

QUALIFICATIONS NAME:

Richard A. Buckles, MAI

BUSINESS:

R. A. Buckles & Associates, Inc.

TITLE:

President

EDUCATION:

Bachelor of Science - Business Administration University of Missouri - St Louis, May, 1968

PROFESSIONAL

Appraisal Institute

AFFILIATIONS:

2900 S. Brentwood Boulevard St. Louis, Missouri 63144

MAI Designation-Member No. 6878

,

The Appraisal Institute conducts a program of continuing education for its

designatedmembers. MATs and SRA's who meet the minimum standards of this program are awarded periodic certification. I have completed the requirements under the continuing education program of the Appraisal Institute.

CERTIFICATION:

State Certified General Real Estate Appraiser-Missouri

EXPERIENCE:

01/71 - 03/74 -

License No. RA001603

Real Estate Specialist & Review Appraiser, St. Louis Redevelopment Authority

04/74- 09/83-

Associate Appraiser, McReynolds Appraisal Company

11/84- 03/86-

Executive Vice President,

03/86-Present -

R. A. Buckles & Associates, Inc.

Appraisal Division, F. L. Sweeney Corp.

Appraisal ofall types ofreal estate, mostly in St. Louis and St. Louis County, but also in numerous cities throughout the country. Experience has been in urban, suburban, rural, commercial, industrial, multi and single family residential, institutional and recreational properties. Also thoroughly familiar

with condemnation appraisals, re-use appraisals and feasibility studies. Qualified as expert witness on real estate values: Circuit Courts

St Louis, Missouri

St Louis County, Missouri Franklin County, Missouri Federal Courts

St Louis, Missouri

FamiUar with giving expert testimony and willing to testify in court regarding all appraised values.

QUALIFICATIONS

NAME:

Jeffrey L. Hansen

BUSINESS:

R. A. Buckles & Associates, Inc.

2900 S. Brentwood Boulevard St. Louis, Missouri 63144

EDUCATION:

Washington State University Pulman, Washington

Appraisal Institute Appraisal Courses Completed: Principles of Residential Real Estate Appraising

Uniform Standards ofProfessional Appraisal Practice

Market Data Analysis for Residential Properties Financial Analysis of Income Properties CERTIFICATION:

Passed State Licensed Appraisers examination in October 2004. Working towards MO State General Real Estate Appraiser Certification

PROFESSIONAL

AFFILIATIONS:

National Association ofIndependent Fee Appraisers (NAIFA)

EXPERIENCE:

05/03-Present R. A. Buckles & Associates, Inc.

Class A Member of PGA of America

Associate Appraiser

7/98-5/03 Forest Hills Country Club Assistant Golf Professional 6/94-6/98 Sunset Lakes Golf Center General Manager

6/89-6/98 Sunset Lakes Golf Club Assistant Golf Professional 5/90-6/91 Deer Creek Golf Club Head GolfProfessional

5/88-6/89 Lake Forest Golf and Country Club Assistant Golf Professional

3/86-12/87 Cherry Hills Golf land Country Club Assistant Golf Professional