Ritchie Bros. Auctioneers (Canada) Ltd. 1500 Sparrow Drive Nisku, AB Canada T9E 8H6 Tel: 780-955-2486 - Fax: 780-955-2662 Internet: www.rbauction.com

2019 Property Appraisal By Flynn Mirtle Moran Real Estate Appraisers & Consultants

207 – 310 Nicola Street, Kamloops, BC V2C 2P5 P. 250.374.7731 F.250.374.8440

info@fmmkamloops.ca www.fmmkamloops.ca

J.W. MORAN, AACI, P.App C.J. WALE, AACI, P.App

B.D. MIRTLE, AACI, P.App, BGS J.D. VLIEGENTHART, BBA

R.K. MORRISON, BBA K.R. TAYLOR, CRA, P.App, B.Comm

W.M. WURZER, CRA, P.App

REAL ESTATE APPRAISERS & CONSULTANTS

FILE NO.: 10302-WL.JWM November 4, 2019 Pioneer Family Land Partnership 351 Hodgson Road, Williams Lake, BC V2G 3P7 Attention: Mr. André Chevigny Dear Mr. Chevigny: RE: Mixed Use Office/Industrial Building, 351 Hodgson Road, Williams Lake, BC Further to your instructions, we have conducted an appraisal for the purpose of providing an estimate of the current market value of the above-captioned property, referred to as the subject property in the body of this report. As a result of our inspection and subsequent investigations and analysis, we estimate that the current market value of the subject property, based upon its Highest and Best Use and contingent upon the Assumptions and Limiting Conditions as set out under Tab “1” in the appendix of this report, as well as the Extraordinary Assumptions contained in the body of this report, as of the effective date of October 25, 2019, is:

$3,150,000 (Excluding Equipment)

The data and conclusions supporting this value are set out in the following pages of this Full Narrative Appraisal Report. Yours truly, FLYNN MIRTLE MORAN

James W. Moran AACI, P.App JWM/nt Attachments

APPRAISAL OF

MULTI-USE OFFICE/INDUSTRIAL BUILDING

351 HODGSON ROAD WILLIAMS LAKE, BC

PREPARED FOR

PIONEER FAMILY LAND PARTNERSHIP

PREPARED BY

TABLE OF CONTENTS

PAGE INTRODUCTION LETTER OF TRANSMITTAL .................................................................................... I SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS ............................... II BASIS OF THE REPORT PURPOSE AND USE OF THE REPORT .................................................................... 1 RIGHTS APPRAISED AND EFFECTIVE DATE ...................................................... 1 DEFINITION OF MARKET VALUE ......................................................................... 2 SCOPE OF THE REPORT ........................................................................................... 3 ASSUMPTIONS AND LIMITING CONDITIONS .................................................... 4 FACTUAL INFORMATION IDENTIFICATION OF THE SUBJECT PROPERTY ................................................ 5 CITY AND NEIGHBOURHOOD CHARACTERISTICS .......................................... 5 SITE CHARACTERISTICS ......................................................................................... 6 DESCRIPTION OF IMPROVEMENTS ...................................................................... 9 OTHER FACTUAL INFORMATION ......................................................................... 16 ANALYSIS AND CONCLUSION HIGHEST AND BEST USE ........................................................................................ 19 METHOD OF APPRAISAL ......................................................................................... 23 INCOME APPROACH ................................................................................................ 24 DIRECT COMPARISON APPROACH ....................................................................... 33 CORRELATION AND FINAL ESTIMATE OF VALUE .......................................... 39 CERTIFICATION APPENDIX TAB ASSUMPTIONS AND LIMITING CONDITIONS .................................................... 1 TITLE SEARCH PRINT .............................................................................................. 2 REGIONAL AND CITY CHARACTERISTICS ......................................................... 3 SURVEY PLAN ........................................................................................................... 4 BUILDING SKETCH ................................................................................................... 5 ZONING REGULATIONS .......................................................................................... 6

J.W. MORAN, AACI, P.App C.J. WALE, AACI, P.App

B.D. MIRTLE, AACI, P.App, BGS J.D. VLIEGENTHART, BBA

R.K. MORRISON, BBA K.R. TAYLOR, CRA, P.App, B.Comm

W.M. WURZER, CRA, P.App

FILE NO.: 10302-WL.JWM November 22, 2019 Pioneer Family Land Partnership 351 Hodgson Road, Williams Lake, BC V2G 3P7 Attention: Mr. André Chevigny Dear Mr. Chevigny: RE: Multi-Use Office/Industrial Building, 351 Hodgson Road, Williams Lake, BC Further to your instructions, we have conducted an appraisal for the purpose of providing an estimate of the current market value of the above-captioned property, referred to as the subject property in the body of this report. As a result of our inspection and subsequent investigations and analysis, we estimate that the current market value of the subject property, based upon our Terms of Reference, its Highest and Best Use and contingent upon the Assumptions and Limiting Conditions as set out under Tab “1” in the appendix of this report, as well as the Extraordinary Assumptions contained in the body of this report, as of the effective date of October 25, 2019, is:

$3,150,000 (Excluding Equipment)

The data and conclusions supporting this value are set out in the following pages of this Full Narrative Appraisal Report. Yours truly, FLYNN MIRTLE MORAN James W. Moran AACI, P.App JWM/ds

Attachments

ASSUMPTIONS AND LIMITING CONDITIONS Rule 6.2.9 of the Appraisal Standard Rules of the Canadian Uniform Standards of Professional

Appraisal Practice of the Appraisal Institute of Canada requires that any written appraisal report containing a supported value estimate shall include assumptions and limiting conditions. In some instances there may be extraordinary assumptions or limiting conditions. These are discussed within the “Basis of the Report” section of this report. In compliance therewith, and to assist the reader in interpreting the report, all ordinary assumptions and limiting conditions are set forth as follows: Assumptions 1. That the information contained in the appraisal report was gathered from sources believed

to be reliable, however, we cannot guarantee its validity and accuracy. 2. That the building is structurally sound, built according to National, Provincial and Local

codes and regulations, and has received an occupancy permit. 3. That the appraisal is prepared on the premise that conventional financing is available on

normal terms for the type of property that is the subject of this appraisal. 4. That nothing in this report is intended as a legal opinion as to the state of the title. This

report is prepared on the premise that the title is marketable and that the property is free and clear of all liens and encumbrances, easements, encroachments and restrictions except those specifically discussed in this report.

5. That the existing improvements have received the necessary approvals from the pertinent

authorities. 6. That the property is not affected by First Nation claims except where expressly stated. 7. That the soil conditions are sound and suitable for development consistent with similar

properties of this type. 8. That unless otherwise stated in this report, we are not aware of any environmental or

occupational hazardous materials or waste activities on the site, nor are we aware of any environmental assessment having been conducted and assume that the subject property and indicators of value are free and clear of potentially hazardous materials and any soil contamination. No methane gas tests or radon gas tests have been conducted. The appraiser is not qualified to detect such conditions and we are not responsible for any such conditions, or for any expertise or engineering knowledge required to discover such conditions.

9. That where structural plans, architectural drawings, etc. are provided by the client or his

agent, such plans, drawings, etc. are assumed to be accurate as to dimensions and specifications, unless information is received to the contrary.

10. That I have not inspected woodwork or other parts of the structure that are covered,

unexposed or inaccessible, and I am, therefore, unable to report that such parts of the property are free of rot, beetle or other defects.

11. That the roof and covering are in satisfactory condition. 12. That the electrical wiring, alarm systems and plumbing installations are in satisfactory

condition. 13. That when preparing an appraisal for lending purposes, appraisers do not investigate if the

prospective loan and applicant satisfy prudent loan underwriting criteria. Correspondingly, we assume no responsibility for loans made where the borrower lacks the ability or motivation to repay the loan, or where the lender has not followed prudent lending practices. When we authorize a lender to rely on this report, we grant such authorization subject to the lender completing a thorough due diligence investigation that reasonably concludes that the borrower has the intention and capacity to repay the loan.

Limiting Conditions 14. This appraisal report was commissioned by Mr. André Chevigny of Pioneer Family Land

Partnership, to assist with internal purposes and/or first mortgage financing relating to the subject property. The only party who may rely on the opinions expressed in this report is the client, even where the report is for financing purposes. Where the client is a lender, its borrower and the loan insurer may also rely on this report. This report assumes that only the addressee will rely upon it, and only for the intended use stated herein. No one else may rely on this report without the written consent of the appraiser, which we may not provide retroactively. We expressly deny any legal liability for unauthorized reliance and for any other use.

15. That the client is the person/organization with whom the appraiser has a contract for the performance of the appraisal work and is identified as such in this report. It does not matter who ultimately pays for the appraisal or who bought the property, financed it, etc. Only that person/organization identified as the client is entitled to receive a copy of the report or know its contents. No one else may see the report or know its contents without the client’s expressed authority.

16. That the term “Market Value”, as herein used, is defined by the Canadian Uniform

Standards of Professional Appraisal Practice as “The most probable price which a property should bring in a competitive and open market as of the specified date 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”; or the ‘probable price at which property would sell for at the date of appraisal allowing a reasonable time to find a purchaser.’

17. That the date of value to which the conclusions and opinions expressed in this report apply

is set forth in the report. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the Canadian dollar existing on that date.

18. The appraiser assumes no responsibility for economic or physical factors, which may offset

the opinions herein, stated occurring at some date after the date of the letter transmitting this report.

19. The appraiser reserves the right to make such adjustments to the valuation herein reported,

as may be required by consideration of additional data or more reliable data that may become available.

20. That no opinion is intended to be expressed for matters which require legal expertise or

specialized investigation or knowledge beyond that customarily employed by real estate appraisers.

21. That testimony or appearance shall not be required in court by reason of this report without

the full payment of normal fees and expenses or satisfactory arrangements made thereto by the party commissioning the appraisal.

22. That sketches, drawings, diagrams and photographs presented in this report are included for

the purpose of illustration. We have not made a survey of the subject site, and therefore, we cannot assume responsibility for such matters.

23. That segregation of the value estimate into land, improvements, chattels and goodwill, if

presented herein, is pertinent to the purpose of the appraisal. Components of the value estimate may not be valid if taken out of context.

24. That no opinion is expressed as to the value of subsurface oil, gas or mineral rights or

whether the property is subject to surface entry for the exploration or removal of such materials except as is expressly stated.

25. That any improvement cost estimates that have been used in this report have been developed

for the purpose of estimating market value and should not be relied upon for insurance purposes.

26. That the appraiser assumes no responsibility for the condition of fire alarms, smoke and/or

fire detectors, or any other such systems present in the subject building. Nor does the appraiser warrant compliance of such equipment.

27. That neither the whole nor any part of the report nor any reference to it may be included in

any published document circular or statement nor published in any way without Flynn Mirtle Moran’s written approval of the form and context in which it may appear.

28. That this appraisal report may only be relied upon if it is the signed and sealed original.

The appraiser assumes no responsibility for any unauthorized alteration to this report.

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SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Executive Summary of Assignment Based on our Terms of Reference the current market value estimate concluded in this appraisal has been provided to assist our client with internal purposes and/or first mortgage financing relating to the subject property. To complete this assignment, we have inspected the subject property and considered appropriate data, including physical, legal and market information. Factual Information Effective Date: October 25, 2019 Date of Inspection: October 25, 2019 Property Appraised: Mixed use office/industrial building Civic Address: 351 Hodgson Road, Williams Lake, BC Zoning: M-1, Light Industrial Size of Land: ±12.42 acres (±5.027 hectares) Size of Building: Main Floor - ±37,844 square feet Second Floor - ±3,321 square feet Total Area - ±41,165 square feet Conclusions Highest and Best Use: As existing, a multi-use office/industrial building and we

assume that the building is structurally sound. Estimated Rental Rate: $8.00 per square foot, overall blended rate Estimated Capitalization Rate: 9.50% Rate Per Square Foot: $80.00 per square foot (based on total floor area) Final Estimate of Value: $3,150,000 (Excluding Equipment) The supporting data, limiting conditions and scope of the assignment are contained in the body of the following report.

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PURPOSE AND USE OF THE REPORT Purpose of the Report The purpose of this report is to provide an estimate of the current market value of the subject property, as of the effective date of value, based upon our Terms of Reference, the Highest and Best Use and is contingent upon the Assumptions and Limiting Conditions found in the appendix of this report, as well as any Extraordinary Assumptions contained herein. Client Mr. André Chevigny of Pioneer Family Land Partnership retained the appraiser and Flynn Mirtle Moran to complete an appraisal of the subject property and, therefore, is our client. Mr. André Chevigny and Pioneer Family Land Partnership are the intended users. Intended Use of the Report We understand from our client that the intended use of this report is to assist with internal purposes and/or first mortgage financing relating to the subject property. This report has been prepared solely for the intended use and the intended users. RIGHTS APPRAISED AND EFFECTIVE DATE Property Rights and Interests Appraised The property rights and interests appraised are the “leased fee simple” interest/estate, which implies ownership of the fee simple, but encumbered by a lease, which is defined as:

“An absolute fee; subject to the limitations of eminent domain, escheat, police power and taxation with the rights of use and occupancy conveyed to another under the specific terms of a lease agreement.”

Bundle of Rights The Appraisal of Real Estate-Third Canadian Edition, Copyright 2010 by the Appraisal Institute of Canada and the Appraisal Institute, is the recognized textbook of the Appraisal Institute of Canada. It defines the bundle of rights as follows:

“The most complete form of ownership is the fee simple interest – i.e., absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the four powers of government: taxation, expropriation, police power, and escheat. The complete bundle of rights includes the following:

• The right to sell an interest

• The right to lease an interest

• The right to occupy the property

• The right to mortgage an interest

• The right to give an interest away.”

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Effective Date of Value The effective date of value is October 25, 2019, which is also the date of inspection of the subject property. The appraisal is intended to reflect current market information. Value Opinion A value opinion estimated in an appraisal report could be a current value with an effective date concurrent with the date of the report, a retrospective value with an effective date that precedes the date of the report, a prospective value with an effective date that follows the date of the report or an updated value that refers to an extension of a previous appraisal with a change to the effective date. This appraisal will estimate a current value opinion. DEFINITION OF MARKET VALUE For the purpose of this appraisal we have relied on the Canadian Uniform Standards of

Professional Appraisal Practice, published by the Appraisal Institute of Canada and effective January 1, 2018, which defines market value as:

“The most probable price which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.”

Implicit in this definition are the consummation of a sale as of the specified date and the passing of title from seller to buyer under conditions whereby:

• buyer and seller are typically motivated;

• both parties are well informed or well advised, and acting in what they consider their best interests;

• a reasonable time is allowed for exposure in the open market;

• payment is made in terms of cash in Canadian dollars or in terms of financial arrangements comparable thereto;

• 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.

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SCOPE OF THE REPORT Inspection We inspected the subject property on October 25, 2019, accompanied by Mr. André Chevigny. Photographs were taken by the appraiser on the date of inspection of the subject property and they can be found under the Site Characteristics and Description of Improvements sections within the body of this report. Data Research We received our instructions from Mr. André Chevigny of Pioneer Family Land Partnership. Publications produced by the City of Williams Lake provided data on applicable land use controls. Sources of market evidence, trends and general information include the following:

- Our client and representatives; - City authorities and City regulations; - British Columbia Assessment; - Prince George Land Title Office; - Scouten Engineering; - Evergreen Geotechnical Inc.; - Economic Development Agencies; - Provincial and Federal Government statistics; and - Flynn Mirtle Moran’s database; and - Real Estate Boards and market representatives.

Land title information for the subject property was obtained from Land Title and Survey Authority of BC web services. Audits and Technical Investigations We did not complete technical investigations such as:

- detailed inspections or engineering review of the structure, roof or mechanical systems; - an environmental review of the property; - a site or building survey; - investigations into the bearing qualities of the soils; or - audits or financial and legal arrangements concerning the leases, if applicable.

Verification of Third Party Information The analysis set out in this report relied on written and verbal information obtained from a number of sources we considered reliable. Unless otherwise stated herein, we did not verify client-supplied information, which we assumed to be correct.

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ASSUMPTIONS AND LIMITING CONDITIONS This report is subject to a number of ordinary Assumptions and Limiting Conditions. A summary of these can be found under Tab “1” in the appendix. It should be noted that this report should be read in its entirety, as there may also be a number of further references to restrictions and limitations contained in the main body of this report. Extraordinary Assumptions The purpose of this report is to estimate the current market value of the subject property. We were informed that there have been structural and stability issues with the subject property and building in the past and that the subject building receives a regime of annual monitoring by engineering and geotechnical firms to monitor the issues. Further, we have been informed that the current M-1, Light Industrial zoning does not permit some of the uses that are in place within the subject building. We understand that the current ownership is in discussions with the City of Williams Lake and that there is an informal agreement to make the necessary changes to the zoning to attain conformity. In this context, this report is subject to the following Extraordinary Assumptions:

• That the subject lands and building are stable and habitable in perpetuity.

• We assume that the subject property conforms with the local zoning bylaws. That historically the current uses within the building have been in place and it is assumed that these uses will continue in the future. .

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IDENTIFICATION OF THE SUBJECT PROPERTY The following described property is referred to as the subject property in the body of this report: Certificate of Title: CA4415906 Parcel Identifier: 005-722-756 Registered Owners in Fee Simple: Great Bear Land Co. Ltd. (Inc. No. BC0758548) (as to an Undivided 1/3 interest) Avril Cherie Holdings Ltd. (Inc. No. BC0758523) (as to an Undivided 1/3 interest) Chichelean Land Co. Ltd. (Inc. No. BC0758565) (as to an Undivided 1/3 interest) Description of Land: Lot 1, District Lots 71 and 7047, Cariboo District, Plan

29225 Civic Address: 351 Hodgson Road, Williams Lake, BC Charges, Liens and Interests: A copy of the Title Search Print illustrating the charges

registered against the title, if any, is under Tab “2” in the appendix of this report.

We did not obtain an opinion on the state of the title or any of the encumbrances, and are not qualified in these legal matters and have not read the documents registered against the title. We note there are legal notations and charges registered on title. The registered easement (No. CA1211679) is to allow access through the subject property to the adjacent Advantage Storage property. This report assume that the legal notation and charges do not interfere with the current use of the subject property.

CITY AND NEIGHBOURHOOD CHARACTERISTICS City Characteristics A comprehensive description of the City of Williams Lake history and demographics is included under Tab “3” in the appendix of this report.

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Neighbourhood Characteristics The neighbourhood of the subject property includes those properties lying along the east side of Chilcotin-Bella Coola Highway No. 20 between Mackenzie Avenue South and Dog Creek Road. It comprises a mix of commercial and light industrial uses with residential use to the east of the commercial and industrial use properties. The subject neighbourhood is considered to be located on the periphery of the downtown core, approximately 1 to 2 kilometres southeast of Oliver Street, which is the main street through the downtown business centre. The growth at the intersection of Chilcotin-Bella Coola Highway and South Lakeshore Drive in the past about 20 years has been towards increased commercial uses with the construction of the Canadian Tire and Real Canadian Wholesale Club and more recently Walmart. A neighbourhood location map is shown below.

SITE CHARACTERISTICS Location The subject property is located on the south side of Hodgson Road. Hodgson Road runs parallel to Chilcotin-Bella Coola Highway No. 20. There are no improvements directly across the street from the subject property, between Hodgson Road and Highway No. 20. The subject property is ±1 to 2 kilometres from the downtown core of Williams Lake. Surrounding the subject are light industrial and retail commercial uses that are compatible with the subject property. The civic address of the subject is 351 Hodgson Road, Williams Lake, BC.

Subject Property

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Size The subject property comprises one title that is slightly irregular in shape and has a total area of 5.027 hectares or ±12.42 acres, which is considered advantageous for the current use with a portion of the additional area for pay parking, an income generator. A copy of the registered Survey Plan 29225, deposited in the Prince George Land Title Office on May 19th, 1983 is included under Tab “4” in the appendix of this report. We note there is a right-a-way that runs along the eastern and southern boundaries of the site and there is an easement to permit access to Advantage Storage which is located adjacent to the subject property. Topography The subject property has a topography that ranges from level/gently sloped to moderate and steeper upwards pitch as the site goes from the north boundary up to the south boundary. The site has been generally graded level where the building and parking area to the east of the building sits and also generally graded level where the parking area(s) are situated adjacent to Hodgson Road. Hodgson Road has a downward slope from Hutchinson Road to South Lakeshore Drive. The subject building did suffer from ground water drainage issues that caused the building to shift and caused several cracks within the structure via the “Hodgson Road Landslide”. The ground water drainage issues and the Hodgson Road Landslide area continues in a very slow yet progressive manner. There is a covenant registered on the subject property’s title stating that there must be structural assessment and geotechnical inspections conducted on an annual basis. Both Scouten Engineering and Evergreen Geotechnical Inc. have submitted their 2019 reports. A 2019 Phase 1 Environmental report has been conducted as well. We were supplied with copies of these reports and they are held on file in our office. One of the owners stated that there has been minimal movement over the past several years but crack monitoring has been and is on-going. The building has been supported with large steel girders and other stabilizing devices to increase stability to the building and reduce or eliminate the risk associated with the ground movement. For the purpose of this report and for valuation purposes, we have assumed that the building is stable and structurally sound. It would be advisable for any prospective purchaser, investor or advisor to contact Pioneer Family Land Partnership for copies of these reports as they are an integral part of the subject property until a full clearance for stability is granted. Also, we acknowledge that there is an on-going cost to maintaining these reports on an annual basis not to mention more costs adhering with the report’s recommendations. These costs have not been calculated and are unknown but this risk will be reflected in the rental rate applied to the building and the overall capitalization rate applied to the net operating income.

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Access Vehicular access to the subject property is directly off Hodgson Road. There is access from Highway No. 20 to Hodgson Road via the intersection of Highway No. 20 and Terra Ridge onto Hodgson Road. This highway entry provides a right turning lane onto Terra Ridge for traffic travelling east on the highway. There is also a left turning lane on the highway providing access to Terra Ridge for traffic travelling west. Access to Hodgson Road is also from the intersection of South Lakeshore Drive and Hodgson Road situated to the northeast of the subject property. There is ample parking at the front of the building and access to the shop at the rear is considered good. The rear of the site is not paved, but the front is partially paved. There is an easement across the parking lot, granting access to Advantage Storage facility. This easement does not appear to interfere with the integrity of the parking lot.

Street Scene Street Scene

Parking Lot View Parking Lot View

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Services Services include community sewer and water, overhead power and telecommunications. The neighbourhood is serviced to city standards including police and fire protection, animal and pollution control, building and zoning regulations, and garbage collection. There are storm drains, fire hydrants and street lighting. Hodgson Road is paved and subject to a 50 km/hr speed limit. DESCRIPTION OF IMPROVEMENTS General Description and Use The subject property is improved with a commercial building that was constructed in two phases. The first phase was the original (± late 1970’s) one-storey plus a smaller upper floor area concrete tilt-up structure originally used for light industrial use. The original structure has been modified to comprise mainly office space other than the rear shop type areas. The second phase is a wood frame addition constructed in ±1993 and used for office space. Both areas are currently used for mixed use office/commercial space and there is a heavy duty/welding machinery shop at the rear of the building plus storage areas at the rear of the building. There is a small upper floor that is used by one tenant and is divided into office areas. There is a one-bedroom residential suite in the older, original section of the building that was not inspected and currently used by a family member. The suite could be used for a caretaker’s suite if required. The residential suite has direct exterior access with a covered parking area directly outside the door.

Front View Front View

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Front View Front View

Building Size The subject building has a measured gross area of ±37,844 square feet on the main floor, plus the upper floor area of ±3,321 square feet for a total of ±41,165 square feet. There is a small meeting area in the mezzanine within the octangular portion of the building that has not been included in the overall area. A sketch of the building is included under Tab “5” in the appendix. Structure The overall subject is a one-storey building with an upper floor, concrete and wood frame building, set on concrete perimeter walls and footings with a concrete slab. The exterior finish on the wood frame portion is stucco. The roof is finished with torch-on membrane (2015/16) set on a roof structure of 5/8” plywood over wood trusses on steel and concrete beams and columns. It is assumed there is fibreglass batt insulation in the walls and ceiling. The height of the building varies throughout the structure but it is overall approximately ±20 feet which makes for a high open type of appearance but much of the building is finished to office use with T-bar ceilings. The shop area is open and unfinished to the concrete joists. This is one of the areas within the building where the supporting/stabilizing work has been completed. Further, there is a retaining wall at the front of the building to assist in the structural integrity of the subject building. All of this structural work has been conducted and administered by an engineering firm to ensure a superior standard of remediation and stabilization.

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Structural Supports Front Retaining and Support Wall

There are twin sealed windows in wood and metal frames and a mix of exterior public entrance doors comprising wood doors with window inserts, steel doors with window inserts and solid steel doors. There is a heavy duty shop area at the rear of the building that has two ±16 foot overhead doors and open ceiling to the concrete joists. There are six skylights in the office area at the front of the building. The upper floor that houses one tenant has typical office type finish with large common washroom facilities. The upper floor mezzanine area above the main office area (octagon) is used for a meeting area only and is well finished.

Reception Area Reception Area

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Front Entry View Staff Kitchen View

Shop View Shop View

Side View Side View

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Rear View Roof View

Interior Finish The office bearing walls are mainly wood and concrete framed, with painted drywall, wood panel and other finishes. The office ceilings have a mix of acoustic panels set in a t-bar suspended grid and drywall with spraytex finish. The floor cover includes a mix of, but not limited to, carpet, ceramic tile, vinyl plank, laminate or hard wood and vinyl cover. The units occupied by Pioneer have decorative log posts. The conference areas have typical office type finish with many windows providing natural lighting and panoramic views. The building has a security system and fire and smoke alarms. Lighting includes high efficient fluorescent, incandescent and some pot lighting. Shop lighting includes metal halide and fluorescent. The shop area is open and is partially lined.

Meeting Room Typical Office View

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Typical Office View Typical Unit View

Heating and Cooling The building has a mixed heating system that varies from package A/C and hot water to electric baseboards with wall or swamp type cooling in the smaller areas. The shop is heated by suspended gas heaters and have ceiling fans. The complete heating and cooling system was upgraded in 2013 and appears to be in good condition.

Mechanical Room Mechanical Room

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Washroom View Washroom View

Plumbing There are large men’s and ladies washrooms located on the main and upper floors plus 2-piece and 3-piece washrooms, some handicap accessible, throughout the building. There are several staff rooms with full kitchens that are well finished throughout the building. We assume that the residential suite contains full bathroom and kitchen facilities. There are hot water tanks throughout the building to service the various areas. The entire building has a sprinkler system installed and one of the owners stated that ±40% is operational. Electrical The building is serviced with a 1200 ampere, 3-phase service which is adequate for the existing uses. There are many sub panels throughout the building with one 800 amp, three phase panel for the welding shop that is not currently in use as a welding shop. Age and Condition

The concrete tilt-up portion of the building was constructed circa late ±1970’s with the wood frame addition completed in ±1993. The overall effective age is estimated at ±20 years and the remaining economic life is estimated at 35 to 40 years assuming that there is an annual regime of maintenance and repairs. The overall improvement is in average condition.

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Yard Improvements The site has two parking areas. The parking area located between the front of the building and Hodgson Road has two sections; one has gravel surface and one has paved surface. The paved surface parking area is for the tenants of the building and the parking stalls in this section have concrete curbing. The other parking area is located to the east of the building which has a crushed gravel surface. The parking area immediately to the east of the building, along the south boundary, is utilized by the tenants (shop area) and the remaining gravel parking area is rented to Gibraltar Mine. Immediately adjacent to the overhead shop doors is a large concrete pad. Near the southwest corner of the building is a retaining wall constructed with large concrete retaining wall blocks. There is minimal landscaping at the front of the property that includes mature shrubs and lawn area. OTHER FACTUAL INFORMATION Land Use Controls Zoning

According to the City of Williams Lake Zoning Bylaw No. 1825, 2002, and confirmed by a representative from the City of Williams Lake Development Services Department, the subject property is zoned M-1, Light Industrial. “This zone is intended to accommodate a range of light industrial development.” Permitted uses include: light industrial; warehousing; public service; accessory residential; accessory uses; accessory retail sales; and permanent metal shipping container. The permitted accessory residential shall be subject to the requirements of Section 209 of the bylaw. Section 209 states an accessory residential use shall be provided with a separate entrance from ground level. The subject property’s ground level residential suite has a separate entrance, therefore, conforms to the requirements of Section 209. The subject property is currently utilized as an office/industrial building and, therefore, does not conform to the M-1 zoning. In recent conversations with the owners and the Development Services Department for the City of Williams Lake regarding the current zoning of the subject property, it is our understanding that the City of Williams Lake would like to either rezone the property to suit the building or invoke a “site specific” to the M-1 zone to include the uses of the subject property. The owners advised us that they are in total agreement with this process and we assume that it will be completed successfully to suit both parties needs and requirements. As the current uses have been in place for many years, we assume that the City of Williams Lake is essentially in favor of the current mixed use on the subject property. A copy of the zoning map is shown on the next page and a copy of the M-1 zoning regulations is included under Tab “6” in the appendix of this report.

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Official Community Plan

According to the City of Williams Lake Official Community Plan, Bylaw No. 2140, 2011, adopted June 2011, the subject property is designated as Commercial. According to the Official Community Plan Development Permit Area map, the subject property does not fall within a development permit area. Further discussions on land use controls can be found in the Highest and Best Use section of this report. Assessment and Taxes The subject property is assessed by BC Assessment and taxed by the City of Williams Lake as follows:

2 0 1 9 A S S E S S M E N T S

FOLIO NO. LAND IMPROVEMENTS TAXES – 2019

492-03020.600 $212,000 $238,000 $10,469.58

Subject Property

18

The actual assessments do not have a relationship to the market value established in this report because the assessed values are not based on current market evidence. Property History We understand that the property was developed in two stages, commencing approximately 40 years ago. In the late ±1970’s the original tilt-up concrete block building was constructed and utilized as a water-bed manufacturing plant. The building was subsequently sold and used as the local community college with the addition of the wood frame portion including the octagonal area. During the use as a community college the ground water and soil issues occurred and the building was condemned and the college vacated the building. The building remained vacant until the purchase of the property by the current owners in 2005 for $280,000. They have remediated the stability problems and are complying to the stipulated requirements illustrated in the registered covenant. Since the purchase the owners have completed some upgrades to the building, including upgrades to the office areas and a one-bedroom residential suite and now have several tenants in place.

The owners stated that this property is to go to an unreserved auction on December 13, 2019 in Edmonton. The auction will be conducted by Ritchie Brothers.

Leases There are currently multiple office/commercial/industrial units within the subject development. Several of the units are utilized by ownership with rental rates in place, but these rates are considered non-arms length agreements as they are related parties. The remaining rental rates vary from gross rates to triple-net rates. Our client provided the rent roll and it is summarized below.

Tenant Rental Income Monthly Gross

Rental Income Annual Gross

All Nations Group $2,050.00 $ 24,600.00

Arrowstone Mgmt $2,521.67 $ 30,260.04

Cariboo First Aid $ 788.00 $ 9,456.00

Engage $ 640.00 $ 7,680.00

Collinda $ 82.50 $ 990.00

Hatch $ 515.00 $ 6,180.00

Holtom $ 577.00 $ 6,924.00

Irish Creek Resource $ 82.50 $ 990.00

Pioneer Log Homes $1,339.00 $ 16,068.00

Pioneer Trucking $1,434.25 $ 17,211.00

Pioneer Family Land $ 900.00 $ 10,800.00

Pioneer Family Timber $ 590.00 $ 7,080.00

Pink Couture $ 695.00 $ 8,340.00

True Foods $ 950.00 $ 11,400.00

Gibraltar $4,650.00 $ 55,800.00

Conference Rent $ 55,097.00

TOTAL $268,876.04

19

HIGHEST AND BEST USE

The Canadian Uniform Standards of Professional Appraisal Practice, effective January 1, 2018 and published by the Appraisal Institute of Canada define Highest and Best Use as:

“The reasonably probable use of real property, that is physically possible, legally permissible, financially feasible, and maximally productive, and that results in the highest value.”

The Highest and Best Use of a property is an economic concept that measures the interaction of four criteria: legal permissibility; physical possibility; financial feasibility; and maximum profitability.

Highest and Best Use As Improved To determine the Highest and Best Use of the subject property, as improved, we would give consideration to the above-noted four criteria as follows:

1) Legal Permissibility

According to the City of Williams Lake Official Community Plan (OCP) Bylaw No. 2140, 2011, adopted June 2011, the subject property is designated as Commercial.

The OCP states:

“The Commercial designation is intended to support commercial activities, primarily retail and service commercial uses that cannot be accommodated in the Downtown, Neighbourhood Centre, or Mixed Use designations and are not appropriate for highway commercial designation. Limited office uses would be considered in this designation, provided that these uses directly support commercial uses.”

According to the City of Williams Lake Zoning Bylaw No. 1825, 2002, and confirmed by a representative from the City of Williams Lake Development Services department, the subject property is zoned M-1, Light Industrial. “This zone is intended to accommodate a range of light industrial development.” The subject property is currently utilized as an office/industrial building. The permitted uses under the M-1 zone does include light industrial but it does not include office use, therefore the subject property does not conform to the M-1 zoning. In recent conversations with the owners and the Development Services Department for the City of Williams Lake regarding the current zoning of the subject property, it is our understanding that the City of Williams Lake would like to either rezone the property to suit the building or invoke a “site specific” to the M-1 zone to include the uses of the subject property. The owners advised us that they are in total agreement with this process and we assume that it will be completed successfully to suit both parties needs and requirements.

As the current uses have been in place for many years the inference that can be drawn is that Council’s intention is to support the existing commercial and office uses on the subject property and, therefore, we conclude that these uses meet the test of legal permissibility. Given the immediate surroundings, we do not consider that alternative uses are appropriate for the site at this time, nor is the site likely to form part of a comprehensive redevelopment area in the near future.

20

We also assume that the building is built according to all appropriate Provincial and other regulations and that there is an occupancy permit.

2) Physical Possibility

Regarding this factor, the subject property comprises a mixture of office/commercial and shop uses built in two stages. In ±1993 the wood frame office/commercial area was constructed plus the office spaces in the original concrete tilt-up portion were created along with extensive renovations to this area to accommodate the new community college owners. When the building was utilized as a community college the building received structural damage due to a slide-mass known as Hodgson Road Landslide. After the current owners purchased the building, they completed the necessary repairs, under direction from an engineering firm, to stabilize the building. The owner’s complete annual structural assessments and geotechnical inspections. For the purpose of this appraisal and for valuation purposes, we assume that the building is structurally sound The property is currently demised into several individual tenant office/commercial areas with Pioneer the largest office occupier. Pioneer also occupies the shop area of the building. The development appears to have the flexibility for a variety of commercial, office and shop uses. We assume that the building meets appropriate codes, and is considered a suitable use for the site. We are not aware of any physical issues (for example, contamination) with the property that are likely to have a material impact on future use. The viability and demand for the property, including market appeal, will be discussed under ‘Demand’ below. The structure is of average quality and is in overall average condition. We estimate the remaining economic life of the overall improvement at 35 to 40 years, assuming a disciplined annual regime of maintenance and repair. The improvement is a viable property consistent with its surroundings and, therefore, we conclude that the property meets the test of physical possibility.

3/4) Financial Feasibility and Maximum Profitability

These items are considered to be interrelated and are dealt with as a single heading. In order to establish the most feasible and profitable use, it is necessary to consider the market influences of location, design and demand. Location The subject property is located south of the downtown area of Williams Lake in a small light industrial and commercial area between South Lakeside Drive and Dog Creek Road. The subject is one to two kilometres from the downtown business centre. South Lakeside Drive has an above-average traffic count and provides good access to this area and the residential areas east of the subject. The subject is 0.5 kilometres south of South Lakeside Drive along Hodgson Road.

21

The physical location is considered suitable for a variety of commercial/office/industrial uses that do not require good exposure or walk-up traffic. Design The building comprises a mix of office/commercial and shop uses. The exterior appearance is considered average, although it is obvious that the building was constructed in two sections. A portion of the building is tenant-occupied and has been leased as commercial and office space. The owner occupies (non-arms length rental agreement) the remainder of the building including the shop. There is a one-bedroom residential suite on the main floor that is currently utilized by a family member but could be used for a night watchman or caretaker. The upper floor consists of small offices suitable for small businesses. The building was originally constructed and used as a warehouse and has been renovated and divided to accommodate the varied current uses. The original division was for the school with the office/commercial type use to follow. The redesign of the building is suitable for the current use, as a multi-use office/industrial building. There are several alternative uses that could be available to the building. Moving any of the interior walls would require minimal effort and cost. Demand Demand for commercial/office and shop space in Williams Lake has been stable in recent years, consistent with medium sized interior centres. This has resulted in moderate vacancy rates in many of the office buildings located in the downtown sector, particularly in the newer developments. There is only limited vacant retail space within the core and this is limited to smaller retail spaces. Due to relatively stable leasing conditions over the last few years, there has only been moderate new development. South Lakeside Drive area, situated just north of the subject property, comprises mainly owner-occupied developments. There are various uses in the area and vacancy appears to be low. With the development of the Wal-Mart Centre nearby, demand for the vacant and improved space has increased but vacant land in this area is limited. We consider that there will be continued demand for the subject property. We have included demographic and economic information for the City of Williams Lake under Tab “3” in the appendix of this report and we note the following from the BC Stats website:

• There have been stable population levels between 2006 (10,744), 2011 (10,832) and 2016 (10,508).

• Average household and family income levels are very similar to the Provincial averages.

• Total building permits in Williams Lake have increased from just over $16,500,000 in 2016 to approximately $20,500,000 in 2017 and to $34,000,000 in 2018 and to just over $35,000,000 up to October 2019.

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In summary, from a tenant perspective we conclude that there is an adequate market demand for the subject property. This is evidenced by the low vacancy rate in the building. After considering all of the factors connected to demand, it is our opinion that there is an adequate investor demand in the market for the subject property. These types of developments are often traded in the marketplace, which implies the demand for this type of product.

Conclusion of Highest and Best Use As Improved

After considering these factors, we conclude that the Highest and Best Use of the subject property is the existing use, as a multi-use office/commercial and shop building. Highest and Best Use of Land As If Vacant The Canadian Uniform Standards of Professional Appraisal Practice states:

“Highest and Best Use of land or a site is the use among all reasonable alternative uses that yields the highest present land value, after payment for labour, capital and co-ordination. The conclusion assumes that the parcel of land is vacant or can be made vacant by demolishing any improvements.”

In order to determine the Highest and Best Use of the subject property as if vacant, we have considered alternative potential uses for the site. It is evident that the Highest and Best Use if vacant is not relevant because the structure has a substantial remaining economic life (with illustrated demand) and thus a contributory value that exceeds the vacant land value. Exposure Time Exposure time is defined in the Canadian Uniform Standards of Professional Appraisal Practice as:

“- The estimated length of time the property interest being appraised would have

been offered on the market before the hypothetical consummation of a sale at the estimated value on the effective date of the appraisal.

- Exposure time is different for various types of real estate and under various

market conditions. Rather than appear as an isolated estimate of time, it must refer to the property appraised, at the value estimated.

- The overall concept of reasonable exposure time encompasses not only adequate,

sufficient and reasonable time, but also adequate, sufficient and reasonable marketing effort.

- The distinction between exposure time and marketing time must be made clear

if both are referred to in the report.”

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In order to estimate a reasonable exposure time, we have considered a number of factors, including:

- Statistical information about days on market; - Information gathered through sales verification; and/or - Interviews of market participants.

Review of several MLS sales in the Williams Lake area and other Interior BC locations indicate that the majority of commercial properties in the area transact between three and twelve months, although there are several examples of a few days to several years. The subject property represents average demand uses within the Williams Lake market, and there is adequate data to conclude exposure time. Given the type of real estate, we consider that if realistically priced, an exposure time of between six and eighteen months would have been reasonable leading up to the effective date of appraisal. METHOD OF APPRAISAL There are a number of approaches that can be used in the estimation of market value. Normally we rely on the Cost Approach, the Income Approach and the Direct Comparison Approach. The Cost Approach This approach has, as its premise, the cost to reproduce or replace the improvements less any loss in value (depreciation) that might have transpired. To the depreciated replacement cost of the improvements is added the market value of the land, which is developed by way of sales comparison. The Income Approach This approach is used for income producing properties and has, as its premise, the estimation of the amount of net income which, when capitalized in a manner which is commensurate with risk and life expectancy of the improvement, will indicate a present value of the income stream. The Direct Comparison Approach This approach has, as its premise, comparison of the subject property with others of a similar design, utility and quality, which have sold in the recent past. This approach, in addition to providing direct comparison with other income bearing properties, provides also the basis for developing capitalization rates, unit multipliers, lease rates and other units of comparison. In addition, this method is also used in estimating the market value of non-income producing properties and vacant land. In this appraisal, we relied on Income and Direct Comparison Approaches to value the subject property. After all the factors in each of the approaches have been carefully weighted, the indications of value derived from each approach are correlated to arrive at a final estimate of value.

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INCOME APPROACH The Income Approach is a method of estimating the present value of an anticipated income benefit. The present worth estimate, the result of the capitalization process, is the amount that a prudent, typically informed purchaser would be willing to pay at a fixed time for the right to receive the income stream produced by a particular property. To calculate the net income to be capitalized, the potential gross income is estimated, less allowance for vacancies and other losses, less operating expenses, leaving the net income before debt service. We have been supplied with the current rent roll from ownership. The subject property is partially owner-occupied at this time, with non-arms length rental agreements due to related parties, with the remainder of the building occupied by month-to-month or one-year agreements to tenants for various rates per square foot depending upon whether they are triple net or gross rental rates. We have not been supplied with any written agreements for the tenants. The history of the development is that there have been very few formal leases in place with more “handshake” type of agreements in place. This style of management usually results in a rent roll that is not market determined and results in various inconsistencies. Currently the rental rates on the rent roll vary from $3.40 per square foot for a larger area to $33.67 per square foot for a single office. We also noted that the rent roll does not illustrate the entire square footage area of the building. During our inspection we noted that some areas are utilized as storage for ownership with no rental rate(s) in place. These storage areas could be rentable areas with some additional clean-up and demising of the areas. It is our opinion that the building rental should be operated in a more efficient and professional manor with all tenants having written formal lease agreements in place. It is our understanding that the current ownership has many facets within their Pioneer business to operate and that managing this building is not a primary priority or focus due to the lack of time and expertise to allot to managing this large piece of real estate. The management of the real estate would include such things as building repairs and maintenance, insurance, structural repairs, attracting new tenants and the drafting of formal rental and lease agreements using market determined rental rates to mention a few duties. As the current rent roll has various types of rental agreements and rates in place at this time, it would be very difficult to analyze and arrive at a triple net rental income for each unit within the building. For the purpose of this analysis we will determine an overall blended rate for the building as a whole, which will cover the large and small areas, the overall parking area and take into account the storage areas that do not have a rental rate in place. Our concluded triple net rental income will then be used to determine the net operating income attributable to the real estate. We consider that a prudent investor would consider the rent roll in place but then estimate the income attributable to the real estate from market determined rates and leases to arrive a net operating income. This net operating income will then be capitalized to arrive at the value via the income approach to value.

25

Our client provided the rent roll and it is summarized below.

Tenant Rental Income Monthly Gross

Rental Income Annual Gross

All Nations Group $2,050.00 $ 24,600.00

Arrowstone Mgmt $2,521.67 $ 30,260.04

Cariboo First Aid $ 788.00 $ 9,456.00

Engage $ 640.00 $ 7,680.00

Collinda $ 82.50 $ 990.00

Hatch $ 515.00 $ 6,180.00

Holtom $ 577.00 $ 6,924.00

Irish Creek Resource $ 82.50 $ 990.00

Pioneer Log Homes $1,339.00 $ 16,068.00

Pioneer Trucking $1,434.25 $ 17,211.00

Pioneer Family Land $ 900.00 $ 10,800.00

Pioneer Family Timber $ 590.00 $ 7,080.00

Pink Couture $ 695.00 $ 8,340.00

True Foods $ 950.00 $ 11,400.00

Gibraltar $4,650.00 $ 55,800.00

Conference Rent $ 55,097.00

TOTAL $268,876.04 In order to determine fair market rent, we compared the various components of the subject property to other similar premises in Williams Lake and other BC Interior centres. The scope for market rentals and leases has been expanded to include other BC Interior centres as the subject is unique for the Williams Lake market. Fair market rent is defined as the rental income that a property would most probably command on the open market as indicated by current rentals being paid for comparable space. We have assembled two charts of comparable rental rates. The first chart is local City of Williams Lake properties only and the second chart is from other BC Interior centres reflecting larger buildings. The two charts are as follows:

Comparable Rents - Williams Lake

IND.

NO. LOCATION

PREMISE

(SQ.FT.)

BASE RENT/

SQ.FT. TERMS

LANDLORD

EXPENSES COMMENTS

1 35 2nd Avenue South,

Williams Lake, BC

5,300

(Main)

$11.50-Yrs 1-3

$12.50-Yrs 4&5

2014 - 5 yrs Management and

structural repairs.

Bank of Montreal tenant in a three-storey office building which is

part of Hodgson Place strip mall. We understand that it is ±5,300

square feet of main floor area. Good central location in the

business core.

2 640 Borland Street,

Williams Lake, BC

57,049 (Total)

14,262 (Avg/Floor)

$9.50-Yr 1

$10.00-Yr 2

$10.25-Yrs 3&4

$10.50-Yr 5

08/14 - 5 yrs* Management and

structural repairs.

Four-storey government office building in Williams Lake; each

floor is occupied by a different long-term BC Ministry. Good

quality building finished to government standards, ample on-site

parking and good location in the downtown periphery. Has 92

parking stalls that are additional rent, between $21.90 and

$23.09 per stall.

3 11 2nd Avenue South,

Williams Lake, BC

6,005-Office

7,083-Office

$11.00

$6.50

09/14 - 5 yrs*

08/16 - 5 yrs

Management and

structural repairs.

Circa 1980 office building located in the downtown core. “L”

shaped structure divided into three tenant spaces; the two

illustrated are professional offices. Unit with the lower rent is

reflective of the substantial recent upgrades to interior completed

at the cost of the tenant. On-site parking included.

4 240 MacKenzie Avenue North,

Williams Lake, BC

2,934 $7.57 02/16 - 5 yrs Management and

structural repairs.

Self-contained single-storey office space in a large building

comprising other retail and office uses. Space is in above-

average condition. On-site parking included.

5 450 MacKenzie Avenue South,

Williams Lake, BC

27,321 $7.53 2002 - 20 yrs Management and

structural repairs.

Sale and leaseback to Finning International. Rent has been

stabilized to reflect 10% rent acceleration every five years.

Mixture of shop, office, warehouse and mezzanine storage.

6 47 Cameron Street,

Williams Lake, BC

10,640 $10.00 2015 - 5 yrs Management and

structural repairs.

Two-storey office building located near the downtown core. Site

is ±0.524 acres and was constructed and designed for office use.

Long-term tenant is a government agency.

7 #240-190 Mackenzie Avenue North,

Williams Lake, BC

13,033 $4.30 06/15 - 3 yrs* Management and

structural repairs.

Unit within an older concrete block commercial building that is

demised into three rental areas. Unit was redeveloped into a

two-storey office area with ±8,852 square feet of main floor and

±4,181 square feet of second floor area. Former Racquets Club.

8 525 Borland Street,

Williams Lake, BC

4,000

(Main)

4,362

(Second)

$11.00

±$6.72

03/19 - 10 yrs

Month-to-Month

Management and

structural repairs.

Renovated building to suit the main floor tenant’s requirements

for good office use. Tenant is Western Financial Group on the

main floor and five smaller tenants on the second floor. Second

floor illustrated rate is the average rate of all of the monthly rental

units.

9 94 and 98 2nd Avenue North,

Williams Lake, BC

6,487

1,968

$7.81

$7.75

Month-to-Month Management and

structural repairs.

Mixed-use commercial building located in the downtown with a

corner location. Large area is open with minimal finish and the

smaller area is an old restaurant with dated finish. Overall in

average condition.

*We note the leases have expired but the tenants remain, and we assume the leases have been renewed at similar rates.

Comparable Rents - Continued, BC Interior Communities

IND.

NO. LOCATION

PREMISE

(SQ.FT.)

BASE RENT/

SQ.FT. TERMS

LANDLORD

EXPENSES COMMENTS

10 1165 Battle Street,

Kamloops, BC

26,544

(Two Floors)

$11.50 12/15 - 5 yrs

+5 yr option

Management and

structural repairs.

Two-storey commercial office building occupied by a long-term

government ministry; finished and maintained to their

specifications. Peripheral downtown location with adjacent

paved lot, lined for parking.

11 2809 28th Street,

Vernon, BC

9,262 $13.75 09/13 - 5 yrs*

+5 yr option

Management and

structural repairs.

Single-storey office building finished to government standards

occupied by Ministry of Labour and Citizen’s Services. Located

in the legal and business district in Vernon, BC. Includes 22 on-

site parking spaces.

12 874 Notre Dame Drive,

Kamloops, BC

25,000 $8.50-Yrs 1&2

$10.50-Yrs 3-5

$11.00-Yrs 6-10

09/10 - 10 yrs Management and

structural repairs.

Warehouse/retail building built in ±1989 for United Furniture.

Leasable area totals ±25,000 square feet demised into ±15,000

square feet of retail and ±10,000 square feet of

warehouse/storage area. Structure is built on a single level, with

pre-cast concrete walls, a 16-foot clear span wall height and dock

loading.

13 9714 Milwaukee Way,

Danson Estates,

Prince George, BC

17,635 $8.50 03/16 - 3 yrs* Management and

structural repairs.

Concrete block industrial building constructed in 1980 situated

on a level ±3.19-acre predominantly paved and fenced site.

Quality building designed with interior crane abilities and leased

to a long-term tenant.

14 1240 Dalhousie Drive,

Kamloops, BC

14,486 $7.35–Yr 1

$7.50-Yr 2

$7.65-Yr 3

$7.80-Yr 4

$7.96-Yr 5

02/17 - 5 yrs Management and

structural repairs.

Good quality warehouse and office building in the Southgate

Industrial Park. Building is situated on a 1.29-acre site. Building

is in average condition with a long-term tenant, but we consider

the rate to be below what should be achieved at this location with

the existing improvements.

15 800 Laval Crescent,

Kamloops, BC

21,534 $7.00-Yrs 1&2

$7.50-Yrs 3-5

08/15 - 5 yrs Management and

structural repairs.

Distribution warehouse facility with administrative offices and

loading dock. Building was built circa 1975 and sits on a site of

1.82 acres with good access. Located in the Southgate Industrial

Park.

15 945 McMaster Way,

Southgate Industrial Park,

Kamloops, BC

19,971 $8.50 08/16 - 3 yrs* Management and

structural repairs.

Purpose-built industrial office and shop building built in 1994/95.

Former government facility, now leased to a private company.

*We note the leases have expired but the tenants remain, and we assume the leases have been renewed at similar rates.

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Analysis and Conclusion The foregoing overall rental information indicates a range from $4.30 to $13.75 per square foot for a variety of light industrial (with offices), service, office and retail commercial uses. The average rental rate of the comparables is $9.02 per square foot and the median rate is $8.50 per square foot. The rental terms of all the indicators generally vary from 3 to 10 years, but mainly fall into a 3 or 5-year time frame. To our knowledge, landlord expenses are all management and structural repairs only, unless otherwise noted. The high end of the range is illustrated by a purpose-built single-storey administrative office building located in Vernon. The overall building comprises a combination of offices and staff areas and has ample on-site parking. This is a newer building with modern government office accommodation with approximately ±9,262 square feet on the main floor. The location has good exposure for the use but is not located in a high traffic area of Vernon. The low end of the range is illustrated by a multi-tenant warehouse facility with administrative offices in Williams Lake. The property has low exposure but adequate access, and the building was built circa 1990 and is mostly in its original state. The building is demised into three units. The illustrated two-storey unit has on-site parking. Conclusion We consider the subject property falls within the range of the indicators and it is our opinion, based on the gross floor area of ±41,165 square feet including the upper floor area, that a blended rate of $8.00 per square foot is appropriate and within market levels and below the average rate of the comparable indicators. This rate takes into account that the building is large for a small community, the building’s deficiencies, the large site size that offers on-site parking for staff and rental purposes and the location within the City of Williams. Therefore; Gross Annual Income Per Annum ±41,165 square feet @ $8.00 per square foot: $329,320 Less Vacancy and Collection Losses

The subject property is owner and tenant-occupied and to recognize economic conditions, the size of the building with unfinished, non-utilized area and the current vacancy within the City of Williams Lake, we conclude a rate of 8% to account for any vacancy over the remaining economic life of the subject property: $ 26,346 Effective Gross Income: $302,974

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Less Management and Structural Repairs

Management typically is between 1% and 6% depending on the number of units and complexity of the property. We have used 3% to reflect the current tenant occupancy. Depending on the type of construction and the age of the development, structural repairs usually range between 3% and 8%. We have used 5% for structural repairs as the property has received average maintenance since the building’s stabilization was completed with ongoing annual structural and geotechnical reports. Therefore, we have concluded management and structural repairs at 8%: $ 24,238 Net Income Before Debt Service: $278,736 (Rounded) $280,000 Estimation of Overall Capitalization Rate To estimate the market value by the Income Approach, it is necessary to capitalize the net income before debt service by an appropriate overall capitalization rate relative to the risk associated with the income stream that is to be capitalized. Any concluded rate used to convert anticipated income to a present value estimate can be considered a “capitalization rate”. Usually, however, a capitalization rate is the sum of a discount rate (interest rate) and a rate for capital recovery. An “overall capitalization rate” includes interest on, and recapture of, an investment. It is applied ultimately to a stream of income (net operating income) over a definite term during which an investment is to be recovered. In selecting an appropriate capitalization rate, we have analyzed several recent investor driven sales from a variety of commercial investment properties within the BC Interior. Our findings are tabulated on the following page.

Capitalization Rates

IND.

NO. LOCATION

SALE

DATE

SALE

PRICE

NET

INCOME

CAP.

RATE COMMENTS

1 1165 Battle Street,

Kamloops, BC

10/15 $3,925,000 $272,500

(Projected)

6.94% Two-storey, professional office building with BC Ministry tenant. At the

time of sale, the tenant had just renewed for a further 5-year lease with a

5-year option. Well maintained building with on-site parking.

2 1315 Summit Drive,

Kamloops, BC

01/17 $12,000,000

(Share Sale)

$835,265

(Reported)

6.96% Well-established and maintained professional office centre with a history

of stable to low vacancy levels. Multi-tenant facility built in 1981/82 with

±54,098 square feet of rentable area. Development has individual strata

titles; however, never been offered for sale.

3 9685 Highway No. 97 North,

Winfield, BC

01/17 $3,647,000

(Adjusted)

$204,721 5.61% Retail strip mall built in 1994 and situated on ±1.41 acres with an adjacent

vacant ±0.71-acre site, both zoned C-1. Contains an A&W free-standing

restaurant and other retail outlets. Property fronts Highway No. 97 with

good exposure and access.

4 201 7th Avenue,

100 Mile House, BC

02/17 $2,275,000

(Adjusted)

$201,100 8.84% Multi-tenant warehouse/office and mini-storage facility located in 100 Mile

House proper. A total of ±20,205 square feet of warehouse/office and

retail space plus ±18,633 square feet of mini-storage space, on a ±4.67-

acre irregular shaped site. Property sold for $2,525,000 inclusive of freight

and bottle depot businesses valued at $250,000. Sale price has been

adjusted.

5 8301 78th Street,

Osoyoos, BC

08/17 $1,575,000 $98,151 6.23% Three-unit strip mall built circa 1987 but updated. Contains approximately

8,000 square feet of rentable retail area. Tenants are Pharmasave, H&R

Block, and a physiotherapy office. Good exposure in the commercial core.

6 501 Main Street,

Penticton, BC

12/17 $2,900,000 $200,100

(Projected)

6.90% Three-storey retail/office building in the downtown core with a good corner

location. Building was upgraded in 2007 and has good occupancy history.

7 340 Victoria Street,

Kamloops, BC

01/18 $7,149,998 $459,650 6.43% Good quality concrete, professional office and retail building with the

upper two floors comprising offices and restaurant/retail uses on the main

floor. Lower level has been improved as an entertainment facility. Backs

to City parkade.

8 2800 29th Street,

Vernon, BC

03/18 $1,900,000 $140,000

(Stabilized)

7.37% Five-unit strata retail and/or office building in Vernon. Peripheral location

with limited on-site parking. Corner site with somewhat awkward

configuration. At the time of sale, there was approximately 2,789 square

feet of vacant space. Net Income has been stabilized.

9 1274 McGill Road,

Kamloops, BC

05/18 $4,500,000 $291,000 6.47% Purpose-built warehouse with a two-storey dated office addition, situated

on a site of ±3.65 acres in the Southgate Industrial Park. Existing lease

is considered to be at the low end of the market, which reflects the long-

term tenant. Building is average quality. Second floor has dated finish.

10 8111 Main Street,

Osoyoos, BC

06/18 $1,100,000 $62,400

(Stabilized)

5.67% Fully leased retail strip mall in Osoyoos. Situated with good exposure on

Main Street. Average quality building with only limited on-site parking.

11 705 Laval Crescent,

Kamloops, BC

08/18 $2,730,000 $152,437 5.58% Tilt-up concrete office/warehouse building situated on a ±1.36-acre

usable site in the Southgate Industrial Park. Updated building has office

and storage components with a large warehouse and updated shop doors.

Property was purchased by one of the long-term tenant.

31

Summary The overall capitalization rate measures the relationship between net income before debt service and the price the market will pay for that income. We have selected sales of an array of different types of investment property that generally fall into a similar commercial/industrial category of the subject property. To provide perspective on the market for investment properties of this category, sales within an approximate three-year period are illustrated. The indicators demonstrate the following characteristics:

OVERALL PRICE NET INCOME CAPITALIZATION RATE

Minimum $1,100,000 $62,400 5.58%

Maximum $12,000,000 $835,265 8.84%

Average $4,004,727 $265,211 6.64%

Median $2,900,000 $201,100 6.47%

The indicators are summarized in the following chart:

The indicators represent a variety of income producing properties – a variety of retail/office/industrial uses, situated in various locations throughout the BC Interior. Generally, it is our opinion that recent trends have been towards lower capitalization rates over the past two years, particularly for good quality commercial properties with high exposure locations.

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

15-Oct 17-Jan 17-Jan 17-Feb 17-Aug 17-Dec 18-Jan 18-Mar 18-May 18-Jun 18-Aug

1 2 3 4 5 6 7 8 9 10 11

Cap

italizati

on

Rate

Capitalization Rate Indicators

Cap Rate Linear (Cap Rate)

32

Conclusion The subject property comprises a multi-tenant office/commercial and shop building located in Williams Lake. The subject property’s contract rental rates and our concluded rental rate are considered to be a moderate risk to an investor.

In our selection of an appropriate capitalization rate for the subject property, we have considered the following factors:

• The location of the subject property relative to its uses, the competition for the specific uses in the area, and the overall demand for commercial and industrial properties in Williams Lake.

• The design and layout of the building, the usable size, effective age and the condition of the subject building.

• The building’s vacancy history and the alternative uses available to the subject property considering its unique design and layout.

• The subject’s current rental rates not being at market levels as the owner has not been attentive to the real estates needs and our market determined blended rate that is well supported with current market information.

• The perceived risk associated with achieving and maintaining the projected level of rental income over the long-term in Williams Lake.

• That there is a stigma concerning the land stability within this area of Williams Lake and that the marketability of the building in conjunction with rental limitations has been affected by the soil movement within this area of the City.

• The owners have addressed and remediated the issues to the building associated with the soil movement and building stability with the assistance of professional structural and geotechnical engineers. The owners have structural assessment and geotechnical inspections conducted on an annual basis. We have considered the costs of the annual inspection/reports and the associated costs to remediate any future issues.

• The subject property’s location within a small community, which could limit the property’s tenancy upon vacancy. The small town location can limit its marketability as many investors are resistant to small town investments.

Taking all factors affecting the value of the subject property into consideration, including the risk associated with the concluded blended rental level, the associated geotechnical condition of the building and land and considering the current economic conditions in conjunction with the perceived stigma associated with the subject property, it is our opinion that a capitalization rate above the high-end of the overall indicators is appropriate. We conclude at a rate of 9.50% for the subject property.

33

Therefore;

Net Income = $280,000 = $2,947,368 Overall Capitalization Rate 0.095

Estimated Value by the Income Approach, Rounded $3,000,000

DIRECT COMPARISON APPROACH The Direct Comparison Approach is based on the principle of substitution, whereby a prudent investor will pay no more for a property than it would cost to buy an equally desirable substitute. When comparing similar characteristics among properties, the Direct Comparison Approach must also compare the different characteristics amongst those same properties and make market adjustments accordingly. The subject property is improved with a ±41,165-square foot, one-storey plus upper floor, multi-use building with ample on-site parking situated in a location on the periphery of the downtown core but within an area of Williams Lake comprising a mix of commercial and industrial uses. The building is well located in a mixed-use neighbourhood with appropriate uses surrounding the subject property. We have analyzed sales of income producing properties in Williams Lake plus other BC Interior and BC Northern locations as the subject is unique for the area with minimal information similar to the subject property available within the City of Williams Lake. We have assembled two charts of sales. The first chart illustrates sales located within Williams Lake. We have included the sales for illustrational purposes to show what smaller retail/commercial properties are selling for. The second chart is from other BC Interior and Northern BC communities reflecting similar larger buildings. Our findings are tabulated on the following pages.

Direct Sales - Williams Lake

IND.

NO. LOCATION

SALE

DATE

RENTABLE

AREA

(SQ.FT.)

SALE

PRICE

RATE PER

SQ.FT. COMMENTS

1 190 Oliver Street,

Williams Lake, BC

01/16 8,310 $300,000 $36.10 Concrete block building in a corner location in the downtown core with five

rentable areas. Situated on a ±0.22-acre lot that is zoned C-1. Building is

in average condition but requires interior upgrades and renovations.

2 281 Oliver Street,

Williams Lake, BC

06/16 1,800 $175,000 $97.22 Small retail store sold to the adjacent owner to become a part of the new

Mr. Mikes restaurant. Site is ±0.076 acres and is zoned C-1.

3 48 Oliver Street,

Williams Lake, BC

11/16 2,569 $90,000 $35.03 One-storey retail building on a 30-foot lot on Oliver Street. Has minimal

on-site parking but has good exposure. It could be two units as there are

separated services. Zoned C-1 and is in average condition.

4 141 1st Avenue North,

Williams Lake, BC

03/17 11,520 $297,500 $25.82 Two-storey building built in 1990 with an average location. Main floor was

vacant at the time of sale and there are two residential suites on the second

floor. Basement area is used for storage and it is currently rented. Site

size is ±0.15-acres and is zoned C-1.

5 452 Borland Street,

Williams Lake, BC

11/17 1,620 $220,000 $135.80 Well located one-storey office building used as a daycare at the sale date

but is now a medical use. Building was built in 1978 and currently is in

average condition. Property is zoned CS-1 and lot is ±0.21 acres.

6 147 1st Avenue North,

Williams Lake, BC

03/18 ±3,000

(Estimated)

$166,000 $55.33 One-storey full basement building in a periphery location. Building is in

average condition with a new roof in 2011. Site is ±0.17 acres and is zoned

C-1. Parking at the rear.

7 284 MacKenzie Avenue South,

Williams Lake, BC

04/18 4,800 $305,000 $63.54 One-storey building built in 1985 with a 16-foot ceiling height. Includes shop,

office and a retail area which are all in average condition. Site is ±0.20 acres

and is zoned CS-1. Parking at the front with rear lane access.

8 94 and 98 2nd Avenue North,

Williams Lake, BC

06/18 8,455

(Main Floor)

$413,000 $48.85 One-storey building with a second floor suite that is located on a corner lot in

the downtown core. Main floor contains a flooring store that is open with

minimal finish and the other side is an older restaurant with dated finish. Overall

it is in average condition but would require renovations and upgrades to attract

any new tenants.

9 525 Borland Street,

Williams Lake, BC

01/19 8,724 $550,000 $63.04 Two-storey building that has tenants on the second floor but the main floor was

vacant at the time of sale. Office tenant has now signed a new 5 year lease for

the entire main floor, upgraded by owner and tenant. Second floor is in average

condition with monthly tenants. There is ample on-site parking, zoned C-1 on

0.49 acres.

Direct Sales - Other Interior/Northern BC Communities

IND.

NO. LOCATION

SALE

DATE

RENTABLE

AREA

(SQ.FT.)

SALE

PRICE

RATE PER

SQ.FT. COMMENTS

10 1165 Battle Street,

Kamloops, BC

10/15 28,454 $3,925,000 $137.94 Two-storey professional office building with a long-term Provincial

Government tenant. At the time of sale, the tenant had just renewed for a

further 5-year lease with a 5-year option. Well maintained building with on-

site parking. Sold previously in 2012 for $3,500,000. Located outside

downtown core on busy arterial.

11 1315 Summit Drive,

Kamloops, BC

01/17 60,277 $12,000,000

(Share Sale)

$199.08 Well established and maintained professional office centre with a history of

stable to low vacancy levels. Multi-tenant facility built in 1981/82.

Development has individual strata titles; however, the units have never been

offered for sale. Purchase was a share sale basis circa January 2017. Sold

previously for $10,500,000 in June 2013.

12 201 7th Avenue,

100 Mile House, BC

02/17 38,838 $2,275,000

(Adjusted)

$58.58 Multi-use development offering office, warehousing, 144-unit mini-storage

facility and cartage/freight re-hauling. Located just off Highway No. 97 in

100 Mile House on a large 4.67-acre site improved with numerous

buildings that total 38,838 square feet. Property sold for $2,525,000

inclusive of freight distribution and bottle depot businesses valued at

$250,000, sale price adjusted.

13 1240 Dalhousie Drive,

Kamloops, BC

08/17 14,616 $2,400,000 $164.20 Recent sale of a tilt-up concrete frame purpose-built one-storey warehouse

structure with some interior office space. Ample on-site parking and

situated on a ±1.29-acre parcel in a high redevelopment area of the City

of Kamloops. Rents are considered to be at the very low end of market

but will provide good interim income relative to the good redevelopment

potential.

14 2498 Skaha Lake Road,

Penticton, BC

10/17 35,000 $3,250,000 $92.86 Two-storey concrete block commercial retail building with partial

basement. Corner location on busy arterial road with on-site paved parking

and good exposure.

Direct Sales - Continued, Other Interior/Northern BC Communities

IND.

NO. LOCATION

SALE

DATE

RENTABLE

AREA

(SQ.FT.)

SALE

PRICE

RATE PER

SQ.FT. COMMENTS

15 383 Ellis Street,

Penticton, BC

10/17 22,856 $2,300,000 $100.63 Three-storey office building on the corner of Ellis Street and Wade Avenue

East. Sale included two lots totaling ±557.4 sq.m. (±6,000 sq.ft.) at 420

and 426 Ellis Street for parking.

16 2965 Tatlow Road,

Smithers, BC

11/17 34,200 $2,800,000 $81.87 Good quality steel frame warehouse/shop building with good quality offices

formerly operated by the Lakes District Maintenance. Comprises 20,000

square feet of warehouse, 10,800 square feet of shop/staff area and 3,400

square feet of administration office on a level 7.44-acre site within Smithers

Industrial Park.

17 501 Main Street,

Penticton, BC

12/17 21,600 $2,900,000 $134.26 Three-storey retail/office building in the downtown core with a good corner

location. Building was upgraded in 2007 and has good occupancy history.

18 1274 McGill Road,

Kamloops, BC

05/18 23,827 $4,500,000 $188.86 Purpose-built warehouse with a two-storey office addition, situated on a

site of ±3.65 acres in the Southgate Industrial Park. Existing lease is

considered to be at the low end of the market, which reflects the long-term

tenant. Building is average quality for the area. Second floor office finish

is dated.

90 705 Laval Crescent,

Kamloops, BC

08/18 17,265 $2,730,000 $158.12 Tilt-up concrete office/warehouse building situated on a ±1.36-acre usable

site in the Southgate Industrial Park. Updated building has office and

storage components with a large warehouse and updated shop

doors. Property was purchased by one of the long-term tenants.

20 760 Laval Crescent,

Kamloops, BC

01/19

(Registration)

13,741

(BC Assess)

$2,400,000 $174.66 Older warehousing building with a front reception and office/retail sales

area located on a level and usable 1.20 acre site in the Southgate Industrial

Park. Site is compounded (chain link), has good exposure and access.

37

Summary of Sales – Williams Lake

Range of Overall Prices: $90,000 - $550,000 Range of Price/Square Foot: $25.82 - $135.80 Average Price/Square Foot: $62.30 Median Price/Square Foot: $55.33 Range of Sizes: 1,620 - 11,520 Square Feet Average Size: 5,644 Square Feet Median Size: 4,800 Square Feet

The foregoing sales illustrate a sale price per square foot ranging from $25.82 to $135.80, with an average rate of $62.30 per square foot and a median rate of $55.33 per square foot. In general, higher rates are illustrated by better quality properties in larger centres and lower rates are illustrated by smaller markets and/or lower quality investment properties. We emphasize that there is limited market evidence to the subject property from Williams Lake.

Summary of Sales – Other Interior/Northern BC Communities

Range of Overall Prices: $2,275,000 - $12,000,000 Range of Price/Square Foot: $58.58 - $199.08 Average Price/Square Foot: $135.55 Median Price/Square Foot: $137.94 Range of Sizes: 13,741 - 60,277 Square Feet Average Size: 28,243 Square Feet Median Size: 22,827 Square Feet

The foregoing sales illustrate a sale price per square foot ranging from $58.58 to $199.08, with an average rate of $135.55 per square foot and a median rate of $137.94 per square foot. In general, higher rates are illustrated by better quality properties in larger centres and lower rates are illustrated by smaller markets and/or lower quality investment properties. The indicators shown on the previous pages represent the most recent known comparable sales of improved light industrial and commercial type properties from various locations throughout the Interior/Northern BC and the City of Kamloops. The sales characteristics are summarized above.

Analysis As previously stated, the Williams Lake sales chart has been included for illustrational purposes. For the Direct Comparison valuation analysis, we will compare to the Other Interior/Northern BC Communities chart. There is no “best” indicator from which to compare – but collectively, the sales illustrate a fairly consistent range.

The high end of the range at $199.08 per square foot is given by Indicator No. 11 which comprises an office complex that is a strata development but since construction has always been a rental property with one owner. The location of this sale is in the Sahali area of Kamloops near Thompson Rivers University and considering the location, design and use of this building (re: the effect of size on the illustrated rate/square foot), it is our opinion that a much lower rate per square foot is appropriate for the subject property.

38

The low end of the range at $58.58 per square foot is shown by Indicator No. 12, which comprises a smaller size building on a smaller site but has varied uses similar to the subject property. This building has had some updates but overall was mostly in average condition and provided mainly basic retail/warehouse accommodation. On balance, it is our opinion that an appropriate rate per square foot falls higher than this indicator. The newest sale, shown by Indicator No. 20, is an older warehouse building with a small front retail sales and office component that is situated on a level and fully usable ±1.20-acre site in the City of Kamloops which is considered to be a superior location.

Conclusion The subject property has an average location for the existing use within a stable and growing industrial and commercial neighbourhood of the City of Williams Lake. The original building was built in circa ±1970’s and was redesigned, refurbished and added to in ±1993. It is currently in average condition and the ownership has conducted maintenance and repairs as required. The main floor building area occupies approximately 8% of the site. The building has ±37,844 square feet on the main floor, with a mix of industrial/commercial/office/storage uses plus an upper floor area of ±3,321 square feet for a total gross floor area of ±41,165 square feet. The subject property comprises a total of ±41,165 square feet of gross floor area on two floors with a projected overall market rental net income of $280,000 ($6.80 per square foot of gross floor area) after allowances for vacancy, structural repairs and management. Given the quality and condition of the overall development, the large land/yard component, the stigma associated with the Hodgson Road Landslide, the average location relative to the use and the projected revenue risk when compared to other market indicators, we have concluded a reasonable rate per square foot for the subject property would fall at the low end of the comparables rate per square foot range at $80.00 per square foot reflecting the large size of the building. This rate is applied to the gross floor area of the building, and considers the large site size at ±12.42 acres.

Therefore;

±41,165 square feet x $80.00 per square foot = $3,293,200

Estimated Value by the Direct Comparison Approach, Rounded, $3,300,000

39

CORRELATION AND FINAL ESTIMATE OF VALUE The purpose of this report is to provide an estimate of the current market value of the subject property, as of the effective date of valuation, based upon our Terms of Reference, the Highest and Best Use and is contingent upon the Assumptions and Limiting Conditions, as well as any Extraordinary Assumptions contained herein. To fulfil the purpose of this appraisal, we relied on the Income and Direct Comparison Approaches and our conclusions are as follows: Income Approach $3,000,000 Direct Comparison Approach $3,300,000 We have considered both the Income and Direct Comparison Approaches. Both of the approaches are supported by appropriate recent market data. Generally, the Cost Approach does not reflect relevant market motivations or conditions upon which these types of properties are transacted; thus, we have not conducted a Cost Approach as, in our opinion, this would not offer relevant support to our conclusions. Properties such as the subject property that generate an income are traded for their long-term ability of the development to maintain this level of income. The most appropriate means of estimating their market value is by the Income Approach and the Direct Comparison Approach. For the purpose of determining the primary approach to be used in estimating value, property may be broadly classified as property regularly traded in the market and property not regularly traded in the market. Commercial buildings are regularly traded in the marketplace. From the available information and our projected income and expenses, the concluded capitalization rate is well supported by market information. The estimate of value by the Direct Comparison Approach is slightly higher than the Income Approach, but it provides good support to the Income Approach. On balance, in the case of the subject property, we consider the Income Approach to be moderately more reliable and our conclusion has given more weight to this approach. Final Estimate of Value As a result of our inspection and subsequent investigations, it is our opinion that the estimated current market value of the subject property, based upon our Terms of Reference, the Highest and Best Use and contingent upon the Assumptions and Limiting Conditions as set out under Tab “1” in the appendix of this report, as well as the Extraordinary Assumptions contained in the body of this report, as of the effective date of October 25, 2019, is:

$3,150,000 (Excluding Equipment)

CERTIFICATION RE: Multi-Use Office/Industrial Building, 351 Hodgson Road, Williams Lake, BC – Our File No. 10302-WL.JWM I certify to the best of my knowledge and belief that, except as otherwise noted in the appraisal report: - the statements of fact contained in the appraisal report are true and correct. The information

contained herein has been obtained from sources which we deem reliable and, while not guaranteed, has been accepted by us as correct;

- the reported analyses, opinions, and conclusions are limited only by the reported

assumptions and limiting conditions, and are my personal impartial, and unbiased professional analyses, opinions, and conclusions;

- I have no present or prospective interest in the property that is the subject of this report, and

no personal interest with respect to the parties involved; - I have no bias with respect to the property that is the subject of this report or to the parties

involved with this assignment; - my engagement in and compensation for this assignment were not contingent upon

developing or reporting predetermined results, the amount of the value estimate, or a conclusion favouring the client;

- my analysis, opinions and conclusions were developed, and this report has been prepared,

in conformity with the Canadian Uniform Standards; - I have the knowledge and experience to complete the assignment competently; - other than governmental authorities specifically identified in the appraisal, no one other than

Flynn Mirtle Moran staff consultants and the undersigned prepared the analysis, conclusions and opinions concerning real estate that are set forth in this appraisal report;

- as of the date of this report, the undersigned has fulfilled the requirements of The Appraisal

Institute of Canada Mandatory Recertification Program for designated members; - the undersigned personally inspected the subject property on October 25, 2019; - based upon the data, analysis and conclusions contained herein, the market value of the

interest in the property described, as at October 25, 2019, is estimated at: $3,150,000 (Excluding Equipment).

FLYNN MIRTLE MORAN

James W. Moran, AACI, P.App Date

QUALIFICATIONS OF THE APPRAISER James W. Moran Experience April 1978 - August 1988 Assessments - Over 10 years with the BC Assessment, Kamloops District and six months with the Langley and North Vancouver Districts. Duties included defense of values in the Court of Revision and Assessment Appeal Board. The majority of time was spent assessing all types of commercial, industrial and residential properties. August 1988 - Present Fee Appraisals - Joined Flynn and Associates Appraisals Ltd. in 1988 and became a partner of the firm on December 1, 1988. The types of properties appraised include residential, all types of commercial and industrial properties, all types of government developments, subdivisions, raw land, churches, motels, multi-family developments, waterfront properties, fire insurance cost build up appraisals, school sites and rental analysis. Additional duties include the training and mentoring of candidate appraisers and supervision of the residential department. Education Completed Grade 12 at Point Grey Secondary School in Vancouver, BC. Completed three years of education at the University of British Columbia. Completed all appraisal requirements with the Appraisal Institute of Canada - Accredited Appraiser No. 2743. The Appraisal Institute of Canada has a Mandatory Continuing Professional Development Program for designated members. As of the date of this report, I have fulfilled the requirements of the program. Designations AACI Accredited Appraiser Canadian Institute – No. 2743 P. App Professional Appraiser RI(BC) Member of the Professional Division of the Real Estate Institute of

British Columbia