Kirkland & Company

APPRAISAL REPORT

On

[OMITTED]

COMBINATION FOOD MART CONVENIENCE STORE WITH AN

INTEGRATED DELI AND CHEVRON® RETAIL PETROLEUM FACILITY [OMITTED]

For

[OMITTED]

AS OF

FEBRUARY 27, 2012

BY

KIRKLAND & COMPANY

Kirkland & Company

\

[OMITTED] Dear Sir or Madam:

At your request, we provide a self-contained appraisal report on the combination Food Mart convenience store with an integrated deli and Chevron® retail petroleum facility, 1090 S. Cobb Drive, Marietta, Cobb County, Georgia 30060. [OMITTED] We appraised the Fee Simple Estate ownership interest. The date of appraisal is February 27, 2012, the date of inspection. The date of the report is March 14, 2012. The value reported below is qualified by certain assumptions, limiting conditions, certifications, and definitions that are set forth in this report.

It is important to note that since the subject property is used for the sale of petroleum

products, the potential exists that leakage of toxic material may have occurred. We are not qualified to detect such substances, and therefore, the extent of contamination on the property, if any, is not known. In the absence of specific information to the contrary, we have estimated the value of the property as if “clean” and uncontaminated. The value estimate expressed in this report does not account for any negative or positive factors caused by existing or forthcoming EPA or other regulations.

As a result of our investigation and analysis, we estimated the Market Value of the subject

property, as of February 27, 2012, to be:

[OMITTED]

QUENTIN BALL, MAI NASH BALL RANA BARNES LINDA BRENNER LARRY CHECKETTS RICHARD GRAGG STEPHEN HOMANS CARRIE SALITURO JASON STOUTAMIRE PHILIP THOMAS, MAI

KIRKLAND & COMPANY

Commercial Real Estate Appraisers Since 1965 ACCOUNTING OFFICE

14875 Ridge Road Summerdale, AL 36580

(404) 892-1011

(866) 887-4963 FAX

March 14, 2012

www.kirklandco.com qball@kirklandco.com

QUENTIN’S DIRECT LINE

(404) 617-9165

Kirkland & Company

[OMITTED]

This report complies with the Uniform Standards of Professional Appraisal Practice promulgated by the Appraisal Standards Board of the Appraisal Foundation and Supplemental Standards of Professional Appraisal Practice of the Appraisal Institute and Title XI of the Federal Financial Institution Reform Act of 1989 (FIRREA). The appraiser has no interest in the subject property, direct or indirect, personal or otherwise. This appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. I certify, as the appraiser, that I have completed all aspects of this valuation, including reconciling my opinion of value, free of influence from the client, client’s representatives, borrower, or any other party to the transaction. [OMITTED] Rana Barnes, Georgia State Registered Real Property Appraiser No. 325547, provided significant professional assistance to the undersigned. We appreciate the opportunity to be of service. Thank you for this engagement. We enjoyed this assignment and look forward to working with you again soon. Sincerely,

Quentin Ball, MAI President Ga. Certified General Real Property Appraiser 1041QB/RB/jad/12300

Kirkland & Company

T A B L E O F C O N T E N T S

SUMMARY OF SALIENT FACTS ................................................................................................. 1

ASSUMPTIONS AND LIMITING CONDITIONS ....................................................................... 3

PURPOSE, DATE, AND INTENDED USE OF APPRAISAL ...................................................... 6

SCOPE OF WORK............................................................................................................................ 8

COMPETENCY PROVISION ....................................................................................................... 10

LEGAL DESCRIPTION ................................................................................................................. 11

PROPERTY HISTORY .................................................................................................................. 12

AERIAL VIEW OF SUBJECT PROPERTY ............................................................................... 13

ATLANTA AREA OVERVIEW ........................................................................................................... 14

NEIGHBORHOOD ..................................................................................................................... 24

MARKET ANALYSIS .................................................................................................................... 25

CONVENIENCE STORE MARKET OVERVIEW ................................................................ 27

ADDITIONAL GAS STATION MARKET RESEARCH ....................................................... 33

HEADWINDS FACING TRADITIONAL CONVENIENCE STORES ................................ 37

REASONABLE EXPOSURE AND MARKETING TIME ......................................................... 41

SITE DESCRIPTION ...................................................................................................................... 42

IMPROVEMENTS DESCRIPTION ............................................................................................. 44

ZONING ........................................................................................................................................... 46

PROPERTY TAXES ....................................................................................................................... 48

TAX MAP ......................................................................................................................................... 49

HIGHEST AND BEST USE ........................................................................................................... 50

HIGHEST AND BEST USE AS VACANT ............................................................................... 50

HIGHEST AND BEST USE AS IMPROVED .......................................................................... 51

Kirkland & Company

SALES COMPARISON APPROACH .......................................................................................... 53

COST APPROACH ......................................................................................................................... 57

LAND VALUE ............................................................................................................................. 57

REPLACEMENT COST OF IMPROVEMENTS ................................................................... 61

OBSERVED DEPRECIATION FROM ALL CAUSES .......................................................... 61

PHYSICAL DETERIORATION – CURABLE & INCURABLE .......................................... 61

RECONCILIATION ....................................................................................................................... 63

CERTIFICATION ........................................................................................................................... 64

QUALIFICATIONS OF APPRAISER .......................................................................................... 65

ADDENDA:

Engagement Letter [OMITTED] Appraiser’s License E&O Insurance Warranty Deed [OMITTED] Flood Map [OMITTED] Property Record [OMITTED] Property Tax Statements [OMITTED] Comparable Building Sales Comparable Land Sales

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Kirkland & Company

SUMMARY OF SALIENT FACTS

FILE NUMBER : [OMITTED]

PROPERTY IDENTIFICATION : Combination Food Mart convenience store with an integrated deli and Chevron® retail petroleum facility, [OMITTED]

AADT : 31,950.

TAX MAP NUMBER(S)

: [OMITTED]

DATE OF INSPECTION : February 27, 2012.

DATE OF APPRAISAL : February 27, 2012.

DATE OF REPORT : March 14, 2012.

INTENDED USER INTENDED USE PROPERTY RIGHTS APPRAISED

: [OMITTED] As an aid in underwriting a loan, classification of a loan, and/or the disposition of the asset. Fee Simple Estate.

SITE DESCRIPTION

: 0.9245 acre (+40,271 ƒ ).

IMPROVEMENTS DESCRIPTION : Improvements include a 7,576 ƒ canopy over five gas islands connecting to a 2,800 ƒ brick and concrete block building built in 1997. Ten multi-product dispensers and 20 fueling positions. The pumps are triple-hose on each side. Underground fuel storage tanks include two 15,000-gallon (regular unleaded and mid-grade) and one 13,000-gallon (premium) tanks.

ZONING

: NRC, Neighborhood Retail Commercial, Cobb County.

HIGHEST AND BEST USE : Continued use as a combination convenience store with an integrated deli and retail petroleum facility.

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REASONABLE MARKETING & EXPOSURE TIME

: 12 months.

APPRAISAL FEE : [OMITTED]

VALUE INDICATORS

SALES COMPARISON APPROACH : [OMITTED]

COST APPROACH : [OMITTED]

MARKET VALUE CONCLUSION :

[OMITTED]

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ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal is subject to the following conditions: We assumed the legal description furnished to be correct. We assumed no responsibility for

matters legal in character nor render any opinion as to the title, which we assume to be good and marketable.

We disregarded all existing liens and encumbrances unless otherwise stated, and we appraise

the property as though free and clear under responsible ownership and competent management.

We assumed reliable information furnished by others, but take no responsibility for its accuracy.

It is assumed that all water and sewer facilities (existing and proposed) are or will be in good

working order and are or will be of sufficient size to adequately serve any proposed buildings.

The physical conditions of the improvements described herein are based on visual inspection. No liability is assumed for the soundness of structural members since no engineering tests were conducted. No liability is assumed for the condition of mechanical equipment, plumbing, or electrical components, as complete tests were not made.

Unless otherwise noted herein, it is assumed that there are no encroachments or violations of

any zoning or other regulations affecting the subject property and that the utilization of the land and improvements is within the boundaries or property lines of the property described.

The Bylaws and Regulations of the Appraisal Institute govern disclosure of the contents of this

appraisal report.

Quentin Ball is a Member of the Appraisal Institute. The Bylaws and Regulations of the

Institute require each Member to control the use and distribution of each appraisal report signed by such Member. Therefore, except as hereinafter provided, the party for whom this appraisal report was prepared may distribute copies of this appraisal report, in its entirety, to such third parties as may be selected by the party for whom this appraisal report was prepared; however, selected portions of this appraisal report shall not be given to third parties without the prior written consent of the signatory of this appraisal report. Further, neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations media, news media, sales media, or other media for public communication without the prior written consent of the signatory of this appraisal report.

Since the subject 0.9245-acre parcel of land is and has been used for the sale of petroleum

products, the potential exists that leakage of toxic material may have occurred. Qualified experts proficient in conducting environmental audits must determine the presence of

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hazardous or toxic materials. As appraisers, we cannot endorse or sanction an environmental audit. The appraiser has made no soil tests, nor tests of underground water for possible contamination. The appraiser is not qualified to detect such substances, and therefore, the extent of hazardous waste remaining on the property, if any, is not known. In the absence of specific information to the contrary, the appraiser has estimated the value of the property as if “clean” and uncontaminated. The value estimate does not take into account any negative or positive factors caused by existing or forthcoming EPA or other regulations.

We recommend that the client obtain a qualified engineer, architect or other Americans With Disabilities Act (ADA) expert to inspect the subject property, determine the level of ADA compliance/non-compliance and estimate the cost to bring the subject property into compliance. Any non-conformity could have an effect on the Market Value conclusion. Unless otherwise stated, we assume the value conclusion of this appraisal on the subject property in ADA compliance.

No soils or geological reports were provided. This appraisal assumes that the soils and

geological conditions of the site are such that no subsurface rock formations will need blasting or will inhibit development and that no excess construction costs will be incurred due to poor soils or unusual or hidden geological conditions. Should any such detrimental conditions be found to exist on the subject site, the market value estimate herein would likely decrease.

The opinion of value is only as of the date stated in the Appraisal. Changes since that date in

external and market factors or in the property itself can significantly affect property value.

In any assignment involving improvements, the existence of potentially hazardous material used

in the construction or maintenance of buildings, such as the presence of formaldehyde foam insulation, the existence of toxic waste, and/or the existence of asbestos insulation which may be present on the property, has not been considered, unless otherwise noted. Appraisers are not qualified to detect such substances. The client is urged to retain an expert in this field.

We are not required to give further consultation, testimony or be in attendance in court by

reason of this analysis or report, with reference to the property in question, unless arrangements have been made previously.

If the appraisal is submitted to a lender or investor, such party should consider the Appraisal as

one factor together with its independent investment considerations and underwriting criteria, in its overall investment decision.

This appraisal was not based on a requested minimum valuation, a specific valuation or the

approval of a loan. Appraiser has no interest, direct or indirect, financial or otherwise, in the subject property.

The building area(s) contained within this appraisal report is/are approximate and is/are based

upon measurements performed by the appraiser and taken during the site inspection and also

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based upon information from the Tax Assessor’s Office. No detailed floor plans with dimensions were provided. If the building area is significantly different from what is stated in this report, then the appraisers reserve the right to revise this opinion of value.

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PURPOSE, DATE, AND INTENDED USE OF APPRAISAL

At your request, we estimated the Market Value of the combination Food Mart Convenience

Store with an integrated deli and Chevron® retail petroleum facility, [OMITTED]. We note again

that there is an address discrepancy between the address for the subject property on the recorded deed

and the address for the subject property on the Cobb County Assessor’s Office records. The recorded

deed lists the subject property’s address as [OMITTED]. The Cobb County Assessor’s Office lists

the subject property’s address as [OMITTED. The property owner will need to get the records

properly aligned. We utilize the address on the Cobb County Assessor’s Office records, but reserve

the right to change or correct the address in this report should it be determined the address on the

recorded deed is correct. We appraised the Fee Simple Estate. We provide the Market Value as of

February 27, 2012, which coincides with the date of inspection. We provide a self-contained

appraisal report as requested. The intended user is [OMITTED and its affiliates or subsidiaries or

other participating financial institutions. The report is intended to be used by [OMITTED] as an aid

in underwriting a loan, classification of a loan, and/or the disposition of the asset. The value estimate

is subject to the Assumptions and Limiting Conditions stated in the report. Quentin Ball, MAI, is the

Reviewer and Supervisory Appraiser on this report. Rana Barnes, Georgia State Registered Real

Property Appraiser No. 325547, prepared this report.

“Market Value” is defined as the most probable price which a property should bring in a

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

acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specified date and the passing of

title from seller to buyer under conditions whereby:

5. Buyer and seller are typically motivated;

2. Both parties are well-informed or well-advised, and each acting in what they consider their best interests;

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

4. Payment is made in terms of cash in U.S. dollars or in terms of financial

arrangements comparable thereto; and

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Kirkland & Company

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

“Fee Simple Estate” is defined as absolute ownership unencumbered by any other interest

or estate, subject only to the limitations of eminent domain, escheat, police power, and taxation.

“Extraordinary Assumption” is defined as an assumption, directly related to a specific

assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions.

“Hypothetical Condition” is defined as that which is contrary to what exists but is supposed

for the purpose of analysis.

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Kirkland & Company

SCOPE OF WORK

The appraisal development process includes an inspection of the subject property and

analyzing comparable sales in the immediate subject area and expanded submarket. Principals,

brokers, public records, and printed data sources confirmed the sales. We analyzed market factors

in the area, city, and neighborhood. The latest edition of USPAP, effective January 1, 2012,

regulates this report. Our scope of work involved an inspection of the subject site, a neighborhood

analysis, and verification of comparable building sales and land sales. We reviewed information

from published data in the market as well as information from market participants in the subject

submarket. We did not utilize any extraordinary assumptions or hypothetical conditions in this

valuation.

Other aspects of the Scope of Work included analyzing the valuation forces and factors that

influence the surrounding area. Our experience with other downturns in the economy over the past

35 years helps with the analysis.

The valuation process calls for a definition of the appraisal problem and an identification of

the client/intended users; intended use of the appraisal; purpose and date of value opinion;

identification of characteristics of the property (including location and property rights to be valued);

extraordinary assumptions; hypothetical conditions; scope of work; data collection and property

description (market area data, subject property data, and comparable property data); data analysis

(market analysis and highest and best use analysis); land value opinion; application of the

approaches to value; and reconciliation of value indications and final opinion of value, with the last

step being a report of the defined value. In this report, we used two approaches (Sales Comparison

Approach and Cost Approach) to value the subject property. We did not utilize the Income

Approach for a variety of reasons. First, the subject property is owner-occupied. Most

convenience stores/gas stations are owner-occupied so that rental data is scarce. A second option

for the Income Approach is to value the going-concern of a property. We obtained the operating

statements/financials for the subject property from the client and the property owner for the years

2009 and 2011 (2010 financials were not provided to the appraisers). After studying the

financials for 2009 and 2011, we came to the conclusion that the subject property has no going-

concern value. From the operating statement/financials we received, 2009 had little to no

income; 2011 did have an income/profit, but according to the property owner, business at the

subject property has dwindled due to a Quicktrip (QT) that opened up recently just down the

street from the subject property. For these reasons, we value just the real estate and focus on the

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other two approaches (Sales Comparison Approach and Cost Approach). The exclusion of the

Income Approach is not considered to diminish the reliability of the value conclusion herein, and

this report is fully conforming.

Specifically for this appraisal, we took the following steps:

• Inspected the subject property on February 27, 2012;

• Verified and analyzed comparable building sales;

• Verified and analyzed comparable land sales;

• Researched tax records and comparable data provided by CoStar©;

• Verified zoning with the Cobb County Planning and Zoning Department;

• Identified the subject property with an aerial photograph and legal description;

• Viewed abutting land uses and developments in the subject neighborhood including

current and proposed land uses, traffic patterns, and development trends;

• Studied the area, city, and neighborhood;

• Researched the convenience store market;

• Performed a neighborhood analysis; and

• Examined the topography, access, orientation to street, and surrounding uses.

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Kirkland & Company

COMPETENCY PROVISION

Prior to accepting this assignment or entering into an agreement to perform any assignment,

an appraiser must properly identify the appraisal problem to be considered and have the knowledge

and experience to complete the assignment competently. Our acceptance of this assignment is a

statement of competency. No information or conditions were discovered during the course of this

assignment to cause the appraisers to believe we lacked the required knowledge or experience to

complete this assignment competently. Kirkland & Company and the signatory hereto have

experience in the appraisal of properties similar to the subject and are deemed qualified by

education, training, and experience in the preparation of such reports to comply with the

competency provisions of USPAP. The professional qualifications of the individual who supervised

and reviewed this appraisal are included at the end of the report.

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LEGAL DESCRIPTION

[LEGAL DESCRIPTION OMITTED]

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PROPERTY HISTORY

[DETAILED PROPERTY HISTORY OMITTED]

No other transactions that we are aware of have transpired on the subject property within the

past three years. Individuals involved with the chain of title and, if available, various documents

such as contracts, deeds, leases, and closing statements provided the property history. We

performed no title search and cannot guarantee accuracy.

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AERIAL VIEW OF SUBJECT PROPERTY

[AERIAL OMITTED]

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ATLANTA AREA OVERVIEW

The subject property situates in Marietta, Cobb County, Georgia. Population and

employment growth, the diversity of businesses, the capacity of the transportation infrastructure,

and the quality of the educational facilities drive current and future economic development.

Population Growth

The city of Marietta is part of the 28-county, Atlanta-Sandy Springs-Marietta, Georgia

Metropolitan Statistical Area (MSA).

An MSA is a term used by The Office of Management and Budget to delineate areas with a

high degree of social and economic integration with the core as measured by commuting ties.

Adjacent MSAs include the Macon, Georgia MSA, located to the south; the Athens-Clarke County,

GA MSA to the east; the Gainesville, GA MSA to the northeast; the Dalton, GA MSA to the north;

and the Rome, GA MSA to the northwest.

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Kirkland & Company

The Atlanta-Sandy Springs-Marietta, GA MSA total population was 4.28 million in July

2000. By 2007, Atlanta’s population reached 5.27 million, averaging 3.29% annual growth

between 2000 and 2007. Since then population growth has continued to slow. Between 2007 and

2008, population grew at an estimated 2.22%; between 2008 and 2009, population grew at 1.55%;

and between 2009 and 2010, population grew at 1.79%. The population for this 28-county area

totaled an estimated 5.54 million residents as of April 2010.

The core of Atlanta’s MSA consists of ten counties. The growth rate as shown on the

following table was slightly less than the rate for the entire MSA, indicating higher growth rates in

outlying counties.

Over the past three years, Cobb County’s population growth rate has continued to decline,

much like most of the 10-county urban core. The current estimate shows population growth at an

annualized 0.92% during the nine months ending April 1, 2010. This compares to 1.69% for the 10-

county urban core and 1.79% for the entire metro area.

Employment Growth

Despite continued population growth, albeit at a slower pace, employment levels were much

more sensitive to the changing economic environment. During the period of 2000 to 2007, the 28-

county MSA experienced an average annual growth rate of 1.81%. From 2007 to 2008, total

2000 2007 2008 2009County 7/1/2000 7/1/2007 7/1/2008 7/1/2009 4/1/2010 to 2007 to 2008 to 2009 to 2010

Cherokee 143,783 203,890 210,115 215,084 217,186 5.97% 3.05% 2.36% 1.30%Clayton 238,383 272,705 276,009 275,772 276,322 2.06% 1.21% -0.09% 0.27%Cobb 612,633 691,496 704,822 714,692 719,617 1.84% 1.93% 1.40% 0.92%Dekalb 668,826 733,746 740,426 747,274 752,361 1.39% 0.91% 0.92% 0.91%Douglas 92,700 124,324 128,111 129,703 131,174 4.87% 3.05% 1.24% 1.51%Fayette 92,082 105,933 106,398 106,788 108,431 2.15% 0.44% 0.37% 2.05%Fulton 817,145 990,790 1,013,356 1,033,756 1,054,582 3.04% 2.28% 2.01% 2.69%Gwinnett 596,296 772,464 790,519 808,167 820,869 4.22% 2.34% 2.23% 2.10%Henry 121,572 184,902 190,529 195,370 199,915 7.44% 3.04% 2.54% 3.10%Rockdale 70,566 81,835 83,400 84,569 85,410 2.28% 1.91% 1.40% 1.33%Total 3,453,986 4,162,085 4,243,685 4,311,175 4,365,867 2.93% 1.96% 1.59% 1.69%

Source: U.S. Bureau of the Census

Population Estimates Average Growth Rate

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employment declined by 0.81%. The decline accelerated to -5.34% during 2009; then, in 2010, the

rate of job loss slowed to 1.95%. The 10-county core experienced a slightly lower growth rate

during the period 2000 to 2007 and slightly higher rate of decline in employment since then.

During 2010, Cobb’s rate of job loss was less than all but one other county in the 10-county urban

core.

Although no industry appears to be immune from the downturn, part of the decline in

employment can be attributed to reduced construction activity, especially with regards to residential

housing. As shown on the following table, the value of residential construction represented by

building permit data fell from $6.57 billion in 2006 to $669 million in 2009. Preliminary data for

2010 suggests a modest increase from the bottom.

2000 2007 2008 2009County 2000 2007 2008 2009 2010 to 2007 to 2008 to 2009 to 2010

Cherokee 81,050 105,217 105,574 100,089 98,281 4.26% 0.34% -5.20% -1.81%Clayton 122,565 127,799 125,162 118,660 114,904 0.61% -2.06% -5.19% -3.17%Cobb 352,181 363,486 357,234 338,675 333,223 0.46% -1.72% -5.20% -1.61%Dekalb 370,271 373,052 364,763 345,813 335,662 0.11% -2.22% -5.20% -2.94%Douglas 50,151 61,505 61,560 58,362 56,870 3.23% 0.09% -5.19% -2.56%Fayette 48,676 51,248 50,065 47,464 45,758 0.75% -2.31% -5.20% -3.59%Fulton 417,210 463,073 461,396 437,425 428,224 1.57% -0.36% -5.20% -2.10%Gwinnett 338,494 402,473 398,633 377,923 371,826 2.70% -0.95% -5.20% -1.61%Henry 66,019 92,240 92,482 87,677 85,972 5.67% 0.26% -5.20% -1.94%Rockdale 35,922 38,157 37,694 35,736 34,904 0.89% -1.21% -5.19% -2.33%

1,882,539 2,078,250 2,054,563 1,947,824 1,905,624 1.49% -1.14% -5.20% -2.17%

Source: Georgia Department of Labor

Employment Estimates Average Growth Rate

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The most recent employment data available is for June. The data shows employment

continues to struggle. The unemployment rate for the entire MSA is 10.5%. The unemployment

rate for the 10-county core is only slightly better at 10.4%. The unemployment rate for Cobb

County is 9.8%. This is slightly lower than the 9.9% rate reported for June 2010.

Diversity of Business

No one industry dominates the local economy. Retail trade accounts for 14.1% of

employment, health care and social assistance represents 13.3%, education services represents

12.1%, accommodation and food services represent 11.4%, and the remaining categories each

represent less than 10%.

Jan. - Oct.County 2000 2006 2007 2008 2009 2010

Cherokee 372,226,977 524,621,911 357,004,554 150,852,362 61,400,097 71,891,624Clayton 294,519,374 307,473,040 174,188,884 50,831,216 11,576,588 18,246,012Cobb 731,477,807 834,140,434 595,787,501 208,607,371 107,804,452 153,687,382Dekalb 672,158,921 714,848,003 729,164,880 543,332,320 80,242,076 73,674,198Douglas 57,003,830 155,024,990 81,779,962 37,389,260 15,636,219 8,059,432Fayette 161,266,511 167,057,086 120,844,656 32,498,227 20,556,422 23,175,304Fulton 837,860,307 2,112,662,692 1,510,578,629 580,685,432 217,195,415 145,632,212Gwinnett 1,042,777,312 1,011,016,318 511,298,587 212,613,255 89,881,738 166,998,990Henry 348,868,495 498,090,959 365,094,009 111,298,336 44,149,051 45,169,807Rockdale 62,165,762 247,699,579 171,126,041 40,523,502 20,943,796 10,629,838

4,580,325,296 6,572,635,012 4,616,867,703 1,968,631,281 669,385,854 717,164,799

Value of Residential Construction Permits

Total AnnualizedTotal Total Growth Growth Unemploy- Unemploy-

Employment Employment Jun-10 Jun-10 ment Rate ment RateCounty Jun-10 Jun-11 to June-11 to June-11 Jun-10 Jun-11

Cherokee 98,022 98,326 304 0.31% 9.0% 8.7%Clayton 114,602 114,957 355 0.31% 12.3% 13.0%Cobb 332,344 333,375 1,031 0.31% 9.9% 9.8%Dekalb 334,778 335,816 1,038 0.31% 10.5% 10.8%Douglas 56,720 56,896 176 0.31% 11.1% 11.5%Fayette 45,638 45,779 141 0.31% 8.7% 9.3%Fulton 427,095 428,420 1,325 0.31% 10.7% 11.0%Gwinnett 370,846 371,996 1,150 0.31% 9.3% 9.4%Henry 85,746 86,011 265 0.31% 10.5% 10.9%Rockdale 34,812 34,920 108 0.31% 11.2% 12.3%

1,900,603 1,906,496 5,893 0.31% 10.3% 10.4%

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The largest employers in the area have the greatest impact on the economy. The following

is a list of the major employers. Note that only corporate employers are included. Retail companies

are included only if the location is a corporate headquarters and if so, only the employment at the

headquarters is listed.

% ofIndustry Sector Employees Total

Retail Trade 240,630 14.1%Health Care and Social Services 226,101 13.3%Education Services 205,909 12.1%Accommodation and Food Services 194,360 11.4%Admin., Support, Waste Mgmt., Remediation 161,767 9.5%Professional, Scientific & Technical Svcs. 153,592 9.0%Manufacturing 140,422 8.3%Wholesale Trade 127,540 7.5%Public Administration 125,279 7.4%Transportation and Warehousing 125,046 7.4%

1,700,646 100.0%

Top Industries in the Atlanta MSA, 2nd Quarter 2010

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Transportation

The interstate highway system provides direct access to a number of major cities in the

Southeast. Atlanta is 117 miles southeast of Chattanooga, Tennessee; 146 miles east of

Birmingham, Alabama; 160 miles northeast of Montgomery, Alabama; 109 miles northeast of

Columbus, Georgia; 84 miles northwest of Macon, Georgia; 250 miles northwest of Savannah,

Georgia; 145 miles west of Augusta, Georgia; 215 miles west of Columbia, South Carolina; 145

miles southwest of Greenville, South Carolina; and 245 miles southwest of Charlotte, North

Carolina.

The Atlanta Hartsfield-Jackson International Airport serves numerous carriers that provide

non-stop service to 165 U.S. destinations and 85 international destinations in more than 50

countries. In 2010, passenger volume increased 1.51% to 89.33 million, with international

passengers increasing 3.47% to 9.14 million. This allowed the airport to retain the title of the

busiest passenger airport in the world for the 13th consecutive year. More than 1,300 flights, on

average, depart daily.

Delta Air Lines 22,257 AT&T 21,915 Emory University 21,000 Cox Enterprises 13,583 United Parcel Service (UPS) 10,745 Wellstar Health Systems 10,112 SunTrust Banks 7,700 Lockheed Martin Aeronautics 7,531 IBM Corporation 7,500 Georgia Institute of Technology 7,342 Northside Hospital 7,100 Turner Broadcasting systems 6,600 The Southern Company (includes GA Power) 6,000 AirTran Airways 6,000 The Home Depot (HQ, not including retail branches) 5,500 Children's Healthcare of Atlanta 5,220 Coca-Cola 5,136 Wachovia Corporation (now Wells Fargo) 5,100

Atlanta Chamber of Commerce & Georgia Power research departments June 2007/2008

Top Corporate Employers, Atlanta MSA

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The airport also serves the air freight industry. In 2010 air cargo volume increased by

17.05% to 659,129 metric tons, with international air cargo increasing 24.22% to 385,136 metric

tons. The airport’s current $6 billion-plus capital improvements project includes the recently

completed fifth runway, a new, energy-efficient rental car center, a new 12-gate international

terminal, and aesthetic and functional upgrades to its concourses, people movers and parking

services.

In addition to Hartsfield-Jackson, the region boasts 20 regional airports with runways 5,000

feet or longer, suitable for corporate jets. Six of these are designated by the FAA to serve as

reliever airports for Hartsfield-Jackson.

Passenger rail service is provided by AMTRAK and locally by MARTA’s light rail system.

Freight rail service is provided by CSX and Norfolk Southern. CSX operates a 24-hour intermodal

terminal in Fairburn, where its Hulsey Yard processes 1,000 trucks and 16 trains daily. Atlanta is

CSX’s fourth largest metro operation in lift volume. In 2008, CSX announced major investments

that shorten rail shipment time from Atlanta to California by approximately a day. CSX teams with

Burlington Northern Santa Fe to offer direct service from California’s ocean ports. Norfolk

Southern operates an intermodal hub in Cobb County, where it is investing $11 million to expand its

operation, and the company also operates its East Point Yard, which is the largest Road-Railer hub

in the world. The carriers also operate two other yards in metro Atlanta and four other yards in

Georgia.

Current efforts are underway to expand the Port of Savannah. The Port of Savannah is

directly responsible for an estimated 3,500 new transportation and logistics jobs in Atlanta during

2010. The hope is to expand the port to coincide with the scheduled completion of the expansion of

the Panama Canal in 2014, when an estimated 25% of U.S. import freight volume will shift to the

East Coast. The Panama Canal’s new locks will be able to transport ships that are 235 feet longer,

54 feet wider and will be able to carry nearly three times as many containers than the existing locks.

Education

The Atlanta metro area ranks 7th among major U.S. metro areas in producing graduates with

bachelor’s degrees or higher. Nearly 40 accredited degree-granting colleges and universities in the

region offer more than 400 fields of study. More than 220,000 students are enrolled. The largest

colleges and universities, ranked by enrollments are the University of Georgia (33,831), Georgia

State University (21,449), Kennesaw State University (20,607), Georgia Institute of Technology

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(18,747), and Emory University (12,570). The largest college offering two-year degrees is Georgia

Perimeter College (21,473).

Forward-Looking Economic Indicators

Some of these indicators of future economic activity include the consumer confidence index,

retail sales trends, and employment trends. Since the second half of 2009, the two main national

consumer confidence indexes have showed a trend of increased consumer confidence, as measured

by consumers’ opinions about the current economic conditions and their expectations for the future.

The increase in consumer confidence has had some short-term variation. For example, the

indexes provided mixed signals for May. The University of Michigan’s consumer sentiment index

increased 4.5 points in May to 74.3, stemming from an increase in the expectations component.

The Conference Board’s consumer confidence index fell 5.2 points in May to 65.4. Both the

expectations component and present situation component of their survey fell during May. However,

both surveys reflect relative weakness compared to previous recoveries/expansions.

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Retail sales nationally have continued to increase on a year over year basis after

experiencing significant adjustment between the second half of 2008 through the end of 2009. At

the end of 2009, the rate of decline in retail sales volume slowed significantly. By the beginning of

2010, retail sales volume started to recover. Core retail sales were up 5.5% in April and have been

above a 5% pace since the beginning of the year.

Another indicator of future growth is the Diffusion Index of Private Nonfarm Payrolls. A

result that is greater than 50% suggests future employment growth.

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Since the first quarter of 2010, the index has been above 50%. In May this index declined

from 64.6% to 53.6%. Though still above 50%, it suggest the growth rate in nonfarm employment

may be slowing.

After the significant declines experienced during the Great Recession, the positive growth

rates experienced in retail sales and in employment show we are continuing to experience recovery.

The recovery, however, is much less robust than previous recoveries. Consumer confidence

remains shows a gradual upward trend, and employment continues to increase.

There are a few areas that that undermine future growth. The greatest source of uneasiness

seems to be the percentage of homeowners who have negative equity in the residence. CoreLogic

reported that at the end of the first quarter of 2011 the average number of mortgagees who owe

more on their home than what they are worth (negative equity) in Georgia is approximately 30%.

Nationally, only California, Michigan, Florida, Arizona, and Nevada have a higher percentage.

Conclusion

Despite the gradual increases in economic activity, the recovery remains less than robust.

Consumer confidence and retail sales reflect gradual improvement. The main source for sustained

long-term growth is employment. Nonfarm payrolls continue to show improvement nationally. In

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Cobb County the declines in employment appear to have slowed. The unemployment rate in June

was 9.8%, a slight increase from last year’s rate of 9.9%. We expect population growth will

continue and the demand for products and services will grow. We expect a gradually improving

economic environment with positive economic prospects for the long-term.

NEIGHBORHOOD

[DETAILED NEIGHBORHOOD DISCUSSION OMITTED]

The neighborhood, as expected, has seen significant declines during the recession. Long-

term prospects are somewhat better, but the neighborhood is largely built out and does not have

room for much future growth without demolition of existing structures. Continued moderate

declines are anticipated in the near term with a return to more stability anticipated for the long term.

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MARKET ANALYSIS

The U.S. retail price average for regular grade gasoline reported by the Energy Information

Administration (EIA) reached a five-week high at $3.299 gallon in beginning 2012, and is set to

notch its third straight weekly increase amid higher wholesale costs.

Several factors continue to drive gasoline prices higher despite ongoing weak demand, with

preliminary EIA statistics showing gasoline delivered to markets in 2011 1.9% lower than in 2010,

while down 4.9% in December against year prior.

Feared supply disruptions for both global crude and finished products have been a primary

concern in early January, highlighted by a belligerent Iranian government that has threatened to

close the Strait of Hormuz over expected sanctions aimed at its oil exports. Iran, a member of the

Organization of the Petroleum Exporting Countries (OPEC), was the world’s third-largest oil

exporter in 2010 behind Saudi Arabia and Russia.

The sanctions were called for by France, with the European Union and U.S. set to target

Iran’s central bank in response to Iran’s pursuit of nuclear weapons, although Tehran has repeatedly

said its nuclear ambitions are peaceful. Reports indicate the U.S. is heavily pressuring other

countries such as Japan to embargo Iranian oil imports.

In response, the Iranian navy has conducted military exercises in the Persian Gulf, and has

plans to conduct more of these exercises in the Strait of Hormuz – a critical shipping lane where

nearly 17.0 million barrels per day (bpd) of oil passed through in 2011. The strait connects the

Persian Gulf with the Gulf of Oman, while bordering Iran. The narrowest width is 21 miles.

Press reports out of Iran indicate Tehran has given its approval to close the strait should

western nations implement their sanctions on Iranian oil exports. The U.S. said it would take action

if the Hormuz Strait were closed, calling it an international waterway. Meanwhile, separate reports

indicate that Iran has begun enriching uranium.

Oil exports from Nigeria, also a member of OPEC, are threatened by massive strikes across

the country in response to the end of fuel subsidies. Despite being Africa’s third-largest oil

producer, Nigeria is a poor country. The end of the fuel subsidies was part of the new government’s

strategy to increase subsidies for other endeavors, such as agriculture.

Meanwhile, European refiner Petroplus said it was forced to close three of its refineries in

Europe after losing its line of credit. Market watchers fear that those shutdowns alongside the

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planned permanent closures of three refineries in Philadelphia, Pa. will tighten up Trans-Atlantic

supply, which is currently having a greater upside price impact on diesel and heating oil price.

Meanwhile, some market observers see a more prosperous year for the U.S. economy in

2012, supported by the Department of Labor’s nonfarm payroll report for December showing the

national jobless rate dipped to 8.5%, a three-year low. A growing economy uses more fuel.

Limiting the upside for gasoline prices, with U.S. crude prices holding above $100 per

barrel, is concern over the Euro-zone debt crisis. Several analysts believe Europe will slip into

recession this year, if those economies haven’t already begun to contract.

Legislative battles and a still-struggling economy marked a year of ups and downs for the

convenience store industry in 2011. Convenience Store News offers 10 predictions for the industry

in 2012:

1. More buying and building of stores. 2011 saw a rush of both acquisition activity and

new builds in the industry. Expect that to continue. The industry is still highly fragmented and

many retailers have stated their intentions to grow and then grow some more.

2. Economic improvement. We won’t head back into a recession and unemployment will

finally go down. Europe will stabilize its economy enough that the Euro survives. In the United

States, companies will realize another recession isn’t coming and begin to loosen up their hiring

practices. Job growth won’t be fantastic, but the “bad old days” of 2008 and 2009 will be left far

behind.

3. Further regulation of the tobacco industry. The Food and Drug Administration (FDA)

started its required review of dissolvable tobacco in July and could issue regulations this year. The

agency’s Tobacco Products Scientific Advisory Committee has a March 23 deadline to submit a

report to the Secretary of Health and Human Services. Also, nearly a year after giving up its legal

fight against electronic cigarettes, the FDA will finally set regulations for electronic cigarettes that

are in line with its regulations of traditional cigarettes.

4. Mobile payments take off. Google Wallet will continue to expand and Isis is ready for

a national launch. More cell phones will also come to market with mobile wallet capabilities. The

question is: Will mobile wallets save c-store operators money? Retailers are still dealing with the

less-than-thrilling cap on debit card transaction fees and uncapped credit card fees.

5. Petroleum alternatives gain traction. 2012 is the year electric vehicles and natural gas

will finally make a dent as petroleum alternatives. Despite challenges to owning either type of

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vehicle, oil remains at $100 per barrel and consumers will begin to see the benefits of electric cars

and compressed natural gas, which are both cheaper at the pump.

6. Widespread digital marketing use. Smart phones and mobile applications will

continue to be popular and become an even greater resource for marketing purposes. Companies

will try to win users over with apps and games that are fun as well as helpful and functional. We’ll

also see more web-to-location promos using smart phones, social networks like Foursquare, and

texting.

7. Converting pumpers to shoppers. This year will bring stepped-up efforts to drive

traffic from the pumps into the store, including more tests of technology that enables customers to

order food at the pump and mobile apps that let users order food prior to arriving on site.

8. Putting “fresh” first. “Fresh” will be the key word behind more c-stores’ food-service

programs. Packaging and merchandising will reflect this in the cold case, as will signage throughout

the store. Fruits and vegetables will also help communicate this message.

9. New prototypes. A resurgence of innovation in store design will occur as c-stores try to

keep up with changing consumer expectations, as well as competition. McDonald’s store of the

future – rolling out now – features wooden tables, faux-leather chairs and a muted color palette.

10. Government gridlock. Don’t look to the government for any major changes – or relief

from onerous federal regulations – as gridlock rules during a Presidential election year.

CONVENIENCE STORE MARKET OVERVIEW

A year ago, the global recession had ended; the devastated housing market was showing

signs of slowly improving; the labor market was lagging the economic rebound; and consumers

were angry.

Now, a year later, the U.S. economy continues to feel the fallout of The Great Recession,

noted Maureen Maguire, president of ThinkResearch and Convenience Store News’ partner on its

annual Industry Forecast Study.

Citing continuing problems in both the housing and labor markets, she predicted that

consumer pessimism – fueled now by gridlock in Washington, Wall Street protesters and a negative

national media – will adversely impact retail sales in 2012.

Although the recession officially ended in June 2009, “It will officially feel like it lasts

through 2012,” Maguire told an audience consisting of some of the biggest retailers in the

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convenience store industry. This year’s CSNews Industry Forecast Council, sponsored by General

Mills, included representatives from 7-Eleven Inc., RaceTrac Petroleum, The Pantry Inc., Susser

Holdings Corp./Stripes, Alon Brands, Bpampm, Quick Chek, Handee Marts and Circle K.

Compared with the third quarter of 2009, personal consumption in the United States

improved slightly over the past two years, according to government statistics. However, the

increase in business spending, which rebounded about a year ago, was much slower in 2011, and

residential investment, which was up about 10% in the third quarter of 2009, plunged by nearly

30% in the third quarter of 2011.

As for oil prices, which recently hit $100 per barrel, Maguire feels consumers seem to have

become desensitized to it – maybe because the price has been hovering at the $90-per-barrel range

for so long. “With China slowing down, I wouldn’t be surprised if the $100 per barrel is short-

lived,” she commented. “We know that speculation is rampant here, but it’s anybody’s guess to

estimate how much of the run-up is due to speculation.”

During the Forecast Council meeting, she also presented these conclusions about the

prospects for the U.S. economy this year:

• Real gross domestic product (GDP) will grow by 2.9% in 2012, compared with a projected

1.7-% gain for 2011;

• Inflation will rise 2.9%, following a 3.2-% increase in the Consumer Price Index in 2011;

• Total retail sales will grow by 4.6% in 2012, after a 7.5-% increase in 2011; and

• Unemployment rates will drop from the current 9% to a still-high 8.7% in 2012.

There are several bright spots in the 2012 CSNews Forecast Study for convenience stores.

The study model predicts that key product categories such as chocolate candy, other tobacco

products (particularly moist snuff and snus) and energy products (energy drinks, shots and bars) will

see strong unit and dollar sales increases this year.

Motor Fuel

Slightly lower pump prices will result in a decline in fuel dollar sales for the convenience

store industry in 2012. Motor fuel prices will drop by a few cents this year, but remain in the mid-

$3 range, according to the Forecast Study. The average retail price per gallon for 2012 is expected

to hit $3.60 ($3.50 for gasoline and $3.85 for diesel). In 2011, the average price per gallon was $.09

higher at $3.66 ($3.58 for gasoline and $3.85 for diesel).

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Both national gallons and convenience store gallons are forecast to increase this year vs. last

year. The 2012 forecast for national gallons is 182.3 billion, vs. 181.5 billion in 2011. This year’s

forecast for c-store gallons is 147.9 billion, compared to 147.2 billion last year.

This projected increase in gallons, though, will not be enough to push 2012 sales above the

previous year. National sales of gasoline in 2012 are expected to decrease from $663.7 billion to

$656.7 billion. C-stores specifically will see a decline from $536 billion to $532.6 billion.

Cigarettes

The manufacturer list cost per carton rose to $33.14 in 2011 from $32.14 in 2010. Another

$1-per-carton increase is forecast for 2012, which will bring the cost to $34.14. Cigarette taxes

remained flat through 2011 at $20.32 per carton, mainly due to the lack of a federal tax increase.

This figure, though, is expected to inch up by 20 cents this year to $20.52. C-stores’ volume in

cigarettes, meanwhile, will remain flat in 2012 at 0.87 billions of cartons.

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Other Tobacco Products (OTP)

The Other Tobacco Products (OTP) category registered $44,538 in sales and 16,413 units

per store in 2010, amounting to a 13.3% sales increase and a 9.8% volume gain; 2011 saw per-store

sales increase to $47,918 – a gain of 7.6% – with per-store volume up 13.0% to 16,881 units. The

forecast indicates 2012 will be even better, with OTP generating $51,752 in sales per store (up

8.0%) and 17,049 units per store (up 14.1%).

Packaged Beverages

In 2011, packaged beverages produced per-store sales of $144,156, while per-store volume

came in at 84,696 units. This represented a 5.3% per-store sales increase and a 2.9% unit volume

increase over 2010. This year, packaged beverages are expected to grow 2.7% in sales, but decline

0.6% in volume. Meanwhile, beer/malt beverages finished 2011 down 1.0% in sales and 0.1% in

unit volume per store. Things are not forecasted to be much better in 2012, as a 0.4% decline in

per-store sales is predicted, with unit volume increasing just 0.8%.

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Candy

While the 2012 forecast calls for sales of candy, gum and mints to grow 3.7% per store this

year, unit volume will decline by 0.7%. This mirrors what was seen in 2011, when the category

grew 4.5% in per-store sales, but volume declined by 1.4%.

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Salty Snacks

The salty snacks category experienced per-store sales and unit volume growth in 2011. Per-

store sales increased 2.6% to $28,820. For 2012, another slight rise is forecasted, with sales

expected to increase 0.8% to $29,038 per store. On the volume side, per-store units increased 1.1%

in 2011, and this year’s forecast calls for a 0.9% gain.

(Source: Convenience Store News, February 2012)

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ADDITIONAL GAS STATION MARKET RESEARCH

The retail market for gasoline has many competitors, making it difficult for one retailer to

set prices independent of other sellers. Gasoline is a product that is basically the same from gas

station to gas station. Furthermore, a manager of a gasoline retailer can easily match competitors’

price swings by changing a few digits on a roadside sign.

Some retailers choose to charge slightly higher or lower prices relative to their closest

competitors, in part due to the mix of other products or services sold at the station or the

convenience of its location. However, price changes for the retail market as a whole are primarily

influenced by the underlying costs for gasoline, including the price of oil, government regulations

and taxes, refining capacity and transportation costs. According to a study by the Energy

Information Administration (EIA), if the wholesale gasoline price increases by 10 cents, retail price

increases of about 6 cents are expected within two weeks and 10 cents within six weeks.

Oil represents the largest component of the cost of gasoline. OPEC largely influences the

price of oil. OPEC includes 11 developing countries that supply 40.0% of the world’s oil. These

countries agree on the amount of oil each country produces to keep oil prices within a range that

accrues the most profit. If the price moves above or below the range, OPEC estimates that

profitability would decline among its members.

Refining crude oil into petroleum products represents 19.0% of the price for gasoline. In

addition, once the product leaves the refinery, it is transported first by pipelines, tankers or barges,

and then by trucks to retailers. States that are farther away from refineries have higher

transportation costs, which lead to higher retail prices relative to states that are closer to refineries.

Constraints to refining capacity can lead to changes in wholesale gasoline prices. When

refineries require unexpected maintenance, or regularly scheduled maintenance runs longer than

anticipated, supply can tighten and wholesale prices increase. For example, a Minnesota refinery

(one of eight refineries in the Ninth District) had equipment problems and was forced to reduce

production. Another example is the more recent BP refinery explosion on the Gulf Coast.

In addition to higher oil prices, seasonal maintenance at refineries led to constraints on

gasoline supply. In this section of the Appraisal Report, we will delve into the problems and the

opportunities of this type of property.

One of the problems lies in large part with credit cards, industry officials say. Gas stations

customarily mark up the price by 8 to 12 cents per gallon, no matter the market conditions. But

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credit card companies charge a fee of 2.0% to 3.0% per sale. So, as the price-per-gallon increases,

the gas stations pay a larger share of their profits to credit companies. And these days, more

customers are paying with credit cards because few carry the $60 or $70 in cash it costs to fill up,

said Paul O’Connell, the New England Service Station and Repair Association’s executive director.

“Business people have to make a decision,” O’Connell said. “Do you keep losing money

day after day, or do you just make a business decision and say it’s not worth it?” Some gas stations

are revolting and refusing to accept credit cards. Some are offering a discount of 2 to 3 cents a

gallon if the customer pays cash. Many gas station owners, from the Berkshires to Cape Cod, are

hurting financially, wondering how much longer they can stay in business as prices spiral steadily

upward.

“My volume is down, my margins are way down, and I’m just barely hanging on,” said

Henry Nazzaro, who has owned North Reading’s best gas station for 35 years. “I’m just barely

eeking out enough each week to pay the bills.”

Many ‘stations’ only make a few cents profit per gallon. Their ‘real’ profit is in selling $5

gallons of milk, $6 a pack for cigarettes, $4 for a loaf of bread, and sodas and beer.

As for ‘branded’ stations, like Chevron, Citgo, Shell, Texaco – Stations earn on average

between 10 and 15 cents on a gallon of gas. Ironically, they earn the least when prices are highest.

As fuel climbs, gas stations must shrink their profit margin to remain competitive, meaning they

earn less per gallon than usual. But another big cost during tough times is something they can’t do

anything about – credit card fees, which add up to about 2.5% of all purchases.

How do station owners make up for lost revenue? “Prices go up like a rocket and come

down like a feather,” says Richard Gilbert, a professor of economics at UC Berkeley. For several

weeks after wholesale prices drop, stations can earn as much as 20 cents a gallon before retail prices

are lowered to reflect the change.” But some stations, where ‘gas wars’ go on, sometimes only

make a couple of cents profit.

Ángel González, Seattle Times business reporter, did research on convenience stores.

Convenience-store owner David Malik earns about as much on a can of Coke as he does on a

typical 10-gallon purchase of gas. Malik’s gross profit on gasoline is roughly 3 cents a gallon after

paying for supplies and credit-card fees, but he earns 30 cents on the soft drink. And when trouble

in a faraway oil-producing nation spikes energy prices, his profits there are squeezed even more.

Kent real-estate agent Harry Timko was recently filling up his Toyota Tacoma pickup at Malik’s

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station, blamed oil companies and fuel taxes, not retailers, for his $200 weekly gasoline bill. “I

understand oil companies are in the business to make a profit, but at the same time it’s at our

expense,” he said.

“When oil-company profits go up, my profits go down,” said Malik, 51, who lives in

Bellevue and owns seven gas stations in South King County under different major brands. Even as

his costs rise, he tries to keep a lid on gas prices so drivers will stop at his stores instead of the

competition. Volume is the only way to make this slim-margin business profitable. “Every time the

price of gas goes up, it costs us more money.” Malik’s real gain lies in bringing customers into his

convenience stores – where they can buy that all-important can of Coke.

High prices, slim profits – For the average consumer, gas stations are the only visible face

of an industry where record profits for global companies like Exxon Mobil have sparked countless

complaints, government investigations and accusations of price-gouging. Exxon Mobil, the world’s

largest publicly traded oil company, reported some $10.26 billion in quarterly profits – lower than

before but still dwarfing giants in other industries.

Yet, the mostly independent gas-station owners, who typically operate franchises under the

oil companies’ brand names, saw little of the windfall. Retailers earn an average of 2 to 3 cents per

gallon before taxes, said Jeff Lenard, a spokesman for the Alexandria, Va.-based National

Association of Convenience Stores.

Operating a gas station “Is not very profitable. It’s also very volatile – even more volatile

than the refining side of the business,” said Fadel Gheit, a New York-based oil analyst with

investment bank Oppenheimer & Co. For the retailers, “most of the profit is in the convenience

store – a prime location in high-traffic areas where people find it easier to buy small items without

having to go to town.”

They feature gas, but station owners increasingly rely on in-store sales for their living. “You

cannot live on one without the other,” said Wagih Abu-Rish, 65, who owns a Union 76 gas station

in North Bend. Big-box stores’ ventures into gasoline dealing are also putting pressure on the retail

side at some convenience stores because the bigger companies can easily weather cost spikes and

offer better prices. When the likes of Costco installs pumps in its parking lots, “it affects your

margin and affects your volume,” Abu-Rish said.

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Price-gouging worries – The small retailers’ ordeal underscores the complexity of the oil

and gas industry, a critical and poorly understood sector that stirs concerns about inflation, energy

security and climate change, and sits squarely on top of the public agenda.

A Federal Trade Commission report a few years ago found no evidence of price

manipulation among oil companies. But for many politicians, price gouging remains a rallying

cause. The U.S. Senate passed an energy bill that criminalizes price gouging. Oil-industry

advocates say legislation that meddles with prices will keep the market from balancing itself by

attracting imports from other countries, and will actually increase costs for consumers.

What’s behind the price – Here’s what contributes to the price Americans pay at the pump:

• The price of crude oil: 46.0%, according to the EIA.

• The refining process: 28.0%. Refining converts crude oil into gasoline and other products.

• Taxes: 13.0%.

• Distribution costs: 13.0%. This is the slice shared by wholesalers and the stations to which

they sell. The profit margins there are slim. Most of the markup goes to paying for storage,

transportation, payroll expenses and mortgage and credit-card fees.

Dealers particularly resent paying high credit-card fees. VISA charges 1.95% of the value

of every transaction, plus 10 cents, at Malik’s Chevron-branded stations. The charge is slightly

smaller for debit cards. Malik would like to see more customers pay cash, but that’s unlikely amid

rising gas prices, which make people prefer plastic.

Why we pay more – The factors that make gasoline prices move are determined by global

markets. As bit players in oil’s great game, gas-station owners watch from the bench and find

themselves increasingly vulnerable.

Crude oil is by far the most important element of the price. Its cost has more than doubled

since 2008 as crude output hasn’t kept pace with soaring demand. At current prices, crude-oil

production is extremely profitable to major oil companies, accounting for about two-thirds of their

income.

With the supply so tight, threats of an unexpected shortage caused by political strife or

natural disasters in oil-producing regions can send prices through the roof. The price of refining also

fluctuates often. Refiners can charge more for their gasoline when other refineries are down due to

maintenance or unexpected trouble in a period of high demand.

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People in the West often pay more than the rest of the country for several reasons: The

region is cut off from massive refining hubs of the Midwest and the Texas-Louisiana coast, and it is

difficult to import gasoline there from Europe.

HEADWINDS FACING TRADITIONAL CONVENIENCE STORES

Hypermarket Competition

Hypermarkets sell fuel to offer a complete shopping experience and to generate additional

in-store sales; they are not particularly concerned about fuel margins. Hypermarkets are not looking

for profit as far as gasoline is concerned, and this becomes a problem for other retailers who do

need to make a profit on gasoline. In rural areas, hypermarkets such as Wal-Mart can draw

customers from up to 20 miles away. The following map shows the development of hypermarket

sites in the U.S. This analysis was prepared by Energy Analysts International (EAI), Inc. EAI, Inc.,

is the foremost authority on the hypermarket phenomenon and its impact on the U.S. retail gasoline

market.

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The chart above shows the hypermarket fuel site distribution for the year 2007. In 2001,

there were about 1,600 hypermarket gasoline retail sites in the U.S. By 2007, this number had

grown to 4,301. Hypermarkets site growth has slowed from the frantic pace of 66 per month in 2001

to about 27 new sites per month as of 2007 as more and more parts of the country, especially in the

West, become saturated.

Looking at the growth rates in various areas, we see that the Southeast is forecast to have the

highest growth in hypermarket sites at 161 new fuel sites added each year.

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The photograph shows a Costco fuel site (a typical hypermarket). Customers are lined up in

queues five and six deep at all fuel lanes waiting to purchase motor fuel. Here, Costco was selling

regular unleaded gasoline at 28 cents per gallon below the average street price.

Hypermarkets like Wal-Mart have typically gone into rural areas first. At a convenience

industry trade show, Energy Analysts International estimated that in 2000 there were 1,200

hypermarkets in the U.S. selling 4.4 billion gallons in gasoline. This represented 3.3% of the U.S.

gasoline market in 2000. Figures show for 2005 show that hypermarkets have captured 12% of the

U.S. gasoline market over a period of less than five years. This is the serious problem facing the

convenience industry today. Because of this new competition in retail fuel sales, the convenience

industry is undergoing a structural change. It is doubtful that the convenience industry will emerge

from this present upheaval operating with the same business model it has had for the last 20 years.

Conclusion

Competition from hypermarkets is real; it is spreading and is having a significant impact on

the convenience-store industry. Inevitably, convenience stores will not be able to withstand this

competition and will reduce in numbers.

In order to survive this competition, the c-store industry needs to change its way of doing

business. For more than 20 years, fuel sales have accounted for a major part of c-store revenues,

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but this is changing now. Leveraging the fuel offering to enhance in-store sales will improve

overall store performance and will help absorb the drop in fuel margins and volumes.

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REASONABLE EXPOSURE AND MARKETING TIME

Exposure time refers to the estimated length of time the property interest being appraised

would have been offered on the market prior to the hypothetical consummation of a sale at market

value on the effective date of the appraisal. Information from brokers and investors indicate sales

were on the market ranging from no marketing period to several years. Based on this information, a

reasonable exposure time for the subject property is 12 months.

Reasonable marketing time is an estimate of the amount of time it might take to sell an

interest in real property at its estimated market value during the period immediately after the

effective date of the appraisal; the anticipated time required to expose the property to a pool of

prospective purchasers and to allow the exercise of due diligence, and the consummation of a sale at

a price supportable by current market conditions. Marketing time differs from exposure time,

which is always presumed to precede the effective date of appraisal.

Over the next 12 months, the market will likely exhibit similar demand characteristics to the

past 12 months, though gradual improvement is possible. An appropriate estimate of the marketing

period for the subject property is 12 months.

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SITE DESCRIPTION

LOCATION

: [OMITTED]

TAX MAP NUMBER

: [OMITTED]

SIZE : 0.9245 acre (+40,271 ƒ ).

SHAPE : Irregular shape; functional.

UTILITIES : All available.

TOPOGRAPHY : Generally level and at street grade with all frontage streets [OMITTED]. A portion of the land slopes downward on the eastern portion of the site.

DRAINAGE : Appears adequate. There is a retention pond on the rear/northwestern portion of the site.

ACCESS & EXPOSURE : Access and exposure to the subject property is good. Access to the property is provided via one curb cut on the southern side of [OMITTED] and one curb cut on the northern side of [OMITTED]. There is no direct access to the subject site from [OMITTED].

FRONTAGE : 147.28’ on [OMITTED. 203.69’ on [OMITTED]. 211.79’ on [OMITTED].

STREETS AND ROADS

: [OMITTED is a four-to-six lane heavily traveled primary traffic artery in Cobb County. It traverses the neighborhood in mostly a north-south direction. It is four lanes at the subject site. Both [OMITTED] roads are short, two-lane secondary roads. [OMITTED] ends at [OMITTED] west of the subject site. AADT: 31,950 on [OMITTED] at the subject site (according to the Georgia Department of Transportation).

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EASEMENTS : Neither the site inspection nor queries revealed any unusual easements. Since the property is connected to water, sewer, gas, electric, and telephone suppliers, it is believed that only the typical utility easements necessary for operation of the property are present. It should be noted, however, that if it is determined that adverse easements exist, these factors may impact the market value and/or the marketability of the property.

PARKING : Approximately 13 marked parking spaces are located along the front entrance to the subject building.

FLOOD PLAIN MAP :

[OMITTED]

ENVIRONMENTAL : We were not provided with an Environmental Site Assessment. It is important to note that since the property is and has been used for the sale of petroleum products, the potential exists that leakage of toxic material may have occurred. We are not qualified to detect such substances, and therefore, the extent of contamination on the property, if any, is not known. In the absence of specific information to the contrary, we have estimated the value of the property as if “clean” and uncontaminated. The value estimate expressed in this report does not account for any negative or positive factors caused by existing or forthcoming EPA or other regulations.

SUMMARY : The subject site is of adequate size, shape, and utility to support development similar to those in the surrounding area. There are no adverse odors, hazards, or nuisance known to exist of which we are aware. The site enjoys good functional utility.

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IMPROVEMENTS DESCRIPTION

TYPE OF IMPROVEMENT : Combination Food Mart convenience store with an integrated deli and Chevron® retail petroleum facility. Improvements include a canopy over five gas islands connecting to a 2,800 ƒ brick and concrete block building. The canopy is approximately 7,576 ƒ and contains under-canopy lighting. Ten multi-product dispensers and 20 fueling positions. The pumps are triple-hose on each side. Underground fuel storage tanks include two 15,000-gallon (regular unleaded and mid-grade) and one 13,000-gallon (premium) tanks.

SIZE OF BUILDING : 2,800 ƒ convenience store building. Built in 1997.

ACTUAL AGE : 15 years.

EFFECTIVE AGE : 15 years.

CONDITION : Average.

CONSTRUCTION DETAILS

FRAMING : Concrete block.

FOUNDATION : Concrete slab.

BASEMENT : None.

EXTERIOR WALLS : Brick and concrete block.

FLOORS : Tile.

WINDOWS : Glass storefront in aluminum frame.

ROOF : Metal gable-type roof with gutters and downspouts.

ENTRANCE : Three glass in anodized aluminum frame doors on the front wall.

INTERIOR LAYOUT : Good, with maneuverability.

INTERIOR WALLS : Painted drywall.

OFFICE : Small office area, also used as storage.

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CEILINGS : Acoustical tile ceiling. Approximately 9’ ceiling height. During

the site inspection, the appraisers noticed some water damage to the acoustical tile ceiling, which could be the result of water leaks from roof issues.

LIGHTING : Suspended fluorescent fixtures.

REST ROOMS : One male and one female rest room each with a porcelain sink, one toilet, tile floors, fluorescent lighting, and walls with half tile and half painted drywall.

PLUMBING : Adequate to meet code requirements.

ELECTRICAL : Adequate to meet code requirements.

SECURITY : Surveillance cameras.

FIRE PROTECTION : The subject building does not appear to have a sprinkler system.

SITE IMPROVEMENTS : Minimal landscaping, enclosed trash dumpster, pylon-style sign with Chevron identification logo and fuel pricing reader board, coin-operated vacuum and air machine, one ice bin, coin-operated pay phone, detached freezer used for meat storage and located at the rear of the building, ground-mounted HVAC units (at rear of building), yard/lot lighting, and wire and wood fencing that surrounds the rear of the building and the rear portion of the subject site.

Petroleum and Other Site Equipment

UNDERGROUND STORAGE TANKS

: 10- 15,000 gallon regular unleaded gasoline tank. 10- 15,000 gallon mid-grade gasoline tank. 10- 13,000 gallon premium gasoline tank.

FUEL DISPENSERS : 10- triple-hose multi-product dispensers with card readers.

Conclusion: Overall, the building improvements are in average condition and functional.

The subject is considered a “Class C” Average Construction Cost Gas Station Mini-Mart

Convenience Store.

[SUBJECT PHOTOGRAPHS OMITTTED]

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ZONING

CLASSIFICATION : NRC, Neighborhood Retail Commercial District.

ZONED BY : Cobb County.

INTENDED USE

: The NRC district is established to provide locations for convenience shopping facilities which are on properties delineated within a neighborhood activity center, community activity center or regional activity center as defined and shown on the Cobb County Comprehensive Plan: A Policy Guide, adopted November 27, 1990. These convenience shopping facilities should have retail commercial uses that have a neighborhood-oriented market and which supply necessities that usually require frequent purchasing with a minimum of consumer travel. Areas zoned for the NRC district should be located at or near an intersection within the center of a neighborhood activity center as opposed to the edge of a neighborhood activity center. The NRC district may also be used to provide step down nodal zoning away from more intensive commercial uses within a community activity center or a regional activity center. The scope at which properties are developed within the NRC district should reflect their relatively small neighborhood service area. Additionally, properties developed within the NRC district should be architecturally compatible with other nonresidential uses permitted within a neighborhood activity center as defined by the comprehensive plan and the neighborhood residences they serve.

PERMITTED USES

: A variety of commercial and retail-oriented uses. The subject’s current use as a convenience store and gas station is permitted in this district, as long as the building size does not exceed 3,000 ƒ and no automotive repairs are done on site.

RESTRICTIONS : Minimum lot size - 20,000 ƒ.

Minimum lot width - 60’.

Minimum public road frontage

- 100’.

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Minimum front yard setback

- Arterial: 50’. Collector: 40’. Local: 40’.

Minimum side yard setback - 15’ to 35’.

Minimum rear yard setback - 30’.

Maximum height - 35’.

SUMMARY :

The subject property appears to conform to the current NRC zoning regulations. We retain a copy of the zoning regulations in our files.

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PROPERTY TAXES

[DETAILED TAX INFORMATION OMITTED]

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TAX MAP

[OMITTED]

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HIGHEST AND BEST USE

Highest and Best Use as defined in The Appraisal of Real Estate, Thirteenth Edition,

published by the Appraisal Institute, follows:

"The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value."

Physically Possible - This deals with the suitability of the site for development (size,

topography, soil, etc.), available utilities and community services, site modifications necessary, and

any limitations caused by the foregoing; and the suitability of the physical characteristics of any

existing improvements. The shape, terrain, soil conditions and accessibility of a parcel of land

affect its physical utility and adaptability. The size, design, and condition of an improved property

may suggest that rehabilitation, conversion or demolition ensues.

Legally Permissible - The legally permissible considerations involve zoning ordinances,

private deed restrictions, historic preservation regulations and environmental codes as well as the

private or contractual restrictions found in deeds and long-term leases.

Financially Feasible - Financially feasible uses produce returns that exceed the income

required to satisfy operating expenses, financial obligations and capital amortization. Among

financially feasible uses, the use that produces the highest price or value consistent with the rate of

return warranted by the market represents the financially feasible use.

Maximally Productive - The maximally productive use of those financially feasible uses

that are physically possible and legally permissible is the highest and best use of a site.

HIGHEST AND BEST USE AS VACANT

Physically Possible - To determine the physically possible uses, we analyzed the site

including the size, topography, and shape. We considered the suitability of the site as if vacant.

The site is generally level and at street grade with all frontage roads. All typical utilities and

services are available to the site. The site features adequate size and shape to support a variety of

uses. The site has good access with regard to surface streets and interstate highways. The size of

the site makes it physically possible to construct most uses. Many uses are physically possible;

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therefore, we use the test of legal permissibility to eliminate many uses from consideration. There

are no defects that would preclude development of most legally permissible uses. The subject site is

physically possible for development of a combination convenience store and retail petroleum

facility.

Legally Permissible - The primary restrictions for the legal use are in the zoning ordinance.

As stated in the zoning section, the zoning designation for the subject is NRC, Neighborhood Retail

Commercial District, allowing for development of many types of commercial developments

including convenience stores and gas stations.

The specific legal requirements of this zoning section appear in the Zoning section of this

appraisal report.

Financially Feasible - We estimated the financial feasibility of the uses that were both

physically possible and financially feasible. Financially feasible uses result in a positive net present

value. The financially feasible uses are derived through an analysis of the data and conclusions

presented in the previous City and Neighborhood and Market Analysis sections of the Report. The

subject is located in a commercial and retail area of [OMITTED] that is mostly automotive retail

with a number of auto repair facilities. Based on the location of the subject site, the zoning, and the

existing and proposed developments surrounding the site, the financially feasible use of the subject

site is a commercial development.

Maximally Productive - We determined the maximally productive use of the financially

feasible uses through an analysis of the above conclusions. Limiting development of the site to a

small-scale high-traffic project that is retail or commercially oriented, is the maximally productive

use.

Conclusion - From the preceding analysis of the physically possible, legally permissible,

financially feasible, and maximally productive uses for the subject site, a retail and/or service

development is the highest and best use of the site as vacant.

HIGHEST AND BEST USE AS IMPROVED

Physically Possible - To determine the physically possible uses, we analyzed the site

including the size, topography, and shape. We considered the suitability of the site as improved.

Additionally, we considered the physical characteristics of the site with respect to the existing

improvements to estimate the possibility of altering the use or increasing the intensity of the current

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use. The site description analysis indicates that there are no undue limitations restricting

development of the subject site. The site has adequate shape and size to support a number of uses.

The size of the site makes it physically possible to construct uses. All public utilities are available.

The improvements contribute to the site as improved.

Legally Permissible - The primary restrictions for the legal use are in the zoning ordinance.

As stated in the Zoning section, convenience stores and retail petroleum facilities/gas stations like

the subject property are permitted, as long as the building is less than 3,000 ƒ and retail repairs are

not performed on site.

Financially Feasible - We estimated the financial feasibility of the uses that were both

physically possible and financially feasible. Financially feasible uses result in a positive net present

value. The financially feasible uses are derived through an analysis of the data and conclusions

presented in the previous City and Neighborhood and Market Analysis sections of this report. The

subject site is developed with a combination convenience store and retail petroleum facility. The

building and improvements are in average condition, evidencing some deferred conditions. The

property maintains a good location along [OMITTED], which has an AADT of 31,950 cars. This

provides for a profitable business and supports our proposal that the current use as a combination

convenience store and retail petroleum facility/gas station is the highest and best use as improved.

Maximally Productive - The maximally productive use is the financially feasible use that

produces the highest residual land value consistent with a rate of return warranted by the market.

The maximally productive use equals the highest and best use. We determined the maximally

productive use of the financially feasible uses through an analysis of the above conclusions. Based

on the size of the site, the current zoning, and the surrounding developments, a retail or

commercially oriented improvement is the maximally productive use of the subject site as

improved.

Conclusion - From the preceding analysis of the physically possible, legally permissible,

financially feasible, and maximally productive uses for the subject site, the subject’s use as a

combination convenience store and retail petroleum facility is the highest and best use of the subject

property as improved.

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SALES COMPARISON APPROACH

The value of the subject derives from an analysis of comparable sales in the subject area

and surrounding submarkets. We analyzed the comparable properties on the basis of sale price

per ƒ . We gathered numerous sales offering a firm indication of what the subject property is

now worth. We included sales of convenience stores with similar characteristics. The

methodology applies adjustments to the comparable properties for any differences compared to

the subject characteristics.

The comparable building sale prices range from $266.11/ ƒ to $1,224.49/ ƒ for buildings

ranging in size from 490 ƒ to 6,463 ƒ . The following table summarizes the comparable

properties:

[COMPARABLE SALES GRID OMITTED]

The Addenda contains details of the comparable sales and a location map. The

differences and adjustments to these comparable sales follow.

Property Rights Conveyed

No adjustment is required for property rights conveyed.

Financing and Conditions of Sale

Adjustments must first be made to equate the sales to market terms on a cash-equivalent

basis. An analysis of each comparable sale indicates that no special financing terms were involved.

Each sale appears to be a "cash-to-seller" transaction or financed at or near market terms. There-

fore, no adjustment is required due to financing terms. Neither is an adjustment necessary due to

conditions of sale. Each of the comparable sales appears to be an arm's-length transaction between

willing buyers and sellers.

Date of Sale

We make this adjustment to the sales to analyze them based on current market conditions.

Although we often refer to the adjustment for market conditions as a “time adjustment,” time is not

the cause of the adjustment. Market conditions, which shift over time, create the need for an

adjustment. If market conditions have not changed, the sales require no adjustment. Our research

revealed no resales. There has been a general downward trend since the beginning of the Great

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Recession of 2007-2010; however, it appears values may be leveling out. Brokers and investors in

the market generally feel a rate of -10% to 0% is an appropriate range. We choose a -5% annual

adjustment for time for the subject.

Comparative Adjustments

Though the sales indicate variances due to physical factors, and financial risk, we found no

matched-pair sales that adequately indicate reliable adjustments for any differences. After

examining the general relationship of the sales, consulting with market participants, and using the

appraisers' experience with similar properties, we discuss adjustments to the sales and summarize in

the following charts.

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DETAILS OF ADJUSTMENTS OMITTED]

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[SUMMARY OF ADJUSTMENTS GRID OMITTED]

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COST APPROACH

The value estimate by the Cost Approach consists of the estimated land value and the

depreciated cost of the improvements.

LAND VALUE

We researched and analyzed recent sales of similar land parcels in the subject area and

surrounding submarkets based on the sale price per ƒ . The site is currently zoned NRC,

Neighborhood Retail Commercial District.

The following table summarizes recent land sales. The Addenda contains additional details

and a location map.

[LAND SALES COMPARABLES OMITTED]

The comparable land sale prices range from $12.90/ ƒ to $25.61/ ƒ for land ranging in size

from 0.27 acre to 1.97 acres. An analysis of differences and adjustments to these comparable sales

follows.

Financing and Conditions of Sale

Adjustments must first be made to equate the sales to market terms on a cash-equivalent

basis. An analysis of each comparable sale indicates no special financing terms. Each sale appears

to be a “cash-to-seller” transaction or financed at or near market terms, requiring no adjustment due

to financing terms. Neither is an adjustment necessary due to conditions of sale. Each of the

comparable sales appears to be an arm’s-length transaction between willing buyers and sellers under

no undue influence.

Date of Sale

We make this adjustment to the sales to analyze them based on current market conditions.

Although we often refer to the adjustment for market conditions as a “time adjustment,” time is not

the cause of the adjustment. Market conditions, which shift over time, create the need for an

adjustment. If market conditions have not changed, the sales require no adjustment. We analyzed

the sales based on current market conditions. Our research did not reveal any resales that indicate

adjustment for time. Brokers and investors in the market corroborate annual increases ranging from

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0% to -15% for land. Based on the state of the current real estate market and the significant decline

in new construction, we estimate an appropriate downward annual adjustment of -5% per year. We

adjusted the sales to the date of appraisal.

Comparative Adjustments

Adjustments for the differences of other value factors are not readily discernible from a

matched-pair sales analysis. We based adjustments for location and physical characteristics on an

analysis of comparable sales, discussions with brokers and investors in the area, and our experience

with similar properties.

A summary of the sale adjustments follows.

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[ADJUSTMENT GRID DISCUSSION OMITTED]

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[ADJUSTMENT GRID OMITTED]

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REPLACEMENT COST OF IMPROVEMENTS

The Marshall Valuation Service Cost Manual represents the basic source for unit costs. The

costs include average architectural and engineering fees, plans, building permits, surveys, normal

interest on building funds, processing fees, service charges, sales taxes on materials, normal site

preparation, utilities from lot line to building, contractor's overhead and profit, job supervision, and

all necessary insurance, but exclude developer’s profit.

This publication classifies the subject building as a Gas Station Mini-Mart Convenience

Store Class C Average Cost construction (Section 13, Page 22) at $121.75/ ƒ , adjusted for current

cost (1.03) and local (.91) multipliers.

Entrepreneur’s profit has declined recently due to more competition for contracts and fewer

new developments due to the lingering effects of the recession. Whereas previously, entrepreneurs

were seeing profits in the 15% - 20%, most report 8% - 12% in the current market. We estimate a

10% entrepreneur’s profit.

OBSERVED DEPRECIATION FROM ALL CAUSES

Physical Deterioration - Curable & Incurable

Incurable physical deterioration represents a loss in value due to those items that cannot be

practically or economically corrected. To estimate the loss due to incurable physical deterioration,

we apply the ratio of effective age to estimated useful life. We determined the effective age through

consideration of the actual age and apply adjustments for the condition of the improvements.

Marshall Valuation Service Cost Manual reports economic life of building types based on physical

characteristics and tenancies. MVS estimates the economic life of the building at 40 years (Section

97, page 6). We estimate effective age of 15 years. Based on the straight-line method of

depreciation, we estimate incurable physical deterioration at 38% (15 years/40 years).

Functional Obsolescence

The layout and design of the subject building prove functional. Therefore, we attribute no

functional obsolescence to the improvements.

External Obsolescence

The subject property lies in a good location with no environmental negative effects. We

estimate no external obsolescence.

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[DETAILED COST APPROACH GRID OMITTED]

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RECONCILIATION

The value indications for the subject property are as follows:

SALES COMPARISON APPROACH ............................................[OMITTED]

COST APPROACH ...........................................................................[OMITTED]

Sales Comparison Approach

The Sales Comparison Approach reliably indicates Market Value when recent sales of

similar buildings exist. We researched and analyzed recent sales of similar properties throughout

the subject submarket and expanded market. Our experience suggests that the Sales Comparison

Approach provides a reasonable estimate of Market Value.

Cost Approach

The Cost Approach presents an estimation of replacement costs, entrepreneurial profit,

depreciation from all causes, and land value. The Cost Approach is reliable when the

improvements are relatively new or in excellent condition, reflecting little in depreciation.

However, the subject building is an older building (approximately 15 years old) and depreciation

cannot be accurately estimated.

In the final analysis, we emphasize the Sales Comparison Approach, but adjust it slightly

lower in consideration of the Cost Approach.

Conclusion - Based on the foregoing, the Market Value of the subject property as of

February 27, 2012, is:

[OMITTED]

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CERTIFICATION

I certify that, to the best of my knowledge and belief:

• The statements of fact contained in this report are true and correct.

• The reported analyses, opinions, and conclusions are limited 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 performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

• I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

• My engagement in this assignment was not contingent upon developing or reporting predetermined results.

• My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

• My analyses, opinions, and conclusions were developed, and the report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice.

• Quentin Ball and Rana Barnes, Georgia State Registered Real Property Appraiser No. 325547, made a personal inspection of the property that is the subject of this report.

• Rana Barnes, Georgia State Registered Real Property Appraiser No. 325547, provided significant real property appraisal assistance to the undersigned.

• The reported analyses, opinions, and conclusions were developed and this report has been prepared in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

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

• As of the date of this report, I, Quentin Ball, have completed the continuing education program of the Appraisal Institute.

3-14-12 ________________________________ __________________________ Signature Date

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QUALIFICATIONS OF APPRAISER

Quentin Ball, MAI President

Waterfront - Specialist on islands, ocean front, river front, marinas, and ports. Island appraisals include Cat Island, Deer Island, and Round Island in Mississippi; South Padre Island in Texas; and numerous other islands off the coasts of Georgia, Florida and South Carolina. Recently appraised closed Naval Base at Singing River Island near Pascagoula. Since Hurricane Katrina, appraised many profoundly affected beachfront properties along the Gulf Coast. Hospitality Industry - Appraised over 520 hotel and/or restaurant properties. Understands the complexities to be addressed in the valuation of beachfront/resort properties, downtown landmark hotels, and problem properties. Health Care/Retirement Industry - Nursing homes, hospitals, personal care centers, substance abuse centers, and retirement communities appraised. Provided seminar at NASLI national convention on "How to Appraise Senior Living Facilities." Retail - Experience includes freestanding retail facilities to regional shopping malls. Apartments - Appraised apartments nationally for past 25 years. Experienced with high-rise, live/work, condo conversions, and government-subsidized projects. Office - Appraised the following office buildings: NationsBank Plaza, Atlanta, GA - 1,429,254 ƒ , 500 Northpark Town Center, Atlanta, GA - 564,491 ƒ , 1818 Market Street Building, Philadelphia, PA - 1,192,531 ƒ , Tower Place, Atlanta, GA - 1,000,000 ƒ , 37 West 57th Street Building, Manhattan, New York City, NY - 70,767 ƒ , ARA Tower, Philadelphia, PA - 782,740 ƒ , The Goodwin Square Complex, Hartford, CT - 348,809 ƒ , Parkway Center, Marietta, GA - 520,000 ƒ , NationsBank Plaza, Charlotte, NC - 802,638 ƒ . Industrial - Appraisals performed on major industrial properties in southern California, San Francisco Bay area, Northwest, Midwest, South, and other regions. Also experienced in analyzing deep-water ports, industrial wasteland, and obsolete heavy industrial plants. Education and Professional Affiliations - Georgia State University, Bachelor of Business Administration with a major in Real Estate (1971). Member of Appraisal Institute (MAI No. 7286), serving on the Admissions Committee of the Georgia Chapter. Certified Toastmaster (CTM) and frequent speaker. Guest lecturer at Georgia State University and Southern College of Technology. Technology - Kirkland & Company is a virtual office delivering reports digitally. Mr. Ball is an industry leader in paperless office technology and has written articles and given seminars on the subject.

Report Version 8 Generated on 2/9/2012 at 4:34:25 PM

13711454

S T A T E O F G E O R G I A � �R E A L E S T A T E A P P R A I S E R S B O A R D

IS AUTHORIZED TO TRANSACT BUSINESS IN GEORGIA AS A

THE PRIVILEGE AND RESPONSIBILITIES OF THIS APPRAISER CLASSIFICATION SHALL CONTINUE IN EFFECT AS LONG AS THE APPRAISER PAYS REQUIRED APPRAISER FEES AND COMPLIES WITH ALL OTHER REQUIREMENTS OF THE OFFICIAL CODE OF GEORGIA ANNOTATED, CHAPTER 43-39-A. THE APPRAISER IS SOLELY RESPONSIBLE FOR THE

PAYMENT OF ALL FEES ON A TIMELY BASIS.

QUENTIN O BALL

1041

CHARLES B. BRAMLETT

SANDRA MCALISTER WINTER

WILLIAM R. COLEMAN, JR.D. SCOTT MURPHYMARILYN R. WATTS

CERTIFIED GENERAL REAL PROPERTY APPRAISER

Chairperson

Vice Chairperson

1041#ACTIVEStatus

QUENTIN O BALL

State of Georgia Real Estate Commission Suite 1000 - International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1605

THIS LICENSE EXPIRES IF YOU FAIL TO PAY RENEWAL FEES OR IF YOU FAIL TO COMPLETE ANY REQUIRED EDUCATION IN A TIMELY MANNER.

CERTIFIED GENERAL REAL PROPERTY APPRAISER

ORIGINALLY LICENSED06/26/1991

END OF RENEWAL

WILLIAM L. ROGERS, JR.Real Estate Commissioner

02/28/2013

13711454

1041#ACTIVEStatus

QUENTIN O BALL

State of Georgia Real Estate Commission Suite 1000 - International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1605

THIS LICENSE EXPIRES IF YOU FAIL TO PAY RENEWAL FEES OR IF YOU FAIL TO COMPLETE ANY REQUIRED EDUCATION IN A TIMELY MANNER.

CERTIFIED GENERAL REAL PROPERTY APPRAISER

ORIGINALLY LICENSED06/26/1991

END OF RENEWAL

WILLIAM L. ROGERS, JR.Real Estate Commissioner

02/28/2013

13711454

Name : ChevronStreet Address : 2243 Roswell RoadCity/County/State : Marietta, Cobb County, GeorgiaParcel ID Number : 16102900170

Grantor : NLP Acquisitions, LLCGrantee : Fuel Connection, Inc.Verification : Suleman Waliany, buyer, and Public RecordsDeed Book/Page : 14904/6459

Year Built : 1998Sale Price : $1,150,000Sale Date : Dec-11Land Area in Acres : 0.57 L/B Ratio: 18.49Building Area : 1,336 Sq. Ft.Price Per SF : $860.78

Remarks:

Convenience Store Sale No. 1

1,336 SF convenience store/gas station built in 1998 and in averagecondition. Two gas islands and eight fueling positions. The site alsocontains an approximately 930SF car wash building. Street Frontage:180 feet on Roswell Rd. 141 feet on Barnes Mill Rd. The buyeradvised the appraisers that the buyer and seller were unrelated parties.In addition, he advised the appraisers that he was already leasing theproperty (owned the business) and decided to purchase the real estate.AADT: 53,570.

previous previous

previous

Name : BPStreet Address : 10930 Jones Bridge RoadCity/County/State : Alpharetta, Fulton County, GeorgiaParcel ID Number : 11 047001680287 Grantor : Jones Bridge 16929, LLCGrantee : 10930 Jones Bridge, LLCVerification : CoStar and Public RecordsDeed Book/Page : 50755/670

Year Built : 1995Sale Price : $1,060,000Sale Date : Dec-11Land Area in Acres : 1.19 L/B Ratio: 15.07Building Area : 3,448 Sq. Ft.Price Per SF : $307.42

Remarks:

Convenience Store Sale No. 2

3,448 SF convenience store with attached car wash and BP gas stationbuilt in 1995 and in average condition. Comparable property locateson the northeast corner of Jones Bridge Road at State Bridge Road.Two gas islands with six MPDs and 12 fueling positions. StreetFrontage: 443 feet on State Bridge Rd and 399 feet on Jones BridgeRd. AADT: 14,820.

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Name : ChevronStreet Address : 5115 Dallas HighwayCity/County/State : Powder Springs, Cobb County, GeorgiaParcel ID Number : 19006600080 Grantor : MCCD, LLCGrantee : Osterberg Realty Group, LLCVerification : CoStar and Public RecordsDeed Book/Page : 14820/6251

Year Built : 1996Sale Price : $1,719,900Sale Date : Dec-10Land Area in Acres : 3.63 L/B Ratio: 24.43Building Area : 6,463 Sq. Ft.Price Per SF : $266.11

Remarks:

Convenience Store Sale No. 3

6,463 SF convenience store with an integrated McDonald's andChevron gas station built in 1996 and in average condition.Comparable sale locates on the southeast corner of Dallas Highway atLost Mountain Road in Dallas, GA. There are two gas islands with sixMPD's and 12 fueling positions. 151 days on the market. Originalasking price was $2,200,000. Sold for $1,719,900. Sale History: Soldfor $1,719,900 ($266.11/SF) on 12/13/2010; Sold for $2,250,000($348.14/SF) on 12/01/2007; Sold for $2,071,882 ($320.58/SF) on11/25/2003. AADT: 30,820.

Name : BPStreet Address : 1365 Powers Ferry RoadCity/County/State : Marietta, Cobb County, GeorgiaParcel ID Number : 17092300010

Grantor : Saints Partners, LLCGrantee : Saneey's BP, Inc.Verification : CoStar and Public RecordsDeed Book/Page : 14794/3317

Year Built : 1976Sale Price : $600,000Sale Date : Aug-10Land Area in Acres : 1.02 L/B Ratio: 90.68Building Area : 490 Sq. Ft.Price Per SF : $1,224.49

Remarks:

Convenience Store Sale No. 4

490 SF convenience store/gas station built in 1976 and in averagecondition. Two gas islands with four MPDs and eight fuelingpositions. Site also features a car wash building. Located on a busycorner lot on Powers Ferry Road at Terrell Mill Road. Street Frontage:262 feet on Powers Ferry Rd and311 feet on Terrell Mill Rd. Parking: 6 spaces. AADT: 35,300.

Name : Circle KStreet Address : 3129 Cobb ParkwayCity/County/State : Kennesaw, Cobb County, GeorgiaParcel ID Number : 20012500080

Grantor : Circle K Stores, Inc.Grantee : Cobb Parkway Center, LLCVerification : CoStar and Public RecordsDeed Book/Page : 14749/5762

Year Built : 1996Sale Price : $1,200,000Sale Date : Jan-10Land Area in Acres : 1.04 L/B Ratio: 15.73Building Area : 2,880 Sq. Ft.Price Per SF : $416.67

Remarks:

Convenience Store Sale No. 5

2,880 SF convenience store/gas station built in 1996 and in averagecondition. Four gas islands with one double-sided fuel dispenser ateach island and eight fueling positions. Circle K Stores Inc. sold theproperty at 3129 Cobb Pky to Marvin Hewett Enterprises Inc. for$1,200,000 on January 15, 2010. The 2,880 square foot retail buildingwas sold as an investment property. LaShawn Hicks of NCR & CapitalAdvisors LLC represented the seller. No broker was reported torepresent the buyer. No sales conditions were reported. StreetFrontage: 306 feet on Cobb Pky. Parking: 11 Surface Spaces areavailable. Located on a corner lot on Cobb Parkway (majorthoroughfare) and Jim Owens Road. AADT: 35,350.

Name : Bells Ferry ShellStreet Address : 6425 Bells Ferry RoadCity/County/State : Woodstock, Cherokee County, GeorgiaParcel ID Number : 15N05 099

Grantor : One Georgia BankGrantee : Mountain Express Oil Co.Verification : Barry Bierenbaum, Buyer/Owner, (770) 517-5776Deed Book/Page : 10868/424

Year Built : 1997Sale Price : $1,400,000Sale Date : Nov-09Land Area in Acres : 0.92 L/B Ratio: 12.37Building Area : 3,240 Sq. Ft.Price Per SF : $432.10

Remarks:

Convenience Store Sale No. 6

3,240 SF convenience store/gas station built in 1997 and in goodcondition. Four gas islands with eight fuel dispensers and sixteenfueling positions. Comparable sale is located on the northwest cornerof Bells Ferry Road at Eagle Drive. Bells Ferry Road is a heavilytraveled, primary traffic route in Cherokee County. Barry Bierenbaum,buyer, Mountain Express Oil Co., verified the sales information andconfirmed this was a previously foreclosed property that he purchasedfrom One Georgia Bank. He also indicated to the appraisers that FF&Ewas included in the sale price, but could not allocate the value of theFF&E. Mr. Bierenbaum also indicated that he is leasing the gas stationproperty but would not disclose the leasing details. Mr. Bierenbaumsaid he was motivated to buy the property because it is in a goodlocation. Mr. Bierenbaum's company, Mountain Express Oil Co., is agasoline distributorship that also owns and operates several stores inthe North Georgia market. AADT: 27,070.

Name : Shell StationAddress : 2715 Sandy Plains RoadCity/County/State : Marietta, Cobb County, GeorgiaParcel ID Number : 16055700400

Grantor : Waters Convenience Stores, LLCGrantee : Sam's Real Estate Holdings - Georgia, LLCVerification : CoStar Comps and Public RecordsDeed Book/Page : 14685/2982

Year Built : 1997Sale Price : $1,686,820Sale Date : Apr-09Land Area in Acres : 0.72 Land-to-Building Ratio : 9.63Building Area (Square Feet) : 3,258Price Per Square Foot : $517.75

Remarks:

Convenience Store Sale No. 7

Comparable property locates on the north side of Sandy Plains Road inMarietta on a busy retail corridor. This comparable sale represents theexercise of an option to buy the property. Four gas islands with 16fueling positions. The parcel has 163 feet on Sandy Plains Road (with 2curb cuts). Parking includes 18 surface spaces. AADT: 33,170.

Description : Commercial Land Sale - Gas Station SiteStreet Address/Location : 15 Windy Hill Road

: N/e corner Windy Hill Road at Austell RoadCity/County/State : Marietta, Cobb County, Georgia

Parcel # : 17005900830, -0310, -0300

Grantor : Ofer Bar-Lev

Grantee : Quicktrip Corporation

Verification : John Haynes, listing broker, (770) 436-3400Deed Book 14881/Page 4871

Sale Price : $2,200,000

Sale Date : Sep-11

Land Area : 1.97 Acres85,900 SF

: $1,115,619Price Per SF : $25.61

Utilities : All available

Zoning : NRC

Remarks:

Land Sale No. 1

Price Per Acre

Comparable land sale locates on the northeast corner of Windy Hilll Road atAustell Road in Marietta. Located at a signalized intersection. Frontage: ±380feet along Windy Hill Road, ±275 feet along Austell Road. Listing brokerindicated to the appraisers that there are some legal issues with the propertywhich he could not discuss, but that the legal issues did not affect the sale price.He also indicated to the appraisers that he believes the buyer will be building aQuicktrip gas station on the site. AADT: Austell Road - ±40,530 estimatedvehicles daily. Windy Hill Road - ±21,790 estimated vehicles daily.

Description : Commercial Land Sale - Gas Station SiteStreet Address/Location : NW/c Hwy 92 and Cherokee StreetCity/County/State : Acworth, Cobb County, GeorgiaParcel # : 20000700210 (portion)

Grantor : Modern Living MHP

Grantee : Andalusia Properties Inc

Verification : Deed Book 14849, Page 5606

Sale Price : $1,084,800

Sale Date : Apr-11

Land Area : 1.81 Acres78,756 SF

: $600,000Price Per SF : $13.77

Utilities : All available

Zoning : C-2

Remarks:

Land Sale No. 2

Price Per Acre

Comparable land sale fronts both Cherokee Street (Glade Road) and Highway92 in Acworth. The former mobile home park was cleared and developed to apad-ready site. The 5.00 acres were divided for this purchase. Buyer willconstruct a Racetrac convenience store on the busy corner. AADT: 21,280 carsper day.

Description : Commercial Land Sale - Gas Station SiteStreet Address/Location : 6281 Oakdale RoadCity/County/State : Mableton, Cobb County, GeorgiaParcel # : 18017700230

Grantor : Barbara Jean Griffith

Grantee : Racetrac Petroleum, Inc.

Verification : CoStar, Tax Assessor, Public RecordsDeed Book 14752, Page 5193

Sale Price : $775,000

Sale Date : Jan-10

Land Area : 1.38 Acres60,069 SF

: $562,001Price Per SF : $12.90

Utilities : All available

Zoning : Commercial

Remarks:

Land Sale No. 3

Price Per Acre

Property locates on the east side of Oakdale Road, north of Veterans Memorial Highway.Racetrac purchased the property for construction of a gas station. This land was assembledwith adjacent parcels of land at Oakdale Road and Veterans Memorial Highway forconstruction of said gas station. Street frontage: 155' on Oakdale Road. Level topography.100% financing. AADT: 21,000 cars per day.

Description : Commercial Land Sale - Gas Station SiteStreet Address/Location : 1431 Veterans Memorial Highway, SECity/County/State : Mableton, Cobb County, GeorgiaParcel # : 18028200010

Grantor : James E. Freeman, d/b/a Freeman Automotive

Grantee : Racetrac Petroleum, Inc.

Verification : CoStar, Tax Assessor, Public RecordsDeed Book 14752, Page 5187

Sale Price : $250,000

Sale Date : Jan-10

Land Area : 0.27 Acres11,805 SF

: $922,509Price Per SF : $21.18

Utilities : All available

Zoning : Commercial

Remarks:

Land Sale No. 4

Price Per Acre

Property locates on the northeast corner of Oakdale Road at Veterans MemorialHighway. Racetrac purchased the property for construction of a gas station. This landwas assembled with adjacent parcels of land at Oakdale Road and Veterans MemorialHighway for construction of said gas station. Street frontage: 136' on VeteransMemorial Highway and 154' on Oakdale Road. Level topograhpy. 100% financing.AADT: 21,000 cars per day.

Description : Commercial Land Sale - Gas Station SiteStreet Address/Location : 600 S. Marietta ParkwayCity/County/State : Marietta, Cobb County, GeorgiaParcel # : 17036100300

Grantor : Petroleum Realty II, LLC

Grantee : Quick Trip Corporation

Verification : CoStar, Tax Assessor, Public RecordsDeed Book 14732, Page 117

Sale Price : $1,000,000

Sale Date : Oct-09

Land Area : 0.98 Acres42,689 SF

: $1,020,408Price Per SF : $23.43

Utilities : All available

Zoning : CRC

Remarks:

Land Sale No. 5

Price Per Acre

Property locates on the southeast corner of S. Marietta Parkway and S.Fairground Street. Level topography. Land locates in busy commercialcorridor. Seller Motivation: Non-functioning service station that was notgenerating any income. Buyer Motivation: Demolish current property tobuild new QuickTrip Service station. Seller reported the buyer alsopurchased the adjacent property at 495 Fairground to combine with this lot.AADT: 31,820 cars per day.