COMMERCIAL PROPERTY 245 E. PORT HUENEME ROAD …

COMMERCIAL PROPERTY

245 E. PORT HUENEME ROAD

PORT HUENEME, CALIFORNIA

REFERENCE: APN 206-0-094-050 Owner – City of Port Hueneme

CLIENT: City of Port Hueneme c/o Steven L. Kinney DATE OF VALUE: June 1, 2017 DATE OF REPORT: June 10, 2017 FILE NAME: 245 E. Port Hueneme Rd.PH

2 245 E. Pt Hueneme Rd.PH BOLTON & ASSOCIATES

BOLTON & ASSOCIATES REAL ESTATE APPRAISERS

1501 CALLENS ROAD VENTURA, CALIFORNIA 93003

(805) 644-7431 FAX (805) 644-6441

DAVID W. BOLTON, MAI MEMBER APPRAISAL INSTITUTE June 10, 2017 Steven L. Kinney Kharis Navigating 2512 Bayridge Court Port Hueneme, CA 93041

Re: Commercial Property 245 E. Port Hueneme Road Port Hueneme, CA 93041

Dear Mr. Kinney: Pursuant to your authorization, I have made an appraisal of the above referenced property consisting of an old abandoned residential structure and detached shed situated on a 9,100 SF lot zoned C-1 located in the City of Port Hueneme. The purpose of the appraisal is to estimate the market value of the 100% fee simple interest in the real property as defined as of June 1, 2017. The scope of work will include the following.

1. Estimate of land value only 2. Estimate of total property value invoking a hypothetical condition that the residential structure has been completely rehabbed and restored to a functional office building while maintaining the historical building integrity and characteristics in conformance with Cultural Heritage Board standards. 3. Determine the distance between the subject property and the Hueneme

Elementary School property that fronts on Scott Street.

The intended use of the appraisal is to assist in negotiations regarding a potential sale of the property.

3 245 E. Pt Hueneme Rd.PH BOLTON & ASSOCIATES

Based on the investigation and analyses conducted given the limiting conditions and scope of the appraisal, the following values are estimated as of June 1, 2017. Land Value Only $173,000 Value As A Completed Functional Office Building $690,000 The scope of work necessary to develop credible opinions of value for this appraisal assignment is described in the Scope of Work section of this report. The reporting format used is a Summary Appraisal Report which is intended to comply with the requirements set forth under Standards Rule 2-2(a) of USPAP for an Appraisal Report. As such, it presents only summary discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning and analyses, is retained in the appraiser’s file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use of the appraisal. Respectfully, BOLTON & ASSOCIATES

David W. Bolton, MAI Gen. Cert. No. AG003499 DWB:rjk

TABLE OF CONTENTS

INTRODUCTION PAGE Letter of Transmittal ................................................................................................ 2 Table of Contents.................................................................................................... 4 Summary of Facts and Conclusions........................................................................ 5 Certification ............................................................................................................. 6 Qualifications........................................................................................................... 7 LIMITING CONDITIONS, SCOPE AND DEFINITIONS Assumptions and Limiting Conditions...................................................................... 9 Purpose of the Appraisal .........................................................................................11 Intended Use and User ...........................................................................................11 Property Rights Appraised ......................................................................................11 Date of Value and Inspection ..................................................................................11 Date of Report .........................................................................................................11 Scope of the Appraisal ............................................................................................11 Definitions ...............................................................................................................12 IDENTIFICATION AND DESCRIPTION Property Identification..............................................................................................13 Sale History.............................................................................................................13 Location Map...........................................................................................................14 Neighborhood Data .................................................................................................15 Assessor's Parcel Map............................................................................................16 Lot Data...................................................................................................................17 Improvements .........................................................................................................18 Assessment and Tax Data ......................................................................................18 ANALYSIS AND CONCLUSION Highest and Best Use..............................................................................................18 Methods of Valuation...............................................................................................19 Land Value ..............................................................................................................20 Sale Data Sheets ...............................................................................................21 Sale Summary....................................................................................................31 Analysis and Value Conclusion ..........................................................................31 Value as a Completed Office Building.....................................................................33 Sales Comparison Approach..............................................................................33 Income Capitalization Approach.........................................................................54 Reconciliation and Final Value Estimate ............................................................57 Exposure and Marketing Periods .......................................................................58 Distance Between the Subject and the Hueneme Elementary School ....................58 ADDENDA Subject Photographs ...............................................................................................59

4 ____________________________________________________________________________________ 245 E. Pt Hueneme Rd.PH BOLTON & ASSOCIATES

SUMMARY OF FACTS AND CONCLUSIONS

Date of Value: June 1, 2017 Date of Report: June 10, 2017 Address: 245 E. Port Hueneme Road Port Hueneme, CA 93041 Owner of Record: City of Port Hueneme Assessor's Parcel No.: 206-0-094-050 Lot Area: 9,100 SF Zoning: C-1 Improvement Type: Old Abandoned Residential Structure Improvement Size: 1,675 SF Current Use: Vacant Highest and Best Use

As Vacant: Commercial

As Improved: Office Value Conclusions: Land Value Only $173,000 Value As A Completed Functional Office Building $690,000 Distance Between Subject & School: 595 feet to school office building site 735 feet to school yard


CERTIFICATION I certify that, to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported

assumptions and limiting conditions, and our personal, unbiased professional analyses, opinions, and conclusions.

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

and I have no personal interest or bias with respect to the parties involved. 4. My compensation is not contingent upon the reporting of a predetermined value or

direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.

5. The appraisal assignment was not based on a requested minimum valuation, a specific

valuation, or the approval of the loan. 6. My analyses, opinions, and conclusions were developed, and this report has been

prepared, in conformity with (1) the Uniform Standards of Professional Appraisal Practice and (2) the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.

7. I have made a personal inspection of the property that is the subject of this report. 8. I have the knowledge and experience necessary to perform this appraisal and therefore

meet the provisions of the Competency Provisions of USPAP. 9. No one provided significant professional assistance to the person signing this report. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to

review by its duly authorized representatives. 11. As of the date of this report, I have completed the requirements of the continuing

education program of the Appraisal Institute. 12. I have performed no services as an appraiser, or in any other capacity, regarding the

property that is the subject of this report with the three year period immediately preceding the acceptance of this assignment.

_________________________________

David W. Bolton, MAI Gen Cert. No. AG003499


APPRAISAL QUALIFICATIONS – DAVID W. BOLTON, MAI

EDUCATION Bachelor of Science Degree in Finance at California State University at Northridge; Northridge, CA; 1967 24 Units completed toward M.S. Degree in Finance at California State University at Northridge. Appraisal Institute examinations passed: 101, 1BA, 1BB, 2-1, 2-2, 2-3. PROFESSIONAL AFFILIATIONS AND LICENSES Member Appraisal Institute - Member Number 09827 Certified General Real Estate Appraiser - No. AG003499 EXPERIENCE Independent Fee Appraiser - 1972 to Present Associate Appraiser - Ventura County Assessor's Office - 1968-1972 Experience encompasses all classifications of real estate including commercial, industrial, residential, residential income, subdivision land, agricultural, rural and various special purpose properties such as mineral and aggregate interests. Appraisals completed for all purposes including fair market value, eminent domain, loan purposes, asset management, partial interests, redevelopment, easements, estate and gift tax, insurance, property damage, Quimby fee, bankruptcy, foreclosure and economic rental matters. Qualified as an expert witness in Ventura County Superior Court Expert Witness - Ventura County Assessment Appeals Board


PARTIAL LIST OF CLIENTS Public Agencies Corporations U.S. Post Office GTE U.S. Department of Navy Southern California Edison Cal Trans Lawyers Title FDIC Circle K City of Ventura Offshore Crane City of Oxnard Salvation Army City of Port Hueneme McDonald's Corp. City of Camarillo Carl Karcher Enterprises County of Ventura Unocal Simi Valley Parks & Recreation Dept. Texaco Oil Oxnard School District Shell Western E & P Simi Valley Unified School District Republic Health Ventura Co. Superintendent of Schools St. John's Regional Medical Center USDA-Farm Service Agency Riverbend Farms Oxnard Harbor District Blue Star Ready Mix Ojai Valley Land Conservancy Knightsbridge Holdings, Inc. Rowell Ranches Woods-Claeyssen Foundation Financial Institutions Attorneys Community West Bank Nordman Cormany Hair & Compton Pacific Western Bank Ferguson Case Orr Paterson Citizens Bank Hawthaway Perrett Webster et. al. Bank of the Sierra Lowthorp Richards McMillan et. al. American Riviera Bank Waite, Jacobs & Atkinson Farm Credit West Benton Orr Duval & Buckingham Rabobank Breon, O'Donnell, et. al. Wells Fargo Bank Rupp & Zimmer Montecito Bank & Trust Frielich, Kaufman, et. al. County Commerce Bank Angel & Neistat Valley Republic Bank Hogan & Hartson Ojai Community Bank Nelson Comis Kahn & Sepulveda Strauss Law Group Developers Lindahl & Beck M.J. Brock & Sons Wennergren Law Offices Trent, Inc. William D. Fairfield Wittenberg-Livingston Spiwak & Iezza Weston Communities Alexander, Clayton & Wilson Downs Land & Development Michael Towbes Dev. Island Coast City Ventures Olsen Co.


ASSUMPTIONS AND LIMITING CONDITIONS

HYPOTHETICAL CONDITIOIN A hypothetical condition is invoked that the residential structure has been completely rehabbed and restored to a functional office building while maintaining the historical building integrity and characteristics in conformance with Cultural Heritage Board standards. OTHER ASSUMPTIONS AND LIMITING CONDITIONS 1. This is a Summary Appraisal report which is intended to comply with the

reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice for an Appraisal Report. As such, it might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning and analyses is retained in the appraiser's file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

2. No responsibility is assumed for matters which are legal in character, nor is any

opinion on the condition of title rendered. Title is assumed to be good and transferable. Any liens, reservations, restrictions or encumbrances have been disregarded except where noted.

3. Factual data appearing in the report has been obtained from sources deemed

reliable and was verified by recording information and other parties where possible. While this information is believed to be reliable, no warranty is given for its accuracy.

4. No title report was available for review. The inspection revealed no obvious

adverse easements or encumbrances affecting the property which is a presumption upon which the appraisal is based.

5. The existing residential structure has been abandoned and is in poor condition.

Age is unknown but the construction type and architectural style are generally consistent with buildings built circa 1920 – 1940.

6. No environmental assessment of the site was available. The appraisal assumes

no hazardous materials or other contamination are present at the site other than those discussed in the report. The value assumes remediation of any contamination would not result in significant cost. If costs proved to be significant, the appraisal would be subject to revision.


7. No soil report was available. Soil conditions are assumed to be adequate for usage permitted in the existing zones. It is assumed there are no adverse soil conditions such as high water table or earthquake fault that would affect value. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

8. The final value estimates apply to the entire property as appraised. Any

proration or division into fractional interests may be invalid. 9. The appraiser, by reason of this appraisement, shall not be required to give

testimony or to be in attendance in court or at any government or other hearing with reference to the subject property without prior arrangements having been made with the appraiser relative to such additional employment.

10. Disclosure of the contents of the appraisal report is governed by the By-Laws

and Regulations of the Appraisal Institute.

Neither all nor any part of the contents of this report, especially any conclusions as to value, the identify of the appraiser or the firm with which he is connected, or any reference to the Appraisal Institute, shall be disseminated to the public through a sales media or any other public means of communication without written consent and approval of the author.

11. This appraisal is for the exclusive use of the client to assist in a potential sale of

the property. 12. The appraisal is subject to review and revision upon receipt of facts or

information affecting value which were not disclosed or unavailable as of the date of this appraisal.

13. Since earthquakes are not uncommon in the area and no geological reports were

made available to the appraiser, no responsibility is assumed due to their possible effect on individual properties.


PURPOSE OF THE APPRAISAL

The purpose of the appraisal is to provide the appraiser's best estimates of the market value of the subject real property as defined as of the effective date of value.

INTENDED USE AND USER

For use by the client to assist in a potential sale of the property.

PROPERTY RIGHTS APPRAISED Property rights appraised are those of the 100% fee simple interest in the following.

1. Land only 2. Total property rehabbed to a completed functional office building

DATE OF VALUE AND INSPECTION

June 1, 2017

DATE OF REPORT

June 10, 2017

SCOPE OF THE APPRAISAL

1. Inspected the interior and exterior of the property. 2. Measured the structures. 3. Confirmed zoning, general plan designation, permit status, allowed uses, etc. with

the City. 4. Confirmed building and property history information with the clity. 5. Researched market data relevant to the approaches to value that drive the market

for this property type including comparable sales and comparable rents. 6. Analyzed the data and correlated it into a final estimates of value.


DEFINITIONS Market Value The following is the definition of market value as set forth in Section 34.43(f) of the OCC Rules and Regulations effective August 24, 1990. "Market Value" means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised and acting in what they

consider their own best interests; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial

arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold

unaffected by special or creative financing or sales concessions grated by anyone associated with the sale.

The final value estimate is stated in terms equivalent to cash. "Market Value As Is" means an estimate of the market value of a property in the condition observed upon inspection and as it physically and legally exists without hypothetical conditions, assumptions or qualifications as of the date of inspection. Fee Simple Absolute ownership unencumbered by any other interest or estate; subject only to the limitations of eminent domain, escheat, police power and taxation. Leased Fee Estate An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; usually consists of the right to receive rent and the right to repossession at the termination of the lease.


Leasehold Estate The right to use and occupy real estate for a stated term and under certain conditions; conveyed by a lease. Highest and Best Use Highest and best use is defined as: "The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value."1 In market value estimates, highest and best use analysis identifies the most profitable, competitive use to which the property can be put. "Therefore, the analysis and interpretation of highest and best use is an economic study of market forces focused on the subject property."2

PROPERTY IDENTIFICATION LOCATION: N/S E. Port Hueneme Road 450’ E/O Market Street, City of

Port Hueneme ADDRESS: 245 E. Port Hueneme Road Port Hueneme, CA 93041 LEGAL DESCRIPTION: A legal description was not provided. For purposes of this

report, the property is legally described by the assessor’s parcel number.

APN: 207-0-094-050 OWNER OF RECORD: City of Port Hueneme

SALE HISTORY The property has not sold or been listed for sale within three years prior to the effective date of value of this report. There is no known current escrow, pending sale or agreement of sale.

1 Appraisal Institute. The Appraisal of Real Estate, Eleventh Edition, Appraisal Institute, 1996, page 297.


2 Ibid. Pg. 298

14

____________________________________________________________________________________ 245 E. Pt Hueneme Rd.PH BOLTON & ASSOCIATES

NEIGHBORHOOD DATA

The subject property is located in the southern section of the city along the north side of E. Port Hueneme Road between Market Street and Ventura Road. The general neighborhood can be defined as the south section of the city extending north from Port Hueneme Beach Park to the CB Base and east from Port Hueneme Harbor to the easterly city limit boundaries. Uses in this area are mixed including residential, commercial and some limited industrial. Major influences in the area include Port Hueneme Harbor and the beach. The Harbor and the adjacent CB Base have a significant impact on the neighborhood in the form of demand for housing and commercial services. Recent expansion programs at the Port have increased its import and export capacity with agricultural products and automobile imports being major commodities. The Port Hueneme Beach Park and associated facilities provide social and recreational amenities that attract visitors to the area. Ventura Road and Hueneme Road are major arterials providing access to the general neighborhood. The immediate neighborhood is defined by Scott Street on the north, Ventura Road on the east, E. Port Hueneme Road on the south and the Port of Hueneme on the west. East Port Hueneme Road provides access to the main entrance gate to the Port. This is a commercial area dominated by the Beachport Shopping Center located on a 4.77 acre site west of Ventura Road between Scott Street and E. Port Hueneme Road. The other major use is the 14,000 SF Harbor Plaza garden office complex situated on a 1.23 acre site at the southwest corner of Scott and Market Streets. Other uses in the immediate neighborhood include two residential duplexes, miscellaneous office and retail uses, a church and the Port Hueneme Historical Museum. There are four parcels of vacant land three of which are owned by the city. Two of the parcels totaling 1.90 acres are located west of Market Street between Scott Street and E. Port Hueneme Road. The other parcel containing 8,063 SF is situated adjacent to the subject on the west. The privately owned parcel fronts on the east side of Market and contains 8,954 SF. Neighborhood zoning is C-1 which is consistent with the general plan designation of commercial. Over the last 25 to 30 years, the general neighborhood has experienced significant upgrading and redevelopment including beach oriented residential and recreational improvements, the Beachport Shopping Center, Country Inn hotel (now Holiday Inn Express), upgrading of shopping centers along Hueneme and Ventura Roads and industrial development in South Oxnard to the east. The immediate commercial neighborhood was designated as the Market Street Landing Sub-Area in the Central Community Redevelopment Project Area.. This Sub-Area was defined as the remaining commercial nucleus of Port Hueneme’s former downtown with revitalization intended to maximize the city’s retail and professional office development potential. However, redevelopment of the neighborhood never materialized due to economic and market conditions and budget constraints. With the abolishment of Redevelopment Agencies in California in 2012, redevelopment potential ceased. The neighborhood has remained static for a number of years. Its future will continue to be tied to the Port of Hueneme and the beach influence plus the city’s disposition of the properties they own.


16


LOT DATA Size Rectangular shape with frontage of 70’ and depth of 130’. Lot area equals 9,100 SF Topography and Drainage Level with no evidence of flooding or drainage problems. Flood Zone Zone X – Denotes areas of .2% annual chance flood, areas of 1% annual change flood with average depths of less than 1 foot or with drainage areas of less than 1 square mile. FEMA Map No. 06111CO914E dated 1/20/10. Most of the city of Port Hueneme is located in the same zone. Easements and Encumbrances A title report was not available for review. The site inspection revealed no easements or encumbrances that would significantly impact value which is a presumption upon which the appraisal is based. Utilities All utilities are connected to the site. Street Improvements and Access East Port Hueneme Road is a fully improved two lane primary arterial with striped center median and parallel parking and bike lane on both sides of the street. Direct access is available via one curb cut. Zoning and General Plan Zoning is C-1, General Commercial. The City’s General Plan designation is Commercial. Environmental No environmental assessment of the site was available for review. The site inspection revealed no obvious signs of contamination or uncontrolled hazardous waste. If an environmental assessment became available, the appraisal would be subject to review and revision.


Seismic/Geologic Hazards The general Ventura County area has a history of seismic activity with a number of faults existing. Based on State of California Division of Mines and Geology maps, there are no known faults in close proximity to the site.

IMPROVEMENTS The main structure was designed and built for residential use with age of construction estimated to be circa 1920 – 1940. Building size is 1,675 SF. The last occupancy was for 3 apartment units The structure has been vacant for a number of years and has been boarded up. Basic construction includes raised concrete block foundation, wood siding exterior walls and composition shingle roof. There is an indented 8’ x 16’ front porch that steps up from the sidewalk. The exterior is in fair to poor condition. The interior is basically original and is in poor condition. The other structure is an old wood shed containing 320 SF that is a tear down. Miscellaneous improvements include some concrete flat and chain link fencing. One of the values to be estimated requires a hypothetical condition that the residential structure is completely rehabbed and restored to a fully functional office building while maintaining the historical integrity and character of the structure consistent with Cultural Heritage Board standards. The original architectural style and construction features must be retained at the exterior elevations. However, the interior can be rehabbed, updated and modified so that the building serves as a fully functional office building. What the final floor plan and interior layout will be is unknown at this time.

ASSESSMENT AND TAX DATA City owned property is exempt from property taxes and is not assessed. The tax rate area is 06000 with a tax rate for 2016/2017 of $1.124848 per $100 of assessed value. Based upon the value estimated in this report for the property as a fully functional office building, taxes would approximate $8,000. If the property transferred to a taxable entity.

HIGHEST AND BEST USE There are four basic criteria that must be met in highest and best use of both land as vacant and property as improved. Highest and best use must be (1) physically possible, (2) legally permissible, (3) financially feasible, and (4) maximally productive. As Vacant The site is rectangular in shape with good access and utilities available. There are no physical constrains to development other than those imposed by the city zone


ordinance. Current zoning permits office, retail and service commercial uses.which are consistent with the general plan designation of commercial. Given neighborhood characteristics, office or some specialty retail or service commercial would be considered financially feasible uses. These uses would be maximally productive and therefore consistent with the highest and best use of the site as vacant. As Improved The improvements consist of an old residential structure that has been abandoned and boarded up. The C-1 zone does not allow residential uses. Because the building has not been used for residential for a few years, a residential use could not be re-established for the property. The structure could be retained and converted to commercial, most likely an office use. However, because cost to convert the building to an office use is not available, its financial feasibility is unknown. If it was not financially feasible to convert the building to office use, the highest and best use of the property as improved would be to demolish the structure or move it to another location if the building had to be saved because of its historical status. The scope of the appraisal requires the property to be appraised assuming the building has been converted to a fully functional office. Given this hypothetical condition, use of the property for office purposes is a directed highest and best use.

METHODS OF VALUATION The three basic approaches to value are: Cost Approach Sales Comparison Approach Income Capitalization Approach The Cost Approach provides an indicator of value by adding the value of the land to the estimated replacement cost of the improvements less depreciation from all sources. The basis for this approach is the principle of substitution which states that a knowledgeable buyer will not pay more for a property than the cost to replace it with a suitable substitute of like utility. All costs must be considered including developer profit or entrepreneurship. The reliability of this approach is dependent upon an accurate estimate of land value based on an analysis of land sales and an accurate estimate of replacement cost and depreciation based on cost manuals and actual cost estimates and proposals of similar improvements. The Sales Comparison Approach provides an indicator of value by a direct comparison of sold properties with the subject property. Various comparison methods are used. The adequacy of this approach generally depends upon the comparability of the sold properties with the subject and an accurate measurement of dissimilar characteristics.


The Income Capitalization Approach provides an indicator of value by the capitalization of projected net income. The basis for this approach is that the value of a property is related to its ability to produce income at a percentage of the value which reflects risk and future property appreciation or depreciation. Reliability is dependent on accurate projections of economic rent, expenses and a capitalization rate. The scope of the assignment requires estimates of value for 1) land only and 2) total property value with the hypothetical condition that the residential structure has been rehabbed and restored to a fully functional office building. The sales comparison approach is the approach used by the market for valuing vacant land and therefore is the approach used in this appraisal for the land value estimate. Demand for the property with the building converted to an office will be oriented toward owner users. The market for smaller owner user office buildings is driven by the sales comparison approach which will be the primary approach in this appraisal. Because these properties are leased at times, the income approach is considered to have some relevance and will be used as a secondary or supportive indicator of value.

LAND VALUE

A search was made for sales of other smaller commercially oriented lots within the Port Hueneme and Oxnard markets. Due to the limited number of sales in these markets, the Ventura market was also researched. Following are complete data sheets with photos of the land sales used to estimate land value.


Sale No. 1

IDENTIFICATION Location: 643 S. “C” Street, Oxnard APN: 202-0-133-060 Thomas Map: 522-G6 LAND DATA Size: 7,000 SF Use: Vacant Zoning: CBD H & B Use: Commercial Topography: Level Flood Hazard: No Offsites & Utilities: Offsites complete – Utilities available Access: Good Exposure: Fair SALE DATA Recording Date: 5/4/17 Doc. No.: 59198 Seller: Couste Buyer: Strawberry Fields Estate LLC


Sale Price: $128,000 Price Per SF: $18.29 Terms: Cash DOM: 10 days Verification: Rudy Campos - Agent REMARKS This was a probate sale located in downtown Oxnard near Plaza Park and city hall. The official listing was for $100,000 with the price bid up to $128,000.


Sale No. 2

IDENTIFICATION Location: E/S S. “A” Street N/O 9th Street, Oxnard APN: 202-0-183-160 Thomas Map: 552-G7 LAND DATA Size: 7,000 SF Use: Vacant Zoning: CBD H & B Use: Commercial Topography: Level Flood Hazard: No Offsites & Utilities: Offsites complete – Utilities available Access: Good Exposure: Fair/Average SALE DATA Recording Date: 1/26/16 Doc. No.: 11204 Seller: Reinke Buyer: Young Trust


Sale Price: $115,000 Price Per SF: $16.43 Terms: Cash DOM: N/A Verification: AIREA REMARKS This sale is located in downtown Oxnard between 8th and 9th Streets. An alley at the rear of the site benefits access. The buyer owns the adjoining property to the south. This was a party to party transaction with no broker involved in the sale.


Sale No. 3

IDENTIFICATION Location: E/S S. “D” Street S/O 3rd Street, Oxnard APN: 202-0-083-140 Thomas Map: 522-G6 LAND DATA Size: 7,000 SF Use: Parking lot Zoning: CBD H & B Use: Commercial Topography: Level Flood Hazard: No Offsites & Utilities: Offsites complete – Utilities available Access: Good Exposure: Fair SALE DATA Recording Date: 7/1/15 Doc. No.: 100847 Seller: Garrul LLC Buyer: Garcia


Sale Price: $101,500 Price Per SF: $14.56 Terms: Cash DOM: N/A Verification: Melinda Walsh - Agent REMARKS This sale is located in downtown Oxnard between 3rd and 4th Streets near Plaza Park and city hall. An alley at the rear of the site benefits access. At time of sale the property was used as a parking lot in conjunction with the adjoining property to the north which is owned by the city and also used for parking. This was a party to party transaction with no broker involved in the sale.


Sale 4

IDENTIFICATION Location: 2950 E. Vineyard Avenue, Oxnard APN: 145-0-151-210 Thomas Map: 492-H7 LAND DATA Size: 28,662 SF Use: Vacant Zoning: CPD H & B Use: Commercial Topography: Level Flood Hazard: No Offsites & Utilities: Offsites complete – Utilities connected Access: Good Exposure: Good SALE DATA Recording Date: 8/22/16 Doc. No.: 118847 Seller: Shaman Trust Buyer: El Rio Plaza LLC


Sale Price: $600,000 Price Per SF: $20.93 Terms: Cash to $350,000 note carried DOM: 21 months by seller Verification: Brad Giles - Agent REMARKS This sale is located in an unincorporated area of Oxnard known as El Rio. Vineyard Avenue is a major thoroughfare with 131’ of frontage providing good exposure. The property was purchased with no development plans or approvals. Motivation for purchase was as an investment and/or to hold the property for development in the future. Terms of the seller carried note were not available. However, the confirming source stated the terms did not impact the purchase price.

28


Sale No. 5

IDENTIFICATION Location: SEC N. Olive Street and Bell Way, Ventura APN: 071-0-022-010, 380 Thomas Map: 471-B7 LAND DATA Size: 18,045 SF Use: Vacant Zoning: C-2 H & B Use: Commercial/mixed use Topography: Level Flood Hazard: No Offsites & Utilities: Partial offsites – Utilities available Access: Very good Exposure: Average SALE DATA Recording Date: 9/23/15 Doc. No.: 142357 Seller: Jamar Buyer: Prajapati


Sale Price: $380,000 Price Per SF: $21.06 Terms: Cash to seller DOM: 22 months Verification: Michael Tharp - Agent REMARKS This sale is located in the “Avenue” district of west Ventura. Uses in the commercial areas of the “Avenue” are considered secondary commercial uses. The neighborhood surrounding this sale is mixed and includes commercial and residential uses. The C-2 zone in Ventura also allows multi-family residential uses. The sale included no approvals or development plans. An old building on the site is abandoned and is a tear down.


Sale Summary Sale No.

Location Date Price

Size Zoning

Price PSF

Offsites Utilities

DOM

1 643 S. “C” Street Oxnard

5/4/17 $128,000

7,000 SF CBD

$18.29

Complete Available

10 days

2 S. “A” Street Oxnard

1/26/16 $115,000

7,000 SF CBD

$16.43 Complete Available

N/A

3 S. “D” Street Oxnard

7/1/15 $101,500

7,000 SF CBD

$14.56 Complete Available

N/A

4 2950 E. Vineyard Avenue, Oxnard

8/22/16 $600,000

28,662 SF CPD

$20.93 Complete Connected

21 months

5 Olive St & Bell Way Ventura

9/23/15 $380,000

18,045 SF C-2

$21.06 Partial Available

22 months

Analysis and Value Conclusion Terms of the sales were all cash or cash to the seller except for Sale 4 which included a seller carried note. Terms of the note were not available. However, the confirming source stated the terms did not impact the purchase price. Therefore, no adjustments were required to the sales for cash equivalency. There were no unusual conditions of sale that impacted the sale prices. The unit of comparison used by the market for vacant land is price PSF. The sales form a nominal price range of $14.56 - $21.06 PSF. Sales 1 – 3 are located in the same downtown Oxnard area and are the same size and zoning with highest and best use as commercial. The variation in price can be attributed to date of sale with price PSF increasing each year. Relating price PSF to date of sale indicates average price appreciation of approximately 10% per year requiring an upward adjustment to the older sales for market conditions. The sales are compared to the subject on a qualitative basis as follows. Sales 1 – 3 $14.56 to $18.29 PSF. These lots are located in downtown Oxnard and are considered generally similar overall to the subject. The difference in price PSF is due to date of sale. Sale 1 which is a current sale at $18.29 PSF is considered a reasonable indicator of value for the subject. Sale 4 - $20.93 PSF. This sale requires a modest upward adjustment for market conditions. It is considered superior in location because of the frontage on a major arterial. Considering these factors, this sale at $20.93 PSF is rated somewhat superior to the subject. Sale 5 - $21.06 PSF. This sale requires an upward adjustment for market conditions. It has a corner location which enhances site utility and access. Also, the zoning allows multi-family residential uses with the surrounding area developed to commercial and residential uses. Considering these factors, this sale at $21.06 PSF is rated somewhat superior to the subject.


In summary, Sale 1 at $18.29 PSF is considered similar to the subject. Sales 4 and 5 at $20.93 and $21.06 PSF are rated somewhat superior to the subject. Based on an analysis of the sales, the subject lot is valued at $19.00 PSF.

9,100 SF @ $19.00 = $172,900

Land Value Estimate $173,000 .


VALUE AS A COMPLETED OFFICE BUILDING

This value requires a hypothetical condition that the residential structure is completely rehabbed and restored to a fully functional office building while maintaining the historical integrity and character of the structure consistent with Cultural Heritage Board standards. The original architectural style and construction features must be retained at the exterior elevations. However, the interior can be rehabbed, updated and modified so that the building serves as a fully functional office building. The primary approach to value used by the market for smaller owner user oriented office buildings is the sales comparison approach. Therefore, because this approach is market driven, it is the main approach used to value the property. However, because these properties are leased at times, the income approach is considered to have some relevance and will be used as a secondary or supportive indicator of value.

SALES COMPARISON APPROACH A search was made for sales of older buildings that are used primarily for office and exhibiting the classic architectural styles found in the first few decades of the 1900’s. The initial search was concentrated in the Oxnard/Port Hueneme market. However, because only one older sale and two listings with reasonable comparability were found, the search was expanded to include older areas of Ventura. Following are data sheets on those sales considered most helpful in estimating value for the subject.


Sale No. 1

Address: 2301 Roosevelt Blvd APN: 206-0-173-175 Oxnard

Lot Data

Size: 2,465 SF Zoning: CPD Lot Coverage: 58% H & B Use: Office Improvement Data Size: 1,440 SF Year Built: 1950 Construction: Frame & wood siding Current Use: Office Condition: Good Parking: 3 open spaces

Sale Data Buyer: Thompson Trust Seller: Nakkoud Sale Price: $610,000 Price PSF: $423.61 Recording Date: 12/17/15 Doc. No. 181903


Financing: Cash OAR: 4.3% (E) Verification: Liz Donnelly – Agent DOM: 4 months Remarks Older 2 story office building located in the Silver Strand beach neighborhood in an unincorporated area of Oxnard. Small lot located 2 blocks from the beach. Ocean views from 2nd story. Investment purchase with overall rate of capitalization (OAR) based on existing rents which are below market. Prior sale on 10/27/11 for $370,000 during soft market period.


Sale No. 2

Address: 730 S. “B” Street APN: 202-0-144-230 Oxnard

Lot Data

Size: 4,153 SF (Condo) Zoning: CBD Lot Coverage: 97% H & B Use: Office Improvement Data Size: 4,041 SF Year Built: Early 1900’s Construction: Frame & wood siding Current Use: Office Condition: Good Parking: Common

Sale Data Buyer: Reiter Affiliated Co. LLC Seller: Barkely Family Trust Sale Price: $1,000,000 Price PSF: $247.46 Recording Date: 11/30/12 Doc. No. 214755


Financing: Cash OAR: N/A Verification: Public records DOM: N/A Remarks This building is located in Heritage Square, a collection of 15 circa 1900 historic residences and other structures that were moved to this site in the early 1990’s and rehabbed and restored for commercial and common area use. Heritage Square encompasses an entire city block in downtown Oxnard. Common on site parking. This 2 story historical house with the Victorian Queen Anne architectural style was the original Petit Ranch House that was situated on the Petit farm in the Oxnard Plain. A fully finished basement area is included in the square footage shown. Historic landmark status qualifies property for reduced property taxes based on the Mills Act.


Listing No. 1

Address: 740 S. “B” Street APN: 202-0-144-270 Oxnard

Lot Data

Size: 2,556 SF (Condo) Zoning: CBD Lot Coverage: 97% H & B Use: Office/restaurant Improvement Data Size: 2,886 SF Year Built: 1901 Construction: Frame & wood siding Current Use: Restaurant Condition: Fair/average Parking: Common

Listing Data Buyer: N/A Seller: City of Oxnard List Price: $790,000 Price PSF: $273.74 Listng Date: 5/5/17 Doc. No. N/A


Financing: Cash OAR: N/A Verification: MLS DOM: 1 month Remarks This listing is also located in Heritage Square. This 2 story historical house with the Colonial Revival architectural style was the original Laurent/McGrath House that was situated on a ranch in the Oxnard Plain. There is a 1,295 SF finished basement area that is not included in the square footage shown. The building is configured and operating as La Dolce Vita restaurant. Discussions with the tenant in the past indicate the building is in need or repairs. Historic landmark status qualifies property for reduced property taxes based on the Mills Act.


Listing No. 2

Address: 272 Market Street APN: 206-0-094-100,110 Port Hueneme

Lot Data

Size: 20,854 SF Zoning: C-1 Lot Coverage: 8% H & B Use: Office Improvement Data Size: 1,600 SF Year Built: Circa 1950-1960 Construction: Masonry Current Use: Office Condition: Fair Parking: Street

Listing Data Buyer: N/A Seller: Kralick List Price: $539,500 Price PSF: $337.19 Listng Date: 3/17 Doc. No. N/A


Financing: Negotiable OAR: N/A Verification: CoStar DOM: 2 ½ months Remarks This property is located in the same immediate neighborhood as the subject. It consists of an older single story concrete block office building that is in only fair condition with repairs needed including a new roof. The listing includes the office building on an 11,990 SF lot plus an adjacent vacant lot containing 8,954 SF. There is no designated parking on the site with parking on the street.


Sale No. 3

Address: 682 E. Thompson Blvd APN: 073-0-134-060 Ventura

Lot Data

Size: 6,400 SF Zoning: C-1 (HD) Lot Coverage: 20% H & B Use: Office Improvement Data Size: 1,267 SF Year Built: 1905 Construction: Frame & wood siding Current Use: Office Condition: Good Parking: 8 open spaces

Sale Data Buyer: Logue Seller: Radding Family Truat Sale Price: $609,000 Price PSF: $480.66 Recording Date: 4/14/17 Doc. No. 49745


Financing: Cash OAR: 4.5% Verification: Jeff Becker - Broker DOM: 1 month Remarks Historic residence known as the Sittel House located in the historic Mitchell Block in downtown Ventura. The building with elements of Queen Anne and Classical Revival style architecture has been completely renovated and updated and converted to office use. The rear 6’ x 18.5’ portion of the building is an addition built in the 1980’s that was required by the city was designed and constructed with the architectural features of the original structure. Historic landmark status qualifies property for reduced property taxes based on the Mills Act. This was an investment purchase with several tenants occupying the building. Overall rents are at the low end of the range of market rent. The property was listed for $699,000.


Sale No. 4

Address: 880 E. Santa Clara St APN: 073-0-141-060 Ventura

Lot Data

Size: 7,400 SF Zoning: T4.1 Lot Coverage: 24% H & B Use: Office/residential Improvement Data Size: 1,785 SF Year Built: 1902 Construction: Frame & wood siding Current Use: Office/residential Condition: Good Parking: Garage

Sale Data Buyer: Jameson Seller: Downs Family Truat Sale Price: $880,000 Price PSF: $493.00 Recording Date: 7/21/16 Doc. No. 208133


Financing: Cash to seller OAR: N/A Verification: Jeff Becker - Broker DOM: 3 months Remarks Completely restored Colonial Revival style building with original architectural style retained and upgraded with modern conveniences inside. Location is in the downtown Ventura area. Owner user purchase with building is suitable for both residential and office use. Property was listed for $999,000. Prior sale on 12/24/09 for $525,000 indicating overall rate of appreciation of 7% annually.


Sale No. 5

Address: 993 E. Santa Clara St APN: 073 0 056 08 Ventura

Lot Data Size: 5,000 SF Zoning: T4.1 Lot Coverage: 51% H & B Use: Residential/office Improvement Data Size: 2,544 SF Year Built: 1920 Construction: Frame & wood siding Current Use: Residential

Condition: Good Parking: 2 car garage

Sale Data

Buyer: Lombardo/Grach Seller: Siodmak Sale Price: $1,045,000 Price PSF: $410.77 Recording Date: 4/13/16 Doc. No. 49991


Financing: Cash to seller OAR: N/A Verification: Teryn Bonime - Agent DOM: 7 months Remarks Historic Landmark craftsman known as the Valentine House located in the downtown area of Ventura. Zoning allows residential and office uses. Many residences are used as offices in the downtown area. This house has been completely restored and renovated to original condition while incorporating modern features. Historic landmark status qualifies property for reduced property taxes in conformance with the Mills Act. Property was listed for $1,100,000.


Sale No. 6

Address: 721 E. Main St APN: 073-0-045-090,230 Ventura

Lot Data

Size: 17,620 SF Zoning: T6.1 Lot Coverage: 30% H & B Use: Office Improvement Data Size: 5,200 SF Year Built: Early 1900’s Construction: Frame & wood siding Current Use: Office Condition: Good Parking: On site

Sale Data Buyer: McCarthy Seller: Taylor Trust Sale Price: $2,000,000 Price PSF: $384.62 Recording Date: 1/20/17 Doc. No. 8653


Financing: Cash to seller OAR: N/A Verification: Mary Ann Young - Agent DOM: 6 months Remarks Owner user purchase of a historic 2 story Victorian style residence located in downtown Ventura. The building has been used as attorneys offices for years. It has been fully restored and upgraded including electrical, plumbing, HVAC. The sale included the building on a 12,580 SF parcel on Main Street and a 5,040 SF parcel at the rear used for parking with access via a public alley from N. Fir Street or Poli Street. If property was classified as a historical landmark, it would qualify for reduced property taxes based on the Mills Act.


Sale No. 7

Address: 180 S. Palm Street APN: 073-123-16 Ventura

Lot Data Size: 6,000 SF Zoning: T6.1 Lot Coverage: 37% H & B Use: Residential/office Improvement Data Size: 2,233 SF Year Built: 1870’s Construction: Frame & wood siding Current Use: Residential

Condition: Good Parking: Garage and open

Sale Data

Buyer: Sturgeon Trust Seller: Oseguera Family Trust Sale Price: $772,000 Price PSF: $345.72 Recording Date: 7/3/14 Doc. No. 95093


Financing: Cash OAR: 4.8%

Verification: Jeanne Lacoste – Agent DOM: 3 months Remarks Old Victorian style duplex built in the 1870’s and completely remodeled in the early 1990’s including electrical, plumbing, heating, etc. Currently rented as 3 separate units but could easily be converted back to its legal duplex configuration. There are two 1 bedroom 1 bath units and one 2 bedroom 1 bath unit. Property was listed for $815,000. Location is in the downtown core in Ventura..


Sale Summary Sale No.

Address Use H & B Use

Date Price

Bldg. Area Construction Age/Condition

Price PSF OAR

Lot Size Parking

1 2301 Roosevelt Blvd Oxnard Office Office

12/17/15 $610,000

1,440 SF F & WS 1950/Good

$423.61 4.3% (E)

2,465 SF 3 spaces

2 730 S. “B” St Oxnard Office Office

11/30/12 $1,000,000

4,041 SF F & WS 1900’s/Good

$247.46 N/A

Condo Common

L1 740 S. “B” St Oxnard Restaurant Restaurant/office

Listed 5/5/17 $790,000

2,886 SF F & WS 1901/Fair-Avg

$273.74 N/A

Condo Common

L2 272 Market St Port Hueneme Office Office

Listed 3/17 $539,500

1,600 SF Masonry 1950’s/Fair

$337.19 N/A

20,854 SF Street

3 682 E. Thompson Blvd Ventura Office Office

4/14/17 $609,000

1,267 SF F & WS 1905/Good

$480.66 4.5%

6,400 SF 8 spaces

4 880 E. Santa Clara St Ventura Office/residential Office/residential

7/21/16 $880,000

1,785 SF F & WS 1902/Good

$493.00 N/A

7,400 SF Garage

5 993 E. Santa Clara St Ventura Residential Residential/officve

4/13/16 $1,045,000

2,544 SF F & WS 1920/Good

$410.77 N/A

5,000 SF 2 car garage

6 721 E. Main St Ventura Office Office

1/20/17 $2,000,000

5,200 SF F & WS 1900’s/Good

$384.62 N/A

17,620 SF On site

7 180 S. Palm St Ventura Residential Residential/office

7/2/14 $772,000

2,233 SF F & WS 1870’s Good

$345.72 4.8%

6,000 SF Garage & open

Analysis The sales are compared to the subject for the elements affecting value including date of sale, location, lot size, parking, building size, age, quality, updating, condition, occupancy, etc. The indicator of value used by the market is price per square foot of gross building area.


Terms of the sales were all cash to the seller either all cash or cash to a conventional loan. Verification of the sales confirmed that none of the sales were impacted by terms of the sale or by any atypical conditions of sale. The market was analyzed for the effect that market conditions have on price. A review of sales in the Port Hueneme, Oxnard and Ventura markets indicates the general commercial and office market has improved somewhat over the last few years as the economy improved, unemployment decreased and interest rates continued to be attractive. Sale 4 indicates an average rate of appreciation of 7% annually from December 2009 through July 2016. A review of market data supports the upward trend in price which continued into 2017. The sales are adjusted accordingly for market conditions. Building size impacts price per square foot. Generally speaking, as size decreases, price PSF increases within a certain range, all other factors being equal. Sales 1, 3 and 4 ranging in size ffrom1,440 SF to 1,785 SF sold in a range of $423.61 to $493.00 PSF. Sales 2 and 4 – 7 plus Listing 1 are priced in a range of $247.46 to $410.77 PSF The lot size, location and parking adjustment considers general locational influences and relative land values as well as frontages and access. The age and condition adjustment considers year built, renovation and updating. The design, quality and use adjustment considers architectural style, quality of building materials and workmanship plus interior build out related to ue. The sales indicate an unadjusted price range of $247.46 - $493.00 PSF with a median of $410.77 PSF. The following chart adjusts the sales to the subject for the elements of comparison that impact price and value. The listings are not adjusted but were considered to be relevant market data.

No. Sale Date

Price PSF

Market Cond.

Adjusted Price

Design Quality Use

Age & Cond.

Bldg. Size

Lot Size Location Parking

Net Adjust.

Adjusted Price

1 12/17/15 $423.61 +10% $465.97 +10% +10% -5% -20% -5% $442.67 2 11/30/12 $247.46 +32% $326.65 -20% - +20% +15% +15% $375.64 3 4/14/17 $480.66 - $480.66 - - -5% -15% -20% $384.53 4 7/21/16 $493.00 +6% $522.58 - - - -20% -20% $418.06 5 4/13/16 $410.77 +8% $443.63 -5% - +10% -13% -8% $408.14 6 1/20/17 $384.62 +3% $396.16 -20% +25% +10% +83% $418.21 7 7/2/14 $345.72 +20% $414.86 - +15% +7% -15% +7% $443.90

SUMMARY AND CONCLUSION The wide adjusted price range of $375.64 - $443.90 PSF is a reflection of the wide variation of the subject and the sale property characteristics which requires significant adjustments. The range reflects a mean of $412.94 and a median of $418.06. Sales 3, 4 and 6 at $384.53 - $418.21 PSF are the most current sales. All of the sales similar net adjustment. Sales 3, 4, 5 and 7 at $384.53 - $443.90 are most similar in physical characteristics but are located in Ventura requiring adjustment for location. Sales 1 and


2 at $442.67 and $375.643 PSF are the only sales located in the Port Hueneme/Oxnard market area. Sale 1 is a conventional style office building situated in a beach location. Sale 2 is an old sale of a much larger building located in Heritage Square. Listing 2 at $337.19 PSF is an older office building in the same immediate area as the subject. There is excess land but the building needs considerable work. Based on an analysis of market data including comparable sales and market conditions, a value of $415.00 PSF of gross building area is estimated for the subject.

1,675 SF @ $415.00 = $695,120

INDICATED VALUE – SALES COMPARISON APPROACH $695,000

INCOME CAPITALIZATION APPROACH The income approach provides a value by capitalizing income at a rate that provides an adequate return to the investor. The market for this property type uses direct capitalization whereby an overall rate of capitalization (OAR) derived from the market is applied to the subject's projected net income after all vacancy allowances and expenses. Arriving at a value by the income approach using direct capitalization is a multi step process. Those steps include estimation of potential gross income, stabilized vacancy rate, effective gross income, expenses, reconstructed operating statement, capitalization and final value estimate. Potential Gross Income A rent survey of office space was conducted in order to estimate economic rent for the subject as a completely restored and updated office building. Rents surveyed include newer office space and historical buildings with classic architectural styles used for office. Following is a summary of rents considered helpful in estimating economic rent. Address Size Age Parking Date Rent PSF Lease Type

245 E. Pt. Hueneme Rd, Port Hueneme

2,640 SF 1971 4.0:1000 8/16 $1.50 NNN

2675 N. Ventura Rd Port Hueneme

616 SF 1979 3.4:1000 6/17 $1.75 NNN

4310 Tradewinds Dr Oxnard

1,738 SF 2006 4.0:1000 12/16 $2.25 MG

107 Figueroa St Ventura

3,503 SF 1897 4.0:1 Mo/Mo $2.06 FSG

682 E. Thompson Blvd, Ventura

1,267 SF 1905 8 spaces Mo0/Mo $2.15 FSG

701 E. Santa Clara St, Ventura

400 SF 1960 1.5:1000 6/16 $2.50 FSG

73 N. Palm St Ventura

685 SF 1911 3.5:1000 Mo/Mo $3.05 FSG

54


FSG = Full service gross where landlord pays all operating expenses MG = Modified gross where tenant pays utilities and interior maintenance and landlord pays remaining expenses NNN = Triple net where tenant pays a pro-rata share of all operating expenses in addition to base rent 245 E. Port Hueneme Road – $1.50 NNN. Office space in the Beachport Shopping Center located at the southwest corner of E. Port Hueneme and Ventura Roads just east of the subject. 2675 N. Ventura Road – $1.75 NNN. Office unit on the first floor of a 10,523 SF two story multi-tenant office building located on N. Ventura Road north of Channel Islands Boulevard. Average quality wood frame building with good on site parking. 4310 Tradewinds Drive – $2.25 MG. New ground floor office space in Westport at Mandalay Bay which is a mixed use project fronting on a water channel. The project consists of retail and office use on the ground floor with residential condominiums on the upper floors. Adjusted for expenses paid by the landlord, the effective NNN rent is calculated at $2.00 PSF. 107 Figueroa Street - $2.06 FSG. Historic residence known as the Peirano House converted to multi-tenant office use. Location is in downtown Ventura. The rent shown is average rent for the office suites. Adjusted for expenses paid by the landlord, which include property taxes that are reduced based pm the Mills Act, the effective NNN rent is $1.65 PSF. 682 E. Thompson Boulevard – $2.15 FSG. Historic residence known as the Sittel House used for small executive offices. Located in the historic Mitchell Block in downtown Ventura. Rent PSF shown includes common area consisting of hallway and rest room. The property qualifies for reduced property taxes based on the Mills Act. Adjusted for expenses paid by the landlord, the effective NNN rent is calculated at $1.72 PSF 701 E. Santa Clara – $2.50 FSG. This rent is for an executive suite in a single story Spanish style building with limited on site parking. Suites come furnished and range in size from 100 SF to 750 SF. The rent shown is at the rear of the building in an inferior location. Amenities include a kitchen, gym, free coffee, copy room and conference room. The location is in downtown Ventura. Adjusted for expenses paid by the landlord, the effective NNN rent is calculated at $1.88 PSF 73 N. Palm – $3.05 FSG. This is office space on the 2nd floor of an old Craftsman style residence used for office located in downtown Ventura. Adjusted for expenses paid by the landlord, the effective NNN rent is calculated at $2.40 PSF.


After adjusting for expenses paid by the landlords, the effective triple net rent range is $1.72 - $2.40 PSF. The rent at 73 N. Palm Street is well outside the range of the other rents which are in a range of $1.72 - $2.00 PSF NNN. Considering the location and physical characteristics of the subject including the new condition the building will be in, economic rent is estimated at $3,000 per month or $1.79 PSF NNN. Vacancy The office vacancy rate in the Oxnard/Port Hueneme market is reported at over 10%. Most of the vacancy is in the larger multi-tenant buildings. Considering the subject location and new condition, a stabilized vacancy factor of 5% is estimated for the subject. Expenses Economic rent is estimated on a triple net basis where the tenant pays all operating expenses in addition to base rent including property taxes and insurance. The only landlord expense would be for management/administration estimated at 2% of effective gross income. Projected Operating Statement Annual Gross Income - $3,000 x 12 = $36,000 Less Vacancy @ 5% 1,800 Effective Gross Income $34,200 Less Management/Administration @ 2% 680 Net Income $33,520 Capitalization Direct capitalization is the method used to capitalize first year’s income. Overall rates of capitalization (OAR) are derived from the market by relating net income from other smaller investment properties to sale price. Sales 1, 3 and 7 in the sales comparison approach have OARs in a range of 4.3% - 4.8%. It is typical for sales of smaller commercial properties that are oriented toward owner users to reflect OARs that are one to two percentage points below the larger investment properties. Sales of other smaller investment properties indicate a general range of 4.5% - 6.0%. Smaller properties in general that are more oriented toward owner users but have short term leases in place indicate OAR’s at the low end of the range. The low OAR’s of the small owner user oriented or single tenant buildings result from advantages of ownership such as tax benefits, fixed rent, property control, etc. not reflected in rental tenancy. Based


on the analysis made considering subject property characteristics, an OAR of 5.0% is considered warranted to apply to net income.

Net Income of $33,520 divided by .05 = $670,400

INDICATED VALUE – INCOME CAPITALIZATION APPROACH $670,000 RECONCILIATION AND FINAL VALUE ESTIMATE

SALES COMPARISON APPROACH $695,000 INCOME CAPITALIZATION APPROACH $670,000 The two approaches form a value range with a differential of about 4%. The sales comparison approach is the approach generally recognized by the market as the most reliable indicator of value for small owner user oriented office buildings. In this appraisal, adequate comparable sales were available for direct comparison with the subject. Because of the nature of the property including size, age, condition, building design, etc., significant adjustments were required to most of the sales. However, the pool of data was considered sufficient to form a reliable estimate of value. Because this is the primary approach used by the market for this property type, most weight is given the sales comparison approach. The income approach required estimates of economic rent, a vacancy factor, expenses and an overall rate of capitalization. Adequate data was available from the market so that these estimates could be made. However, because of the conditions of the appraisal and the subject characteristics, the estimates are inherently more subjective in nature. Because the subject is not considered a true investment property and is oriented more toward owner users, the income approach is given secondary weight but provides support for the final estimate of value. Based on the investigation and analysis made, it is my opinion the value of the subject property as defined, given the assumptions and limiting conditions of the report as of June 1, 2017 is:

SIX HUNDRED NINETY THOUSAND DOLLARS

($690,000.00)


EXPOSURE AND MARKETING PERIODS

Given the definition of market value, the final value estimate is as of the date of value of this report which presupposes that the property has already been exposed to the market for a reasonable period of time prior to the date of value. This past exposure period prior to a hypothetical sale as of the date of value reflects market conditions and trends during the exposure period. The exposure period estimated in this report is based on the following data sources.

1. Statistical information on exposure periods of current sales used in the report and sales of other similar properties. Exposure periods for the sales used in this report ranged from 1 to 7 months.

2. Interviews with brokers and other market participants.

3. Days on the market for listings.

A distinction is made between exposure period and marketing period. While exposure period is the time frame which occurs prior to the date of value (hypothetical sale date), marketing period reflects the estimated time required to market the property from the date of value given a reasonable listing price. This marketing period can be similar to or different from the exposure period. The marketing period is based in part on past trends but also considers current market conditions and the appraiser’s projections regarding future market conditions and trends. If market conditions change during the future marketing period, the ultimate sale price or value at time of sale can vary from the estimate as of the date of value. Exposure period is relevant in this appraisal given its intended used. An exposure period of approximately six months is estimated and forms the basis for the market value estimate.

DISTANCE BETWEEN THE SUBJECT AND THE HUENEME ELEMENTARY SCHOOL PROPERTY

Assessor’s parcel maps and aerial photos were reviewed to determine the distance between the two properties. Physical on site measurements could not be taken because of obstructions on adjoining properties. Based on the sources used, the distance between the school’s office building and the subject is judged to be 595 feet. The distance between the subject and the school yard is 735 feet.


View looking northeast from adjoining property

Rear elevation

59


Shed

Street view looking west toward Port entrance in background. Subject to right of photo.

60


Street view looking east toward Ventura Road.


COMMERCIAL PROPERTY 245 E. PORT HUENEME ROAD …

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