Source document (2019-12-11) — Doc. 75-4

Summary

Filed December 11, 2019 as Doc 75-4 in case No. 2:19-bk-00787, this is a 2015 appraisal of the Panthera Training Center in Old Fields, West Virginia, prepared by Chaney & Associates for Access National Bank. Mark A. Chaney, MAI, and Richard H. Hayes valued the fee simple estate as is at $15,050,000 as of 4/29/15. The property is about 747.49 acres of agricultural land improved as a training facility with firing ranges, a live-fire shoot house, a high-speed road track, an off-road rally track and a mock town for combat simulations. The report says the facility started operations in October 2009 and that its highest and best use as improved is continuation of the current use.

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No. 2:19-bk-00787 Doc 75-4 Filed 12/11/19 Entered 12/11/19 16:47:35 Page 1 of

53
CHANE

Commercial Real Estate and Business Valuation

An Appraisal of:

Panthera Training Center
2506 Fish Pond Road, Old Fields, West Virginia 26845

Subject Property

Prepared for:

Jeremy Tatge
Access National Bank
1800 Robert Fulton Drive, Suite 310
Reston, Virginia 20191

Washington, DC / Maryland / Virginia / West Virginia / Pennsylvania / Delaware
No. 2:19-bk-00787 Doc 75-4 Filed 12/11/19 Entered 12/11/19 16:47:35 Page 2 of
APPRAISAL REPORT (15-2882) 53

111 Cathedral Street, Suite 202, Annapolis, MD 21401
8508 White Post Court, Potomac, MD 20854

Tel 301.365.1285 @ Fax 301.365.1286

E-mail Mark.Chaney @ CAI-value.com

May 25", 2015

Jeremy Tatge

Access National Bank

1800 Robert Fulton Drive, Suite 310
Reston, VA 20191

Re: Panthera Training Center — 2506 Fish Pond Road, Old Fields, WV 26845
Dear Mr. Tatge:

In response to your April 17", 2015 request for an appraisal (utilizing all applicable approaches) of
the above captioned property, reported in conformance with the 2014-2015 Edition of the Uniform
Standards of Professional Appraisal Practice (USPAP), Title XI of the Federal Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), revised June 7", 1994, and
amendments thereto; and the requirements detailed in our engagement (see addenda).

The referenced subject consists of +747.49 acres of Agricultural zoned land, improved with
multiple structures and site improvements supportive of a specialized sustainment training
facility. These include multiple firing ranges, a live-fire shoot house, high-speed road track, an
off-road rally track, mock town for combat simulations, wet/dry skid pad, obstacle course,
classroom/administrative trailers (leased), shooting/repelling tower, multiple structures for
general operations, paved roads, gravel roads, and many other site improvements. The facility
was started operations in October 2009 (leased by a different operator until 2011). The highest
and best use as improved 1s continuation of the current use.

The purpose of this appraisal is to provide the subject’s market value as is of the fee simple estate.
In concluding to the value opinion we have considered the pertinent market data and the actions of
market participants knowledgeable of comparable properties. Based upon the analyses,
assumptions, and limiting conditions of this report, the subject’s market value as is of the fee simple
estate is $15,050,000 as of April 29", 2015 (the most comprehensive inspection). Attached hereto is
the analyses and reasoning for the opinion of value. Any separation of the signature pages from the
balance of the report invalidates the conclusion.

Respectfully submitted,
<3 _ Digitally signed by Mark A. Chaney a j

; pee ge ia > DN: cn=Mark A. Chaney, o=Chaney & A ' XG

Date: 2015.05.25 16:56:14 -04'00' /

Mark A. Chaney, MAI Richard H. Hayes

CHANE
ASSOCIATES

Commercial Real Estate and Business Valuation
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APPRAISAL REPORT (15-2882)

53

Scope of the Appraisal:

Engagement -

Period Data Was Investigated -
Date of Last Physical Inspection -

Geographica! Markets Researched -

Sources Used to Collect and Verify Data -

Valuation Approaches Utilized -

Identification of the Property:
Property Name -
Address -

Taxation Identification -

Personal Property and Other Items -
Ownership and History of the Property:
Current Ownership -

Acquisition Date -

To provide the subject’s market value as is via
an appraisal (utilizing all applicable approaches)
prepared in conformance with the 2014-2015
Edition of the USPAP; Title XI of the FIRREA,
revised June 7”, 1994, and amendments thereto;

and the requirements detailed in our engagement
(see addenda).

4/17/15 to the report date.

4/29/15.

The subject’s competitive market and
surrounding regional area.

Site inspection, ownership, CoStar, MRIS,
STDB, public records and officials, developers,
broker/agents, lending institutions, attorneys,
various published data pertinent to the subject’s
real estate market, and our files.

Cost, supported by the income capitalization.
Sales comparison cannot be applied given the

unique use of the subject, though efforts were
made to obtain comparables nationally.

Panthera Training Center.
2506 Fish Pond Road, Old Fields, WV 26845.

District 3, Map 203, Parcel 8; and District 3,
Map 203, Parcel 5.

None associated with our value opinion.

TenX Group, LLC.

8/21/13 for $6,283,608 from William Renick.
Ownership reportedly leased the subject from
2011 until purchase. A different operator,

]

CHANE
ASSOCMTES

Commercial Real Estate and Business Valuation
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APPRAISAL REPORT (15-2882)

93 2

Prior Sales -
Pending Sale Price -
Contracts, Options, Listings -

Recent Changes in the Operating Profile -

Purpose, Use, and User of the Appraisal:

Value Requested -

Intended Use -

Intended User -

Property Rights Appraised:
Interest Valued -

Encumbrances / Legal Constraints -
Date of Value Estimate:

Market As Is -

Moorefield Training Center (MTC) started the
operations in 2009 after obtaining necessary
approvals from Hardy County. At the time MTC
leased the property from William Renick, and in
2011 MTC left and the current operator
subleased and continued the operation. Though
we were not provided with specifics, it was
reported that while MTC was obtaining county
approvals and negotiating the land lease with
William Renick, they also agreed on a purchase
option which would allow for a very favorable
acquisition price.

None known within the past 3 years.
None known.
None known.

None known.

Market as is.

To assist client and intended users in making a
lending decision.

Access National Bank and The U.S. Small
Business Administration (SBA).

Fee simple estate.

None adverse known.

4/29/15 (the most comprehensive inspection).

CHANE

Commercial Real Estate and Business Valuation
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APPRAISAL REPORT (15-2882) 53 3

Definitions:
Market Value '

The major focus of most real property appraisal assignments. Both economic and legal definitions of
market value have been developed and refined.

3. The following definition of market value is used by agencies that regulate federally insured
financial institutions in the United States: The most probable price that 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 specified date and the
passing of title from seller to buyer under conditions whereby:

» Buyer and seller are typically motivated;

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

= A reasonable time is allowed for exposure in the open market,

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

« 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. (12 CFR.
Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, April 9,
1992; 59 Federal Register 29499, June 7, 1994)

Only that applicable to the subject is provided.
As Is Market Value?

The estimate of the market value of real property in its current physical condition, use, and zoning as
of the appraisal date. (Proposed Interagency Appraisal and Evaluation Guidelines, OCC-4810-33-P 20%)

Fee Simple Estate’

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations
imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

Furniture, Fixtures, and Equipment (FF&E) *

Business trade fixtures and personal property, exclusive of inventory.

' Appraisal Institute, The Dictionary of Real Estate Appraisal, 5" ed. (Chicago: Appraisal Institute), 2010.

CHANE

Commercial Real Estate and Business Valuation
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Business Enterprise Value (BEV) °

The value contribution of the total intangible assets of a continuing business enterprise such as
marketing and management skill, an assembled work force, working capital, trade names, franchises,
patents, trademarks, contracts, leases, customer base, and operating agreements.

Assumptions and Limiting Conditions:

« No responsibility is assumed for the legal description provided or for matters pertaining to legal or title
considerations. Title to the property is assumed to be good and marketable unless otherwise stated.

= The property is appraised free and clear of any or al! liens or encumbrances unless otherwise stated.

« Responsible ownership and competent property management are assumed.

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

« All engineering studies are assumed to be correct. The plot plans and illustrative material in this report are included
only to help the reader visualize the property.

« — It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it
more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that
may be required to discover them.

» It is assumed that the property is in full compliance with all applicable federal, state, and local environmental
regulations and laws unless the lack of compliance is stated, described, and considered in the appraisal report.

« It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless
nonconformity has been identified, described, and considered in the appraisal report.

« It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative
authority from any local, state, or national government or private entity or organization have been or can be obtained
or renewed for any use on which the opinion of value contained in this report is based.

* It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the
subject described and that there is no encroachment or trespass unless noted in the report.

« Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the
property, was not observed. We have no knowledge of the existence of such materials on or in the property. We,
however, are not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde
foam insulation and other potentially hazardous materials may affect the value of the property. The value estimated is
predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No
responsibility is assumed for such conditions or for any expertise or engineering knowledge required discovering
them. The intended user is urged to retain an expert in this field, if desired.

« Any allocation of the total value estimated in this report between the land and the improvements applies only under
the stated program of utilization. The separate values allocated to the land and buildings must not be used in
conjunction with any other appraisal and are invalid if so used.

* — Possession of this report, or a copy thereof, does not carry with it the right of publication.

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

» Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the
appraisers, or the firm with which they are connected) shall be disseminated to the public through advertising, public
relations, news, sales, or other media without the prior written consent and approval of the appraisers.

e Any opinions of value provided in the report apply to the entire property and any prorating or division of the total into
fractional interests will invalidate the opinion of value, unless such prorating or division of interests has been set
forth.

= If only preliminary plans and specifications were available for use in the preparation of this appraisal; the analysis is
subject to a review of the final plans and specifications when available and arrangements have been previously made.

= We assume that the user of this report has been provided with copies of available building plans and all leases and
amendments, if any, that encumbers the property.

° Appraisal Institute, The Dictionary of Real Estate Appraisal, 5" ed. (Chicago: Appraisal Institute), 2010.

CHANE

Commercial Real Estate and Business Vatuation
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« The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated
short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to
changes with future conditions.

= The Americans with Disabilities Act (ADA) became effective January 26", 1992. We have not made a specific
compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed
requirements of ADA. It is possible that a compliance survey of the property and a detailed analysis of the
requirements of the ADA would reveal that the property is not in compliance with one or more of the requirements of
the act. If so, this fact could have a negative impact upon the value of the property. Since we have no direct evidence
relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimating the
value of the property.

National Economy:

The Conference Board’s® Leading Economic Index (LEI) for the U.S. increased 0.7%, the
Coincident Economic Index (CEI) increased 0.2% and the Lagging Economic Index (LAG)
increased 0.1% in April.

- The LEI for the U.S. increased again in April, with building permits and the yield spread
making large positive contributions. In the 6-month period ending 4/15, the LEI increased
2.0% (44.0% annual rate), considerably slower than the growth of 3.5% (£7.2% annual rate)
during the previous 6 months. However, the strengths among the leading indicators remain
more widespread than the weaknesses.

« The CEI for the U.S., a measure of current economic activity, increased in April. The CEI
rose 1.3% (42.5% annual rate) between 10/14 and 4/15, about the same pace as for the
previous 6 months. In addition, the strengths among the coincident indicators have remained
very widespread. The LAG increased at a slightly slower pace than the CEI; as a result, the
coincident-to-lagging ratio rose marginally. Real GDP expanded at a 0.2% annual rate in
1Q'15, after increasing 2.2% (annual rate) in the final quarter of last year.

- The LEI for the U.S. continued to increase through April, but its 6-month growth rate has
moderated somewhat in recent months. Meanwhile, the CEI for the U.S. increased slightly,
and its 6-month growth rate is virtually unchanged compared to 6 months ago. Taken
together, the current behavior of the composite indexes and their components suggest that the
expansion in economic activity should continue, but the pace of growth is not likely to
significantly strengthen in the months ahead.

Seven of the 10 indicators that make up the LEI for the U.S. increased in April. The positive
contributors — beginning with the largest positive contributor — were building permits, the interest
rate spread, the Leading Credit Index (inverted), average weekly initial claims for unemployment
insurance (inverted), average consumer expectations for business conditions, manufacturers’ new

®° The Conference Board is the premier business membership and research network founded in 1916. It disseminates
knowledge about management and the marketplace to help businesses strengthen their performance and better serve
society. Working as a global, independent membership organization in the public interest, they conduct research,
convene conferences, make forecasts, assess trends, publish information and analysis, and bring executives together to
learn from one another. The Conference Board is a not-for-profit organization and holds 501 (c) (3) tax-exempt status in
the United States.

CHANE

Commercial Real Estate and Business Valuation
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orders for non-defense capital goods excluding aircraft, and stock prices. The ISM new orders index
declined, while average weekly manufacturing hours and manufacturers’ new orders for consumer
goods and materials were unchanged in April. The LEI for the U.S. now stands at 122.3 (2010=100).
Based on revised data, this index increased 0.4% in March and decreased 0.2% in February. Over the
6-month span through April, the LEI increased 2.0%, with 7 out of 10 components advancing
(diffusion index, 6-month span equals 70.0%).

Three of the 4 indicators that make up the CEI for the U.S. increased in April. The positive
contributors to the index — beginning with the largest positive contributor — were employees on non-
agricultural payrolls, personal income less transfer payments, and manufacturing and trade sales.
Industrial production declined in April. The CEI now stands at 112.0 (2010=100). Based on revised
data, this index decreased 0.1% in March and increased 0.2% in February. During the 6-month
period through April, the CEI increased 1.3%, with 3 out of 4 components advancing (diffusion
index, 6-month span equals 87.5%).

The LAG for the U.S. stands at 116.6 (2010=100) in April, with 2 of its 7 components advancing.
The positive contributors to the index — beginning with the largest positive contributor — were the
ratio of consumer installment credit outstanding to personal income and the ratio of manufacturing
and trade inventories to sales. The negative contributors — beginning with the largest negative
contributor — were change in the index of labor cost per unit of output, manufacturing and the
average duration of unemployment (inverted). The average prime rate charged by banks, commercial
and industrial loans outstanding, and the change in CPI for services held steady in April. Based on
revised data, the LAG increased 0.5% in March and increased 0.2% in February.

Regional Data:

The subject is located in Hardy County, WV, as depicted below.

a

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Commercial Real Estate and Business Valuation
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APPRAISAL REPORT (15-2882) of 53

Hardy County has a rural, rolling landscape, with much of the land covered with farms, forests,
state parks, and residences on large parcels. It also contains about 10 small communities and 2
small towns of Moorefield and Wardensville. Commercial development occurs primarily on the
main transportation corridors, State Route 55 and 259 and US Route 220, as well as in the towns.
Public facilities such as schools and medical facilities are also predominantly located in the same
places as commercial development and near community centers. There is a small amount of
industrial land use and there are few manufacturing businesses in the County. Hardy County as a
whole is depicted as follows.

° Census 2010

Household Income

CHANE

ASSOCIATES

Commercial Real Estate and Business Valuation
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Entered 12/11/19 16:47:35 Page11
8

APPRAISAL REPORT (15-2882) of 53
Population Summary
2006 Total Population 12,669
2010 Total Poputaticn 14,025
2015 Total Population 14,563
2015 Group Quarters 58
2020 Total Population 15,103
2015-2020 Annual Rate 0.73%
Houséhold Summary
2000 Households 5,204
2000 Average Household Size 2.42
2010 Households 5,818
2010 Average Household Size 2.40
2015 Households 6,067
2015 Aversge Household Size 2.359
2020 Households 6,297
2026 Average Household Size 2.39
2015-2020 Annual Rate 0.75%
2010 Families 3,909
2010 Average Famiy Size 2.86
2015 Families 4,037
2015 Average Family Size 2.85
2020 Families 4,173
2020 Average Family Size 2.84
2015-2020 Annual Rate 0.66%
Housing Unit Siimmary
2000 Housing Units 7,118
Owner Occupied Housing Units 58.9%
Renter Occupied Housing Units 14,3%
Vacant Housing Units 26.9%
2010 Housing Units 8,078
Owner Oecupled Housing Units 55.2%
Renter Occupied Housing Units 16.9%
Vacant Housing Units 28.0%
2015 Housing Units 8,453
Owner Occupied Housing Units 52.8%
Renter Occupied Housing Units 19.0%
Vacant Housing Units 28.25%
2020 Housing Units 8,820
Owner Occupied Housing Units 52.4%
Renter Occupied Housing Units 18.9%
Vacant Housing Units 28.6%
Median Household Income
2015 $37,506
2020 $41,723
Madian Home Value
2015 $138,428
2020 $148,854
Per Capita Income
2015 $19,987
2020 $22,236
Median Age
2010 42,7
2015 44.0
2020 45.7
2015 Population by Age 2015 Home Value
12.7% M@ 5-19
M 35-44 Mi $200-299K
14.8% m@ 45-54] | 46% Wi $300-399K

| CHANEY?

Commercial Real Estate and Business Valuation
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APPRAISAL REPORT (15-2882) of 53 9
2015 Households by Income
Household Income Base 6,067
$15,000 - $24,999 16.3%
$25,000 - $34,999 12.3%
$35,000 - $49,999 16.9%
$50,000 - $74,999 18.2%
$75,000 - $99,999 10.0%
$100,000 - $149,599 6.6%
$150,000 - $199,599 1.5%
$200,C00+ 0.6%
Average Household Income $47,940
2020 Households by tacome
Household Income Base 6,297
<$15,000 16.5%
$15,000 - $24,999 12.4%
$25,000 - $34,999 12.0%
$35,000 - $49,999 16.9%
$50,000 - $74,999 20.9%
$75,006 - $99,999 11.4%
$100,000 - $149,999 7.2%
$150,000 - $199,999 2.0%
$200,000+ 0.7%
Average Household Income $53,296
2015 Owner Occupied Housing Unites by Value
Total 4,464
<$50,000 4.8%
$50,000 - $99,999 23.4%
$100,000 - $149,999 28.4%
$150,000 - $199,999 21.2%
$200,000 - $249,999 13.7%
$250,000 - $299,999 3.8%
$300,000 - $399,999 3.1%
$400,000 - $499,999 1.1%
$500,000 - $749,999 0.4%
$750,000 - $999,999 0.1%
$1,000,000 + 0.0%
Average Home Vatue $152,223
2020 Owner Oceupled Housing Units by Value
Total 4,626
<$50,000 2.8%
$50,000 - $99,999 19.5%
$100,000 - $149,999 28.3%
$150,000 - $199,999 27.2%
$200,000 - $249,999 14.6%
$250,000 - $299,999 3.5%
$300,000 - $399,999 2.8%
$400,000 - $499,999 0.8%
$500,000 - $749,999 0.4%
$750,000 - $999,999 0.1%
$1,000,000 + 0.0%
Average Home Value $157,766

Within Hardy County, the subject is just outside Moorefield, as depicted below.

%

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Commercial Real Estate and Business Valuation
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APPRAISAL REPORT (15-2882) of 53 10

Moorefield’s demographic profile follows:

Summary Census 2010 2015 2020
Population 2,544 2,742 2,906
Households 1,097 1,184 1,257
Families 624 688 725
Average Household Size 2.32 2.32 2.31
Gwner Occup'ed Housing Units 577 615 668
Renter Occupied Housing Units 520 569 590
Median Age 40.1 $1.3 42.0

Trends: 2015 - 2020 Annual Rate Area State : National
Poputation 1.17% 0.52% 0.75%
Households 1.20% 0.55% 0.77%
Families 1.05% 0.46% 0.69%
Gwner KHHs 1.67% 0.54% 0.70%
Median Household [Income 321% 2.61% 2.66%

i 2015 A 2020

ki holds by Incom: ~_ Nurnber Percent Number Percent |
<$15,000 291 24.6% 295 23.5%
$15,000 - $24,999 234 19.8% 192 15.3%
$25,000 - $34,999 148 12.5% 157 12.5%
$35,000 - $49,999 182 15.4% 199 15.8%
$50,000 - $74,999 207 17.5% 267 21.2%
$75,000 - $99,999 64 5.4% 77 6.1%
$100,000 - $149,999 53 4.5% 63 5.0%
$150,000 - $199,999 2 0.2% 3 0.2%
$200,000+ 3 0.3% 4 0.3%
Median Householde Income $28,910 $33,734
Average Household Income $38,297 $42,651
Per Capita Income $16,398 $18,299

: Census 2010 2015 2920

Population by Age fumber. Percent Number Percent Number Percent
0-4 161 6.3% 157 5.7% 165 5.7%
5-9 137 §-4% 158 5.8% 166 5.7%
10-14 121 4.8% 146 5.3% 172 5.9%
1$-19 166 6.5% 131 4.8% 152 5.2%
20-24 169 6.6% 177 6.5% 139 4.8%
25-34 357 14.0% 392 14.3% 395 13.6%
35-44 336 13.2% 336 12.3% 369 12.7%
45 - 54 351 13.8% 391 £4,3% 366 12.6%

55 - 64 329 12.9% 379 13.8% 424 14.6%
65-74 203 5.0% 258 9.4% 330 11.4%
75 - 64 473 6.8% 158 5.8% 162 5.6%

85+ 41 1.6% 59 2.2% 64 2.2%

Trends 2015-2020
3

2.5

24

Population Households Families Owner HHs Median HH Income

Annual Rate (in percent)

a

2015 Household Income

$15K - $24K
19.6% <$15K
24.6%
1,200 Fs $150K - $199K
1,000 $25K - $34% s200R4*
800 11.5% $DOGM- $149K
eto 4.5%
$75K - $99K
400 54%
15.4% $50K - $74K
Census 2010 2015 2020 17.5%

CHANE
ASSOC TES

Commercial Real Estate and Business Valuation
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APPRAISAL REPORT (15-2882) of 53 11
2015 Population by Age 2015 Home Value
65% 48.3%
fry >. 15.9% = <5
5-19
12.3% 5.7% i 20-24 M@ <$100K
Wi 25-34 @ $100-199K
17.3% 45-54 8.8% @ $300-399K
14.1% Wi 55-64 BW $400-499K

Leading industries and products in Hardy County include poultry, wood and value-added
products, hay and grain, and livestock. Poultry is the major leading industry and accounts for over
half of its employment. Wood and wood products account for approximately one quarter.
Schools, government, agricultural, and service-related employment account for the balance of
employment. Not included in these estimates are self-employed persons or agricultural
employment (which predominates). Hardy County, along with the rest of the counties of this
region of West Virginia, will continue to have economic growth opportunities, including retention
of the existing jobs, new job creations including more highly skilled jobs, business
diversifications, tourism related developments, new residents - especially those commuters from
adjacent out-of-state areas and in-state residents in neighboring counties. Overall, the surrounding
area is considered to have the stability to support the subject’s current use.

Neighborhood Analysis:

Boundaries - The subject is situated +5 miles northwest of the
small town of Moorefield. The general
neighborhood ts within a valley generally bound
by north-south running mountain ridges to the
east and west, lower lying hills and the county
border +5 miles to the north, and the South
Branch Potomac River to the south. The area is
depicted below.

.

CHANE
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Commercial Real Estate and Business Valuation
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Land Uses - The neighborhood consists of forested land and
large acreage agricultural land with single-
family residences embedded within a valley
between mountain ridges to the east and west.
The small town of Moorefield to the southeast
of the subject provides local residents with
basic retail and commercial needs. New
development has been limited in Moorefield.

o

Subject noted with red box

Accessibility - The subject is located within rural lands with
limited access given the surrounding mountain
ridgelines running north-south. The closest area
with a moderate degree of development is
Winchester, VA, which is +60 miles to the east.
However, the town of Moorefield is located at
the intersection of U.S. Route 220 (running
north-south) and U.S. Route 48 (running east-
west). Each of these provide access to other
areas of West Virginia, Virginia to the east and
Maryland to the north.

Growth Rate - Forecasts are for +0.6% per annum to 2019 for
the 10-mile radius. Within this radius the current

population is 10,529.

Typical Property Condition - Average rural product.

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Predominant Occupancy - 2014 Occupancy - STDB
1-Mile d-Mile 10-Mile
# Units 5 1,200 5,297
Owner 60.0% 56.9% 56.6%
Renter 0.0% 20.6% 23.3%
Vacant 40.0% 22.5% 20.1%
2019 Forecasted Occupancy
# Units 5 1,259 5,531
Owner 60.0% 56.6% 56.2%
Renter 20.0% 20.4% 22.7%
Vacant 20.0% 23.0% 21.1%
Evidence of Declining Occupancy - None, though given the rural nature of the

overall area, growth is modest.
Prevalent Market Trend - Relative stability.

Overall Real Estate Values - Reportedly residential resale values have been
fairly stable over the past year.

Uses Adjacent to Subject - The subject is surrounded by raw forested land
to the south and west, and agricultural land to
the north and east.

Market Analysis:

The subject’s current use is one that is fairly unique with limited competition. The subject is a
sustainment training facility that offers customized training packages to the U.S. Department of
Defense, U.S. Department of State, various government agencies, and local law enforcement
teams who operate in sensitive environments worldwide. The subject offers scenario-based
training in a private venue, and provides sophisticated scenarios to meet customized training
requirements. Ground, aviation and intelligence training is merged in a single exercise to enable
the client to train like they fight. Some of the tactical training courses consist of the following:

« Firearms — Basic to advanced smal] to medium arms training.

« Driving — Security driving, convoy operations, advanced vehicle control and technical driving, and evasive
maneuvers.

» Special Tactics — Simulations of urban warfare and close quarter battles.

» Executive Protection — Mission planning, venue security, escape routes, hand-to-hand tactics, formations and
perimeter security, and use of force.

= Situational Awareness and Survivability — Surveillance detection, combat medicine and operational! planning.

Reportedly the competition comes on a national scope from 4 companies — BSR, Academi,
Raytheon, and Dyncorp. Academi has 3 locations, North Carolina, California and Connecticut;
their flagship location is in Moyock, NC and is a 7,000-acre facility that includes several tactical
ranges, 5 ballistic houses, scenario facilities, airfields, drop-zones, tactical driving tracks, and
classrooms. BSR is a facility located in Summit Point, WV, though is focused on the aspect of
evasive driving curriculum. They have various courses such as high-speed road courses, off-road
courses, and skid pads. There are firing ranges as well, but their core focus is on various driving

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courses. Raytheon and Dyncorp offer various military training programs as well, reportedly in
Texas and Georgia, though public information on their programs is difficult to obtain.

As will be discussed within our Zoning Analysis, the subject received approval to allow for the
current use, one that allows for live-fire 24 hours/7 days a week. The subject land is
Agriculturally zoned. Without the subject’s special zoning approval, agricultural use is most
likely, as development within the county is virtually non-existent. According to the Hardy County
Assessor, there have only been 2 large acreage sales since the economic downturn started in 2007
(we analyze both in our land valuation). The Hardy County Planner stated there has been no
development in recent years, and there does not appear to be any development in the near term
since there are not many employment opportunities outside of the agricultural industry to support
significant development. Given the subject’s location outside of Moorefield in very rural lands,
residential subdivision development is unlikely.

Site Description:

Location - 2506 Fish Pond Road, Old Fields, WV 26845.
The Census Tract is 9701.00.

Tax Identification - District 3, Map 203, Parcel 8 and District 3,
Map 203, Parcel 5.

Size - 689.40 acres (Parcel 8) and 58.09 acres (Parcel
5), for a total of 747.49 acres.

Shape - Irregular.

Access - Fish Pond Road is a gravel road that is accessed
from U.S. Routes 220 and 48.

Topography - Varying from lightly rolling to steep
mountainous terrain. Vegetation ranges from
clear open pastures to heavily wooded forests.

Visibility - Poor, which is advantageous for a use that has
many clients seeking secrecy.

Drainage - Facilitated by natural means.

Flood Zone - According to FEMA map 54031C0050G
effective 9/2/09, the subject is in Zone X, an
area of minimal risk.

Soil Condition - We were provided with a soil sampling report

dated 10/2/14. The purpose of this report was
over concerns of storm water runoff into ditches

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below the firing ranges on site. These ranges
have been utilized in the past few years as
training areas for military and _ security
personnel. Lead is utilized in the ammunition
rounds, hence the cause for concern, though
measures are taken to capture spent rounds.
Based on the results of the sampling, human or
environmental risks were not identified related
to the runoff from the firing ranges. All results
were well below the stringent limits used as
clearance levels by HUD and the EPA.

Environmental Hazards - We were provided with a Phase I Environmental
Site Assessment dated 8/1/11. No Recognized
Environmental Conditions were identified, and
no additional investigations were warranted.

Utilities - Electricity, telephone, well and septic.
Easements / Encroachments - None adverse assumed.

Detrimental Influences - None significant noted.

Site Improvements - A network of roads connects the various sections

of the training facility. There are paved asphalt
roads that are 18'-wide and span 2,162’. There
are gravel roads that are 18'-wide and span
10,560.

Along the side of a steeply sloped hill is a
concrete road course for training drivers in
evasive high speed, tightly turning, and steeply
sloped conditions. This course is 36'-wide and
spans 13,460’.

A large Skid Pad exists for various automotive
training exercises. This paved square surface is
400' x 400', or 160,000 SF.

A 2.6-mile dirt rally track with tightly winding
curves is in-place just south of the wet/dry skid
pad area.

There are 5 open-space shooting ranges, which
are graded and graveled. Each of the ranges have

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the following dimensions — 90' x 350'; 90' x
350'; 90' x 620'; 90° x 900'; 150! x 95'. The total
size of these ranges equates to 214,050 SF.

For safety purposes there are large berms
surrounding the firing ranges, the Live Fire
Shoot House and the canopy covered shooting
range (Range Cover 5). There is also a 360°
shooting range that is comprised of a berm
surrounding a center area for training drills. As
construction has taken place throughout the
facility much of the dirt has been hauled to these
areas to build-up the berms, and there have also
been arrangements with other local projects to
acquire soil for relatively inexpensive amounts.

It was reported that subject ownership has
continued to perform infrastructure upgrades to
enhance business operations. Such upgrades
within the past couple years include +3,000' of
water/sewer lines, +3,700' of underground
power lines, additional gravel roads, and other
miscellaneous site work such as imgation
systems. However, we were not provided with a
detailed breakout of the costs incurred.

Off-Site Improvements - Minimal, as access to the site is via a gravel road
(Fish Pond Road).
Conclusion - The site is assumed physically capable of

supporting legally permissible uses, including
the existing.

View overlooking subject View toward off-road trails

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View from subject’s high-ground gravel road depicting various components of the subject

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Firing ranges, berms to each side

Gravel road, berm in background Gravel road to rear entrance of facility

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Zoning Analysis:
Type - Agricultural (A) District — This comprises the

residual unincorporated lands in the county after
the other zoning districts and the floodplain
areas have been designated. It is recognized that
some land in the county must be available for
innovative ideas and less restrictive uses, which
the “A” District provides.

Permitted Uses - Agricultural is encouraged, but the following are
also permitted: Single- and 2-family dwellings,
churches, private recreation areas, wildlife
preserves, commercial green houses, cemeteries,
kennels, and historical sites.

The following conditional uses may be
authorized with approval of the Zoning Appeals
Board: hospitals and institutions for human care,
motels, gun clubs and trap-shooting ranges,
camp grounds, correctional institutions, landing
fields, and scrap/salvage yards.

On 5/28/09, a Conditional Use Permit was
granted by the Hardy County Board of Zoning
Appeals for the purpose of building a
Sustainment Training Facility. This zoning
approval letter was for the Moorefield Training
Center, Inc. the entity which developed the
subject in 2009. The conditional use transferred
with the land. The conditions of this permit
allowed for obtaining building permits for the
facility, and states that the planned facility’s
operations comply with the zoning ordinance.
Most notable was the granting of live-fire 24
hours/ 7 days per week, to simulate nighttime
missions. We spoke with the head of the
Planning and Zoning Department of Hardy
County to get an idea on the difficulty of
obtaining such a zoning appeal. It was her
opinion that it is simply impossible to predict the
likelihood of another similar use being approved
within the county as there are simply so many
factors that go into the zoning board voting for
such exceptions. It really depends on who is on
the board at that time and a multitude of factors.

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She did state that, “...anything that may bring
significant jobs to the area would perk
anybody’s ears up around there.” Her opinion
was that given the subject’s adjacency to an
abundance of forested and mountainous land,
along with virtually no residences within ear-
shot of the facility, that granting such approval
may not have been overly difficult.

Bulk Regulations - Minimum Lot Area: 3 acres
Minimum Lot Width: 200'
Minimum Side Yard: 30'
Minimum Front Yard: 40'
Minimum Rear Yard: 50’

Maximum Height: 3 stories or 40'
Conformance - The subject appears legal.
Possibility of Zoning Change - Minimal.
Improvements Description:
Overview - The subject is a sustainment training facility

that offers customized training packages to the
U.S. Department of Defense, U.S. Department
of State, various government agencies, and
local law enforcement teams who operate in
sensitive environments worldwide. The subject
offers scenario-based training in a private
venue, and provides sophisticated scenarios to
meet customized training requirements.
Ground, aviation and intelligence training is
merged in a single exercise to enable the client
to train like they fight. Some of the tactical
training courses consist of the following:

» Firearms — Basic to advanced small to medium arms
training.

« Driving Security driving, convoy operations,
advanced vehicle control and technical driving, and
evasive maneuvers.

* Special Tactics — Simulations of urban warfare and
close quarter battles.

« Executive Protection — Mission planning, venue
security, escape routes, hand-to-hand tactics,
formations and perimeter security, and use of force.

« Situational Awareness and Survivability —
Surveillance detection, combat medicine and
operational planning.

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Many of the subject’s qualities that add value
to the current use simply lie within the land
itself. Many of the training operations greatly
benefit from the subject’s terrain; this varies
from wooded mountainous land to rolling open
pastures. Throughout the land are obstacle
course trails, off-road trails for vehicle training,
and even old farm buildings that assist in
recreating countryside environments _ that
soldiers may encounter in real-life conflicts.
Also of benefit to the subject is the changing of
seasons (i.e. simulations done in snow covered
mountain terrain), and the fact that live-fire is
allowed 24 hours/7 days per week for
providing nighttime training missions.

The subject is a highly specialized use, and
thus many of the improvements are very
unique to this use. The following summarizes
the improvements throughout the site, followed
by descriptions of FF&E.

Live-Fire Shoot House

Product - A specialized facility that allows for live-fire
combat simulations within a closed structure.
The facility is essentially a Class S warehouse
shell building with the lower portion of the
exterior wall removed. Reportedly the exterior
metal wall is of thicker material to handle any
stray rounds going through. Within the interior
of the warehouse-like structure is a highly
specialized build-out. On the ground level is a
series of hallways and rooms in which all of the
walls are a costly composite material that
absorbs live rounds. This allows for combat
simulations with live-fire in which the rounds
do not riccochet. These walls and rooms can be
configured to simulate the layout of a building
that a special-operations team will be
infiltrating in real scenarios. Above the ground
level’s layout is an intricate network of steel
fabricated cat walks, stairs and multiple levels
for observations of the training squads on the
ground level and for exercises on the cat walk
levels as well. Reportedly this custom

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Size -

Year Built / Effective Age -
Condition -

Remaining Economic Life -
Foundation -

Frame -

Floor Cover -

Exterior Walls -

Interior Partitions -

Roof Cover/Support -
Electrical -

Functional Adequacy -

fabricated steel structure, the specialized round
absorbing walls, the high impact exterior metal
walls, and the building itself had a construction
cost of +$2,000,000. Another contractor that
specializes in build-outs like this provided a bid
that was well over $3,000,000.

8,712 SF.

2013 /+2 years.

Excellent.

+33 years.

Concrete slab.

Steel.

Concrete slab.

Metal.

Wood stud and specialized round absorbing
composite material.

Metal cover, steel truss.
Assumed adequate.

Adequate for the given use.

Front views of Live-Fire Shoot House

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ecialized live round absorbing

Views depicting specialized steel work

Range Cover 5

Product - A covered open-air shooting range.

Size - 162' x 89’, 14,418 SF.

Year Built / Effective Age - 2013 / +2 years.

Condition - Excellent.

Remaining Economic Life - +23 years.

Foundation - Gravel.

Frame - Steel.

Roof Cover/Support - Metal over steel support.

Electrical - Assumed adequate.
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Functional Adequacy - Adequate for the given use.

Range Cover 5

Steel structure

Sim 1 & Sim 2

Product - Two-story structures located within the Combat
Town section, they are utilized as “Sim Houses”
to assist in combat simulations.

Size - 3,812 SF and 1,476 SF.

Year Built / Effective Age - 2009 / +5 years.

Condition - Very good.

Remaining Economic Life - +25 years.

Foundation - Concrete slab.

Frame - Wood.

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Floor Cover - Wood floor.
Exterior Walls - Stucco.

Interior Partitions -
Roof Cover/Support -
Electrical -

Fire Protection -
Plumbing -

Heating -

Functional Adequacy -

Sim House 1

Shop

Product -

Size -

Year Built / Effective Age -
Condition -

Remaining Economic Life -

Foundation -

Painted drywall over wood.
Asphalt shingles, wood truss.
Assumed adequate.

Smoke detectors assumed.
Adequate.

Electric heat.

Adequate for the given use.

Sim House 2

One-story structure used as a maintenance shop.
960 SF.

2009 / +5 years.

Very good.

+25 years.

Concrete slab.

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Frame -

Floor Cover -
Exterior Walls -
Roof Cover/Support -
Electrical -

Fire Protection -
Plumbing -

Heating -

Functional Adequacy -

Wood.

Concrete slab.

Stucco.

Asphalt shingles, wood truss.
Assumed adequate.

Smoke detectors assumed.
Adequate.

Electric heat.

Adequate for the given use.

Track Cover Briefing for Wet/Dry Skid Pad

Product -

Size -
Year Built / Effective Age -
Condition -

Remaining Economic Life -

A pavilion to provide vehicle shelter and a
covered briefing area for training courses on the
wet/dry skid pad.

1,960 SF

2009 / +5 years.

Good.

+20 years.

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Foundation - Gravel.
Frame - Open-air, wood post.
Roof Cover/Support - Wood truss, asphalt shingle.
Electrical - None.
Functional Adequacy - Adequate for the given use.
Track Cover Briefing Pavilion
FAV Building
Product - A pavilion to provide armored vehicle shelter.
Size - 3,000 SF.

Year Built / Effective Age -
Condition -

Remaining Economic Life -
Foundation -

Frame -

Roof Cover/Support -
Electrical -

Functional Adequacy -

2009 / +5 years.

Good.

+20 years.

Gravel.

Open-air, wood post.
Wood truss, metal cover.
Assumed adequate.

Adequate for the given use.

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FAV Building
Armo
Product - Two-story structure near the administrative
trailers and utilized as weaponry strorage.
Size - 1,836 SF.
Year Built / Effective Age - 2009 / +5 years.
Condition - Very good.
Remaining Economic Life - +25 years.
Foundation - Concrete slab.
Frame - Wood.
Floor Cover - Wood floor.
Exterior Walls - Stucco.
Interior Partitions - Painted drywall over wood.
Roof Cover/Support - Asphalt shingles, wood truss.
Electrical - Assumed adequate.
Heating - Electric heat.
Functional Adequacy - Adequate for the given use.

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Armory

Shooting & Repelling Tower

Overview - This is a 60' tower that is utilized for long-range
shooting and repelling exercises. It is primarily
constructed of wood, has multiple levels and
features a rock-climbing wall. The structure was
constructed in 2009 and is in very good
condition.

Shooting tower Rock climbing wall next to stairwell

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Block House

Product -

Size -

Year Built / Effective Age -
Condition -

Remaining Economic Life -
Foundation -

Frame -

Floor Cover -

Exterior Walls -

Interior Partitions -

Roof Cover/Support -
Electrical -

Fire Protection -

Plumbing -

Heating -

View to tower’s top

View of cleared shooting range in front of tower

One-story structure utilized as the medical
triage training facility.

800 SF.

2009 / +5 years.

Good.

+30 years.

Concrete slab.

Concrete masonry units (CMU).
Concrete slab.

Painted CMU.

None.

Metal roof cover, wood truss.
Assumed adequate.

Smoke detectors assumed.
Adequate.

Gas heat.

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Functional Adequacy - Adequate for the given use.

Block House (Medical Triage Training)

Minor Miscellaneous Improvements

Overview - The following are small improvements that are
in good condition and built in 2009; 2 pump
houses (100 SF and 64 SF), and 2 pavilions
(720 and 240 SF) to provide coverage on the
shooting ranges.

Pump House 1 (100 SF)

Pump House 2 (64 SF)

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Automobile assets for wet/dry skid pad training Wood structures within ‘Combat Town’

Leasehold Improvements

Overview - The subject has a number of leased trailers that
were brought on-site for administrative
operations, a kitchen, and multiple classrooms.
These trailers are located at various locations.
The following depict some of these leased
trailers.

Administrative trailers

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Miscellaneous Structures

Overview -

Administrative trailers

The following pictures depict very old structures
that were utilized for the prior agricultural use of
the land. These buildings are extremely worn and
dated and thus past their agricultural useful lives;
however, they do play a useful role for the
subject’s current use. In certain combat
simulations these buildings are effective “set
props” in recreating conflict environments. It was
stated that given the location of these buildings in
an open pasture next to a wooded hillside, this
creates an excellent set for recreating missions
that take place in rural areas of some countries,
such as those of the Eastern Bloc. Reenactments
here and within the Combat Town (where
shipping containers and small wooden huts are
built) are very extensive, reportedly often movie
set like. Villages are created, complete with
distractions such as buming vehicles, local
citizens creating crowded market areas, etc.
Actors are hired to play the local citizens that
may be packing a central market area or as
farmers on the countryside. These hired actors are
individuals originally from the countries that are
being recreated and speak the languages of these
countries; all of this is in an effort to recreate the
environments that soldiers may encounter in an
upcoming mission in which they are training for.

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Old barns

Old farmhouse

Tax and Assessment Data:

Identification - District 3, Map 203, Parcel 8 and District 3, Map
203, Parcel 5S.
Assessed Value - Parcel 8 5
Land $1,193,570 $16,800

Improvement $13,800 $1,500
Total $1,207,370 $18,300

Tax Rate - State $0.0100
County $0.5720
School Fund $0.7760
School Bond $0.2112

Total $1.5692*

* Per $100 of assessed value

Current Annual Tax Burden - $19,233.

Assessment Trends - Stable.

Prospective Changes in Tax Rates - None known.

Adequacy of Tax Burden - Appears reasonable for agricultural land.
Highest and Best Use:

“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. The four
criteria the highest and best use must meet are legal permissibility, physical possibility, financial
feasibility, and maximum productivity.” ’

’ Appraisal Institute, The Dictionary of Real Estate Appraisal, 5" ed. (Chicago: Appraisal Institute, 2002), 135.

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As If Vacant

Physically Possible - Reasonably expected legally permissible uses.
Legally Permissible - Agricultural uses are encouraged, but also

permitted is single- and 2-family dwellings,
churches, private recreation areas, wildlife
preserves, commercial green houses, and
historical sites.

Financially Feasible - Current market conditions are not supportive of
speculative development.

Maximally Productive - Hold for agricultural or residential development.
Special purpose facilities, such as the subject,
are an alternative highest and best use.

As Improved

Physically Possible - The current use.
Legally Permissible - The current use.
Financially Feasible - The current use.
Maximally Productive - The current use.

Valuation Process:

There are three valuation approaches common to appraisal, “In the sales comparison approach,
properties similar to the subject property that have been sold recently or for which listing prices or
offers are known are compared to the subject. Data from generally comparable properties is used,
and comparisons are made to demonstrate a probable price at which the subject property would sell
if offered on the market.

In the cost approach, an estimated reproduction or replacement cost of the building and site
improvements as of the date of appraisal is developed (including an estimate of entrepreneurial
profit or incentive), and an estimate of the losses in value (depreciation) that have taken place due
to wear and tear, design and plan deficiencies, or external influences is subtracted. An estimate of
the value of the land is then added to this depreciated building cost estimate. The total represents the
value indicated by the cost approach.

In the income capitalization approach, the potential income of the property is calculated and
deductions are made for vacancy and collection loss and expenses. The prospective net operating
income of the property is then estimated. To support this estimate, operating statements for the
subject property in previous years and for comparable properties are reviewed. An applicable

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capitalization method and appropriate capitalization rates are developed and used in calculations that

lead to an indication of value.

398

The valuation of the subject was accomplished primarily by the cost approach, and supported by
the income capitalization approach. The sales comparison approach cannot be applied given the
unique use of the subject, though efforts were made to obtain comparable sales nationally.

Cost Approach:

The land sales that follow are considered the best available concerning comparable properties to the
subject. Due to the subject’s rural nature we increased our search area to include a much broader

area.

Comparable Sale # 1

Location:

Sale Data

Verification:

Comments:

487 General Andrews Drive, Kabletown, WV 25414

Grantor:
Grantee:
Identification:
Sale Date:
Consideration:
Rights Conveyed:
Financing Terms:
Site Area:

Site Characteristics:
Zoning:
Price/Acre:

Avon Woods Inc.
Crawford and Keller
00015741

10/17/14
$2,500,000

Fee simple

Cash equivalent

397 Acres

Generally cleared agricultural land
Agricultural

$6,297

CoStar / public records / Jerry Derr, Snyder Bailey & Associates

This is the sale of agricultural farmland +10 miles south of Charles Town, WV. According to the
listing agent the buyer acquired the property to continue use as farmland.

® Appraisal Institute, The Appraisal of Real Estate, 14" ed. (Chicago: Appraisal Institute, 2013), 669.

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Comparable Sale # 2
Location: West and east side of State Route 48 (west of South Branch River), Moorefield, WV 26836
Sale Data Grantor: TR Barbara Crites
Grantee: Rural Development Authority
Identification: District 03, Map 263, Parcels 6 and 6.2
Sale Date: 4/13
Consideration: $1,800,000
Rights Conveyed: Fee simple
Terms of Sale: Cash equivalent
Zoning: Agricultural
Site Area: 213 Acres
Site Characteristics: Partially cleared and rolling agricultural land
Price/Acre: $8,451
Verification: Public records / Jim Wratchford, Hardy County Assessor
Comments: This property was acquired with the intention of developing it for light industrial uses as it lies just

outside the town of Moorefield along the recently extended State Route 48. Development has yet to
occur. The land was previously utilized as agricultural land for livestock and located +4 miles south

of the subject.
Comparable Sale # 3
Location: West side of US Route 220 near Wright Farm Road, Old Fields, WV 26836
Sale Data Grantor: Wilt Farm Inc.
Grantee: Path West Virginia Transmission Company, LLC
Identification: Deed Book 311, Page 775
Sale Date: 9/9/09
Consideration: $5,800,000
Rights Conveyed: Fee simple
Financing Terms: Cash equivalent
Site Area: 515 Acres
Site Characteristics: Rolling and generally clear agricultural land
Zoning: Agricultural
Price/Acre: $11,262

Verification: Public records / Jim Wratchford, Hardy County Assessor

Comments: This farmland was purchased for the development of an electrical substation. The site is located +5
miles north of the subject.

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40

The following map depicts the previous sale data relative to the subject:

A

{
mae x 9 :
onawy
e ;
|
| Sette
i

The comparables are adjusted as follows:

Comparable Sale #1 Sale#2 Sale #3
Price/Acre $6,297 $8,451 $11,262
Property Rights Conveyed 0% 0% 0%
Adjusted Price $6,297 $8,451 $11,262
Financing Terms 0% 0% 0%
Adjusted Price $6,297 $8,451 $11,262
Conditions of Sale 0% 0% 0%
Adjusted Price $6,297 $8,451 $11,262
Expenditures After Purchase 0% 0% 0%
Adjusted Price $6,297 $8,451 $11,262
Market Conditions 0% 0% -20%
Adjusted Price $6,297 $8,451 $9,010
Location 0% 0% 0%
Physical Characteristics 10% 5% 10%
Economic Characteristics 0% 0% 0%
Zoning/Use 5% 5% 5%
Non-Realty Components 0% 0% 0%
sub-total adjustments 15% 10% 15%
Final Adjusted Price $7,242 $9,296 $10,361
Mean $8,966
Median $9,296

Based on our analysis, the subject land is estimated to have a market value of $9,000/acre, with its

overall site value calculated as (747.49 acres »

$9,000) $6,727,410 as of 4/29/15.

The next step in this cost approach to value is to estimate the depreciated value of the subject

building improvements.

This is undertaken by estimating the replacement cost of the

improvements and deducting the estimated depreciation from all sources.

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The subject buildings fall under several classifications in Marshall Valuation Service (MVS), a
widely recognized authority on costs. MVS provides the appraisal industry with the most current and
qualified building cost data available. On a daily basis, an expert research team monitors the costs of
labor and materials throughout the United States and Canada, keeping all published data consistent
with the latest market trends and conditions. The cost estimates for the subject follow.

Building Type: Commercial Equipment Shed
Construction Class: D
Building Quality: Average
Year Built: 2009
# of Stories: |
Base SF Cost: $20.64
Refinements

# of Stories Multiplier: 1.000
Height per Story Multiplier: 1.000
Area Multiplier: L110
Refined SF Cost: $22.9]
Current Cost Multiplier: 1.06
Local Multiplier: 107
Final SF Cost: $25.98
GBA SF: 960
Hard Costs: $24,946
Indirect Costs (Legal, Accounting, Loan Fee): 5% §1,247
Total Hard/Soft Costs $26,193

t Sim 1
Building Type: Shed Office Structures
Construction Class: D
Building Quality: Low Cost
Year Built: 2009
# of Stories: 2
Base SF Cost: $36.48
# of Stories Multiplier: 1.000
Height per Story Multiplier: 1.000
Area Multiplier: 0.977
Refined SF Cost: $35.64
Current Cost Multiplier: 1.06
Local Multiplier: 107
Final SF Cost: $40.42
GBA SF: 3,812
Hard Costs: $154,096
Indirect Costs (Legal, Accounting, Loan Fee): 5% $7,705
Total Hard/Soft Costs $161,801

Construction Class:

Building Type: Shed Office Structures
D

Building Quality: Low Cost
Year Built: 2009
# of Stories: 2
Base SF Cost: $36.48
# of Stories Multiplier: 1,000
Height per Story Multiplier: 1.000
Area Multiplier: L044
Refined SF Cost: $38.09
Current Cost Multiplier: 1.06
Local Multiplier: 1.07
Final SF Cost: $43.20
GBA SFE: 1,476
Hard Costs: $63,758
Indirect Costs (Legal, Accounting, Loan Fee): 5% $3,188
Total Hard/Soft Costs $66,945

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Track Cover Briefing Pavilion

Building Type: Pavilions
Constnuction Class: D
Building Quality: Cheap
Year Built: 2009
Base SF Cost: $35.76
Height per Story Multiplier: 1.000
Area Multiplier: LU7
Refined SF Cost: $39.94
Current Cost Multiplier: 1.06
Local Multiplier: 107
Final SF Cost: $45.30
GBA SF: 1,960
Hard Costs: $88,797
Indirect Costs (Legal, Accounting, Loan Fee): 5% | $4,440
Total Hard/Soft Costs $93,236

FAY Building

Building Type: Pavilions
Construction Class: D
Building Quality: Cheap
Year Built: 2009
Base SF Cost: $35.76
Height per Story Multiplier: 1.000
Area Multiplier: L071
Refined SF Cost: $38.30
Current Cost Multiplier: 1.06
Local Multiplier: LO7
Final SF Cost: $43.44
GBA SF: 3,000
Hard Costs: $130,316
Indirect Costs (Legal, Accounting, Loan Fee): 5% | $6,516
Total Hard/Soft Costs $136,832
Building Type: Shed Office Structure
Construction Class: D
Building Quality: Low Cost
Year Built: 2009
# of Stores: 2
Base SF Cost: $36.48
# of Stories Multiplier: 1.000
Height per Story Multiplier: 1.000
Area Multiplier: 1.110
Refined SF Cost: $40.49
Current Cost Multiplier: 1.06
Local Multiplier: 1.07
Final SF Cost: 545.93
GBA SF: 1,836
Hard Costs: $84,322
Indirect Costs (Legal, Accounting, Loan Fee): 5% $4,216
Total Hard/Soft Costs $88,538
Range Cover 4
Building Type: Pavilions
Construction Class: D
Building Quality: Cheap
Year Built: 2009
Base SF Cost: $35.76
Current Cost Multiplier: 1.06
Local Multiplier: 1.07
Final SF Cost: $40.56
GBA SF: 720°
Hard Costs: $29,202
Indirect Costs (Legal, Accounting, Loan Fee): 5% §1,460
Total Hard/Soft Costs $30,663

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Range Cover 5
Building Type: Material Commodity Shelter
Construction Class: S
Building Quality: Very Good
Year Built: 2013
Base SF Cost: $17.64
Height per Story Multiplier: 1.077
Refined SF Cost: $19.00
Current Cost Multiplier: 1.04
Local Multiplier: 1.07
Final SF Cost: $21.14
GBA SF: 14,418
Hard Costs: $304,815
Indirect Costs (Legal, Accounting, Loan Fee): 5% $15,241
Total Hard/Soft Costs $320,056
Range Cover 6
Building Type: Pavilions
Construction Class: D
Building Quality: Cheap
Year Built: 2009
Base SF Cost: $35.76
Current Cost Multiplier: 1.06
Local Multiplier: 1.07
Final SF Cost: $40.56
GBA SF: 240
Hard Costs: $9,734
Indirect Costs (Legal, Accounting, Loan Fee): 5% $487
Total Hard/Soft Costs $10,221
Block House _
Building Type: Commercial Utility Building
Construction Class: Cc
Building Quality: Average
Year Built: 2009
# of Stories: 1
Base SF Cost: $24.29
# of Stories Multiplier: 1.000
Height per Story Multiplier: 1.000
Area Multiplier: 1.133
Refined SF Cost: $27.52
Current Cost Multiplier: 1.08
Local Multiplier: 1.06
Final SF Cost: $31.51
GBA SF: 800
Hard Costs: $25,204
Indirect Costs (Legal, Accounting, Loan Fee): 5% $1,260
Total Hard/Soft Costs $26,465
Pump House 1
Building Type Toolshed Building
Construction Class: D
Building Quality: Low Cost
Year Built 2009
Base SF Cost: $7.38
Current Cost Multiplier: 1.06
Local Multiplier: Lo?
Final SF Cost: $8.37
GBA SF: 100
Hard Costs: $837
Indirect Costs (Legal, Accounting, Loan Fee): 5% $42
Total Hard/Soft Costs $879
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Pump House 2
Building Type: Toolshed Building
Construction Class: D
Building Quality: Low Cost
Year Built: 2009
Base SF Cost: $7.38
Current Cost Multiplier: 1.06
Local Multiplier: 41.07
Final SF Cost: $8.37
GBA SF: 64
Construction Costs $536
Hard Costs: $536
Indirect Costs (Legal, Accounting, Loan Fee): 5% $27
Total Hard/Soft Costs $562
Live Fire Shoot House
Building Type: Warehouse Shell Building
Construction Class: S
Building Quality: Good
Year Built: 2013
Base SF Cost: $56.01
Area Multiplier: 1.013
Refined SF Cost: $56.74
Current Cost Multiplier: 1.03
Local Multiplier: LOo7
Final SF Cost: $62.53
GBA SF: 8,712
Construction Costs: $544,748
Custom Build-out and Iron Work Lump Sum: $1,500,000
Hard Costs: $2,044,748
Indirect Costs (Legal, Accounting, Loan Fee): 5% $102,237
Total Hard/Soft Costs $2,146,985

Shooting/Repelling Tower

Building Type:
Year Built:
Cost Per Cubic Foot of Tower Structure:
Cubic Feet (23" x 23' « 60'):

Hard Costs:

Training Towers

Indirect Costs (Legal, Accounting, Loan Fee): 5%

2009
$3.29
31,740
$104,425
$5,221

Total Hard/Soft Costs

$109,646

Utilizing MVS, the physical depreciation percentage for the subject buildings are calculated below:

Actual Age* Effective Age*
Shop 6 5
Sim | 6 5
Sim 2 6 5
Track Cover & Briefing 6 5
FAY Building 6 5
Armory 6 5
Range Cover 5 2 2
Block House 6 5
Pump House | 6 5
Pump House 2 6 5
Live Fire Shoot House 2 2
Shooting & Repelling Tower 6 5

Economic Life* Depreciation
30 9%
30 9%
30 9%
25 13%
25 13%
30 9%
25 3%
35 6%
25 13%
25 13%
35 2%
25 13%

* Years

We do not estimate any functional or external obsolescence for the buildings. The calculations for
the physical depreciation of the improvements follow:

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45

Replacement Cost: $26,193
Depreciation Percentage: 9%
Depreciation Amount: $2,357
Depreciated Cost: $23,835
Replacement Cost: $161,801
Depreciation Percentage: 9%
Depreciation Amount: $14,562
Depreciated Cost: $147,239
Replacement Cost: $66,945
Depreciation Percentage: 9%
Depreciation Amount: $6,025

Depreciated Cost: $60,920
Track Cover & Briefing

Replacement Cost: $93,236
Depreciation Percentage: 13%
Depreciation Amount: $12,121

_De preciated Cost: $81,116

FAV Building

Replacement Cost: $136,832
Depreciation Percentage: 13%
Depreciation Amount: $17,788

Depreciated Cost: $119,044
Replacement Cost: $88,538

Depreciation Percentage: 9%
Depreciation Amount: 57,968
Depreciated Cost: $80,570

Range Cover 5

Replacement Cost: $320,056
Depreciation Percentage: 5%
Depreciation Amount: $16,003

Depreciated Cost: §304,053
Block House

Replacement Cost: $26,465
Depreciation Percentage: 6%
Depreciation Amount: $1,588

Depreciated Cost: $24,877
Pump House 1

Replacement Cost: $879
Depreciation Percentage: 13%
Depreciation Amount: $114

$765

Depreciated Cost:
i Pump House 2

Replacement Cost: $562
Depreciation Percentage: 13%
Depreciation Amount: $73

489

Depreciated Cost: §
Replacement Cost: $2,146,985
Depreciation Percentage: 2%

Depreciation Amount: $42,940

Depreciated Cost: $2,104,045
Shooting & Repetling Tower

Replacement Cost: $109,646
Depreciation Percentage: 13%

Depreciation Amount: $14,254
Depreciated Cost: $95,392

Overall, the depreciated value of the subject buildings is estimated at $3,042,345.

We have considered the contributing value of the on-site improvements. These depreciate at a faster
rate than many building components, and we have estimated their contributing value, including

depreciation, below:

| Site Improvements
Skid Pad - 160,000 SF @ $4.23/SF, depreciated 15% $575,280

Track 2.5 miles - 484,560 SF @ $5.82/SF, depreciated 15% $2,397,118
Paved Roads - 38,916 SF @ $4.23/SF, depreciated 15% $139,922
Gravel Roads - 190,080 SF @ $1.24/SF, depreciated 10% $212,129
Gravel Shooting Ranges - 214,050 SF @ $1.24/SF, depreciated 10% $238,880
Dirt Rally Course 2.6 miles - 343,200 SF @ $0.55/SF, depreciated 10% $169,884
Shooting Range Berms - 468,000 Cubic Yards @ $2.92/CY $1,366,560
Recent Underground Electrical Install - 3,700' @ $22.41/foot $82,917
Recent Water/Sewer Lines Install - 3,000’ @ $31.49/foot $94,470
Total Depreciated Value of Site Improvements $5,277,161

The total depreciated value of the buildings and site improvements, plus the value of the land follow.

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Summary of Depreciated Cost Estimates

Shop $23,835
Sim | $147,239
Sim 2 $60,920
Track Cover & Briefing $81,116
FAY Building $119,044
Armory $80,570
Range Cover 5 $304,053
Block House $24,877
Pump House | $765
Pump House 2 $489
Live Fire Shoot House $2,104,045
Shooting & Repelling Tower $95,392
Subtotal $3,042,345
Site Improvements $5,277,161
Land $6,727,410
Total $15,046,915

Based on our analysis, the market value as is as of 4/29/15 is $15,050,000 rounded. The marketing
period is estimated to be less than 12 months. Similarly, the exposure time is estimated to be less
than 12 months. The most likely purchaser is opined to be a owner userbased on the subject’s
characteristics.

As previously mentioned, the subject has an extremely unique use with very little competition.
Because of this there are no sales to reliably perform a sales comparison approach. We did utilize
CoStar’s database to search for any possible comparable property sales that may have occurred
throughout the country. We did identify one property sale that had some similarities to the
subject, and this transaction follows.

Address: 1 Northrup Place, Perry, GA 31069
Grantor: American Real Estate Investment Co.
Grantee: Guardian Centers of Georgia LLC
Tax ID: OP38A0005000

Sale Date: 12/2/11

Sale Price: $12,760,000

Acres: 827

$/Acre: $15,429

This is the sale of a former Northrup Grumman cruise missile manufacturing facility. The
property consisted of 18 buildings totaling 750,000 SF that were constructed during the 1980s;
however, the buyer simply purchased it for land value, planning to convert the property into a
Homeland Security and emergency management training facility that will be used for the training
of first responders to disasters along with some military training programs. Some of the buildings
were to remain on-site and require extensive rehabilitation, though many were to be razed. The

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plan was to utilize much of the land for outdoor training programs while also developing several
new improvements. Considering this property was purchased for land value, on a price/acre basis,
it does offer some degree of support to our land value — albeit slightly higher given that the new
owner did have some use for the old warehouse buildings on site. However, this sale did of course
take place before improvements were made to convert it into a training facility, and therefore it is
difficult to compare this to the improved value from our Cost Approach.

Income Capitalization Approach:

The subject is an operating sustainment training facility with several offerings to various clients
as previously discussed. This broad offering has resulted in a solid income stream in a fairly short
time since operations commenced, and it is expected to continue growth into the future. However,
applying a typical analysis to the subject’s income is difficult for a multitude of reasons. First,
there is no industry standard to compare and contrast the subject’s income and expense
operations, thus creating a baseline for determining reasonableness of the subject’s income and
expenses is extremely subjective. Second, the subject’s operations are essentially just beginning
to come out of their infancy. Much of 2011 and into 2013 involved heavy investment and
implementing strategies into the subject operations, with the official land acquisition occurring
mid-2013. Income and expense operations were still minimal during this time, and 2014 was the
1“ full year when the government contracts really started occurring to get the program offerings
up and running; projections for 2015 and 2016 continue a steep trend upward. A third issue
complicating detailed analysis of the operations is the structure of the ownership group. TenX
Group is the parent company with subsidiaries operating within it. Each of these subsidiary
companies (Blue Force Technologies, Panthera Worldwide, Panthera Training Center, and Night
Eagle Aviation) have significant operations tied directly into the subject; however; some of the
operations that impact the income and expenses do occur off-site, yet are included within the
income and expense statements that the subject utilizes. Most notably, Blue Force Technologies
has an office in Durham (NC) and the expenses (and income) from this office are rolled into the
income and expense data. Reportedly, Panthera Worldwide and Panthera Training Center is for
the most part tied into the subject land, but overall the operations of this conglomerate takes on a
more holistic perspective that simply cannot be directed specifically toward the subject property
alone. Another item that complicates matters is the recently updated lease between Panthera and
TenX Group, one that is 15 years for $2,656,800 annually. Again, due to corporate structuring this
lease simply is not considered arm’s-length, and the borrower representation agreed that it is
difficult to apply this to a business enterprise valuation when it is income that is simply showing
up elsewhere for TenX Group. These are the most notable complications in applying an income
capitalization approach, though there are others. However, it is worth depicting a high level
overview of the subject’s operations in an effort to provide some degree of evidence to supporting
our Cost Approach value estimate, as a buyer for the subject would likely continue current
operations.

Historic and Projected Income and Expenses

Following is the historic income and expense data for the subject’s 2014 calendar year only. As
stated, in prior years the subject was investing in infrastructure, and programming and securing
government contracts. Given the multitude of complications discussed, and based on

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conversations with borrower representation, the following income and expense figures are the
sum total for Panthera Worldwide and Panthera Training Center only. Blue Force Technologies
was not included due to their off-site activities (though they do generate revenue at the subject),
Night Eagle Aviation was not included, and figures for TenX Group were kept out as well.
Additionally, the lease between Panthera and TenX Group was not included — it should be noted
that within the consolidated operating statements that this lease shows as an expense for
Panthera, yet shows as revenue for TenX Group.

Income & Expenses - 2014
Panthera Worldwide Panthera Training Panthera Total
Revenue $2,738,571 $5,062,463 $7,801,034
Cost of Sales
Direct Labor $684,823 $532,848 $1,217,671
Direct Materials - $1,165 $1,165
Direct Travel $184,419 $290,011 $474,430
Subcontractors $536,925 $1,323,284 $1,860,209
Other Direct Costs $396,722 $116,698 $513,420
Total Cost of Sales $1,802,889 $2,264,006 $4,066,895
Gross Profit $935,682 $2,798,457 $3,734,139
Operating Expenses
Payroll and Related Expenses $101,045 $176,047 $277,092
Professional Fees $117,299 $217,251 $334,550
Rent $60,000 $60,000 $120,000
Indirect Materials & Supplies - $5,199 $5,199
Other Indirect Costs - $10,615 $10,615
Travel $64,030 $36,561 $100,591
Training Expenses - $125,778 $125,778
General and Administration $17,475 $387,223 $404,698
Management Fee $371,986 5628,098 51,000,084
Total $731,835 $1,646,772 $2,378,607
EBITDA $203,847 $1,151,685 $1,355,532

Next is the subject’s projected income and expenses through 2016. However, these projections are
based on the holistic viewpoint of the TenX Group, and thus isolation of any of the subsidiaries
was not possible with the information at hand. As discussed, items such as the Panthera lease
agreement may be included as an expense item that then shows up as a revenue item for TenX

Group.

Income & Expense Projections for TenX Group
2015 2016
Revenue $20,875,000 $23,220,000
Cost of Sales
Direct Labor $3,419,300 $3,874,300
Other Direct Costs $3,409,700 $3,467,700
Total Cost of Sales $6,829,000 $7,342,000
Gross Profit $14,046,000 $15,878,000
Operating Expenses
Payroll and Related Expenses $2,315,000 $3,080,000
Professional Fees $1,135,000 $964,600
Rent $3,024,000 $3,024,000
Facility, Tools, & Equipment $362,000 $376,000
Indirect Materials & Other $467,000 $480,000
Travel $487,000 $595,000
Vehicle §28,000 $28,000
General and Administration $513,000 $540,000
Total $8,331,000 59,087,000
EBITDA $5,715,000 $6,791,000

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As can be seen, regardless of the many complications of analyzing the subject’s operating
income, it is projected to continue the steep growth trend. However, we did not have access to
analyzing any government contracts that have been secured to verify the income projections going
forward (nor did we have access to past contracts). Even though we cannot reasonably apply
baseline measurements to the subject’s 2014 financials, the EBITDA does appear to be on a
healthy upward trend. Capitalizing the EBITDA is of course highly subjective with an extremely
unique property type that is rarely traded, if ever. Capitalizing 2014’s figures at a rate of 9.0%
equates to a value of $15,061,000, a figure that is in-line with our Cost Approach value estimate.
But the subject’s growth trend appears steep, which muddies any efforts to capitalize EBITDA.
Also, as referenced within our Improvements Description, the subject reported a depreciated
FF&E figure of $1,112,590.

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Certification:

We certify that, to the best of our knowledge and belief:

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

« The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting
conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions.

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

« We have performed 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.

» We have no bias with respect to the property that is the subject of this report or to the parties involved with this
assignment

«= Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

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

« Our 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, which
include the Uniform Standards of Professional Appraisal Practice.

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

* We made a personal inspection of the property that is the subject of this report.

*= Noone provided significant real property appraisal assistance to the persons signing this certification.

* As of the date of this report, Richard H. Hayes has completed the Standards and Ethics Education Requirement
of members of the Appraisal Institute’s Candidate for Designation program.

« As of the date of this report, Mark A. Chaney has completed the continuing education program of the Appraisal
Institute.

Furthermore, Mark A. Chaney is appropriately certified within the State of West Virginia to appraise
the subject property.

In concluding to the value opinion we have considered the pertinent market data and the actions of
market participants knowledgeable of comparable properties. Based upon the analyses, assumptions,
and limiting conditions of this report, the subject’s market value as is of the fee simple estate is
$15,050,000 as of April 29", 2015 (the most comprehensive inspection). Attached hereto is the
analyses and reasoning for the opinion of value. Any separation of the signature pages from the
balance of the report invalidates the conclusion.

Respectfully submitted,
Digitally signed by Mark A. Chaney

see sel A, MOG DN: cn=Mark A. Chaney, o=Chaney & he
ca Pe Associates, Inc., ou=President, /y

Date: 2015.05.25 16:55:47 -04'00' / (

Mark A. Chaney, MAI Richard H. Hayes

CHANE

Commercial Real Estate and Business Valuation


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