SUMMARY APPRAISAL REPORT - Lorenzen Realty Advisors, LLC

96 Pages·2007·3.77 MB·English

SUMMARY APPRAISAL REPORT

RETROSPECTIVE INVESTMENT VALUE
Of the Leasehold Estate - Mrs. O'Kleen's Laundry
1375, Highway 40
Fernley, Nevada 89408

Relevant Dates
Date of Inspection: April 20, 1007
Effective Date of Value Opinion: December 31, 1998
Date of Report: April 30, 2007

Prepared for:
Paul Malikowski
325 W. Liberty
Reno, Nevada 89501

Prepared by:
Paul Lorenzen
CCIM, CPM, CSM
8151 Easy Meadow Drive
Converse, Texas 78109
Paul Lorenzen, CCIM, CPM, CSM

Real Estate Appraiser
8151 Easy Meadow Drive
Converse, Texas 78109
210-662-2857

April 30, 2007

Paul Malikowski
Malikowski Law Offices, Ltd.
325 W. Liberty
Reno, Nevada 89501

RE: Appraisal Report - Retrospective Investment Value of the
Leasehold Estate of Mrs. O'Kleen Laundromat

Dear Mr. Malikowski:

As per your authorization, I have prepared an appraisal of the Leasehold Estate of the Lease
Between Scolari's Warehouse Markets, Inc. as landlord, and Howard Mc Gowan and Virginia
McGowan, HOW Enterprises, Inc. dba Mrs. O'Kleen's as tenant, regarding property located at
1375 Highway 40, Fernley, Nevada 89408. The property is described as:

approximately 3,000 square feet, commonly known as 1375 Highway 40,
Fernley, Nevada, 89408, . . . located in the Fernley Plaza Shopping Center, in
Fernley, Lyon County, Nevada, which area is shown on Exhibit "A", attached to
the Lease Agreement which is included in the addenda to this appraisal.

The purpose of this appraisal is to determine the Retrospective Investment Value, as herein
defined, of the remaining Leasehold Interest of the tenant under the lease as of the effective date of
December 31, 1998. The intended use of the appraisal is to assist in the resolution of pending
litigation between Chris Buchanan, Successor Trustee of the H & V Family Trust, as Plaintiff, and
Scolari's Warehouse Markets, Inc., as Defendant. The Intended Users of the report are Paul
Malikowski, his client, other attorneys involved in the referenced matter, and the officers of the
Second Judicial District Court of the State of Nevada in and for the County of Washoe.

In the process of preparing this appraisal, I have inspected the site where the building subject to the
lease was located and the surrounding neighborhood, researched the Fernley rental property market,
selected, researched, and analyzed appropriate comparable properties, and prepared an analysis
utilizing only the Income Approach for estimating value. The full Scope of Work is described in the
appropriate section of the accompanying report.

The Appraisal Report which accompanies this Transmittal Letter is a Summary Report and
contains a brief description of the data and a summary of the analysis and reasoning used to reach
my final opinion of value. Please be aware that this Transmittal Letter is not an appraisal report and
the accompanying Appraisal Report must be read to fully understand my analysis and conclusions.
Please also give special attention to the Assumptions and Limiting Conditions as outlined in the
Addenda to the Report.
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

Please note that there is a very significant Hypothetical Condition in this appraisal and that absent
that Hypothetical Condition, the value conclusion would be different.

The relevant dates in the appraisal are:

Effective Date of Value Opinion -- December 31, 1998
Date of On-Site Visit to the property -- April 20, 2007
Appraisal Report Date -- April 30, 2007

The analyses and results of the investigation presented in the attached appraisal report are intended
to comply with the Code of Ethics and Standards of Professional Practice of the Appraisal
Institute and the requirements of the current edition of the Uniform Standards of Professional
Appraisal Practice (USPAP) as adopted by the Appraisal Standard Board of the Appraisal
Foundation.

Because this Transmittal Letter is not the actual Appraisal Report, I have not indicated my opinion of
value in this letter. Please refer to the Summary of Salient Facts following the Table of Contents
and to Section III - Analysis and Valuation in the appropriate section of the accompanying Report.

Thank you for permitting me to serve you by preparing this appraisal report. Should you have any
questions on the report or my conclusions, please feel free to give me a call.

Sincerely,

Paul Lorenzen
CCIM, CPM, CSM
Certified General Appraiser
TX- 1336071-G
NV-A.0006527-CG

Page 2 of 2
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

TABLE OF CONTENTS

Title Page

Letter of Transmittal

Table of Contents

Summary of Salient Facts

Aerial Photos of the Site from the 1998 Time Period

Photographs of Subject Property

SECTION I - PRELIMINARY MATTERS

SECTION II. DESCRIPTION OF THE SUBJECT PROPERTY

SECTION III. ANALYSIS AND VALUATION

ADDENDA

Appraiser Certification

Assumptions and Limiting Conditions

Qualifications of the Appraiser

Bibliography

Subject Location Map

Assessors Parcel Map

Site Plan of Fernley Plaza Shopping Center

Lease Agreement

Rent Comparables Map & Rental Data Pages

Table of Contents - Page 1 of 1
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

SUMMARY OF SALIENT FACTS

Property Type Leasehold Estate in a shopping center lease

Property Location 1375 US Highway #40 North, Fernley, Nevada - The lease covers
one retail space in a multi-tenant shopping center

Property Rights Appraised Leasehold Estate - Intangible Real Estate Asset

Purpose of Appraisal Determine the Retrospective Investment Value of the Leasehold
Estate in the Lease Agreement

Client/Intended Use/User Paul Malikowski, attorney at law, and other parties involved in
litigation between the client represented by Paul Malikowski and
Scolari's Warehouse Markets, Inc.

Land The land area of the property encumbered by the lease is
approximately 6.92 acres, located on the SWC of Newlands Drive
and US Highway #40, in Fernley, Nevada.

Improvements The improvements encumbered by lease were a 3,000 square foot
retail space in a multi-tenant retail shopping center with
approximately 58,800 square foot shopping center anchored by
Scolari's Warehouse Market

Zoning C-2 - County of Lyons

Flood Zone Flood maps are not available - unmapped area per FEMA website

Lease Description The lease is a NNN Lease between Scolari's Warehouse Markets,
Inc., a Nevada Corporation, as Landlord and Howard McGowan
and Virginia McGowan, HOW Enterprises, Inc. dba Mrs. O'Kleen's,
as Tenant. The lease has an original term of four years, beginning
12/28/1992 and expiring 12/31/1996, and has two five year renewal
options with specified rent schedule.

Relevant Dates Date of On-Site Visit -- 4/20/2007
Date of Opinion -- 12/31/1998
Date of Report -- 4/30/2007

Income Approach $100,000

Final Opinion of Value $100,000

Hypothetical Condition Because the renewal options are "personal" to the original
tenants, there is a hypothetical condition that the original
tenant was in possession of the premises and fulfilled the
requirements of the renewal option provisions in the lease.
Without this hypothetical condition, the value conclusion
would be different.

Summary Of Salient Facts - Page 1 of 1
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

Mrs. O'Kleen's Laundromat
in
Fernley Plaza Shopping Center

Aerial Photo of Subject Property Taken Before December 1998
Source: Sky-High Photography, Fernley, Nevada

Aerial Photo of Subject Property
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

Mrs. O'Kleen's Laundromat
in
Fernley Plaza Shopping Center

Aerial Photo of Subject Property - Close up of buildings - Taken in 2001
Source: City of Fernley, GIS staff

Aerial Photo of Subject Property
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

PHOTOGRAPHS OF SUBJECT LOCATION
Photos provided by Chris Buchanan

1) Front View of old Scolari's Grocery 2) Front View of Scolari's Grocery
Store after it closed showing Laundromat - second store to
the right of the grocery store

3) View looking North from parking lot in 4) View looking South from sidewalk in
front of old Scolari's store - Laundry is at front of the Laundry - Scolari's Grocery
far end of the building is at far end of sidewalk

5) View from inside rear looking toward 6) View from inside rear looking toward
store front showing customer seating South wall of Laundromat showing
area - Slot machines are in front by seating area and south of washers
windows
Photographs of Subject - Page 1 of 2
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

7) View from front of Laundromat store 8) View from front of Laundromat store
looking toward back showing seating looking toward back wall showing
area and North wall of washers office/storage rooms in back

9) View of folding tables on North side of 10) View of more folding tables on South
store - this area also used for UPS side of store
shipping station

11) View of front of store looking from 12) View of inside line of washers - price
South wall list for wash-dry-fold is on hanging sign

Photographs of Subject - Page 2 of 2
Paul Lorenzen, CCIM, CPM, CSM Real Estate Appraiser

SECTION I.
PRELIMINARY MATTERS

Identification of the Subject Property

The property that is the Subject of this appraisal is the Leasehold Estate under a
lease covering a 3,000 square foot retail space in the Fernley Plaza Shopping Center
located at 1375 Highway 40, Fernley, Nevada, 89408.

This address no longer exists as of the date of this report. The structure has been
demolished and new structures have been constructed with new addresses
assigned. The space was the second store to the North of the Scolari's Grocery
Store in the shopping center as shown on the site plan in the addenda to this report.

The physical address range of the site under the numbering system in effect as of
April, 2007 is 1343 - 1360 US Highway 95a N, Fernley, Nevada 89408.

Extraordinary Assumptions1 and Hypothetical Conditions2

In addition to the Extraordinary Assumptions and/or Hypothetical Conditions listed
below, please be sure to review the Assumptions and Limiting Conditions
included in the Addenda as they are important in understanding the limitations of this
appraisal report.

Hypothetical Conditions.

Renewal Options. The lease which is the Subject of this appraisal contains two
options to renew the lease for an additional five years each. These options are
"personal" to the original tenants, and conditioned on the fact that they are still in
possession and operating the business in the premises when they exercise the

1 Extraordinary Assumptions. An assumption, directly related to a specific assignment, which, if
found to be false, could alter the appraiser's opinions or conclusions, Extraordinary assumptions
presume as fact otherwise uncertain information about physical, legal, or economic characteristics of
the subject property; or about conditions external to the property such as market conditions or trends;
or about the integrity of data used in an analysis. An extraordinary assumption may be used in an
assignment only if: it is required to properly develop credible opinions and conclusions; the appraiser
has a reasonable basis for the extraordinary assumption; use of the extraordinary assumption results
in a credible analysis; and the appraiser complies with the disclosure requirements set forth in
USPAP for extraordinary assumptions. (The Dictionary of Real Estate Appraisal)
.

2 Hypothetical Conditions. That which is contrary to what exists but is supposed for the
purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about
physical, legal, or economic characteristics of the subject property; or about conditions external to the
property, such as market conditions or trends; or about the integrity of data used in an analysis. A
hypothetical condition may be used in an assignment only if: use of the hypothetical condition is
clearly required for legal purposes, for purposes of reasonable analysis, or for purposes of
comparison; use of the hypothetical condition results in a credible analysis; and the appraiser
complies with the disclosure requirements set forth in USPAP for hypothetical conditions. (The
Dictionary of Real Estate Appraisal).

Section I - Preliminary Matters - Page 1 of 9