CASE STUDY: TOWNHOME COMMUNITY CONSIDERS

EXPANSION
Overview:

Mainland Valuation Services (MVS) was engaged to complete a comprehensive feasibility study
that included a detailed market analysis and feasibility study. The owners of Countryside
Meadows, an existing 108-unit townhome community in Kansas City, Missouri, had an
opportunity to acquire 4.51 acres of unimproved multifamily-zoned land located adjacent to
their existing townhome development. MVS prepared a feasibility report to answer the following
questions:

1. What are the ideal improvements?

2. Is development of the ideal improvements financially feasible as a stand-alone multifamily
community?
3. Is development financially feasible if the ideal improvements are operated as part of the
existing 108-unit townhome community?

Background:

The subject (Phase II) of the feasibility study was 4.51 acres of unimproved multifamily land
located immediately south of the existing Countryside Meadows.

The existing improvements were the 108-unit Countryside Meadow Townhomes. This rental
community included townhome buildings and a clubhouse with leasing office. The
improvements were constructed in phases between 1987 and 1995 and were in good condition
and operating at a stabilized level consistent with the market.

The Challenge:

In order to answer the questions and determine the highest and best use of Phase II, MVS
considered two scenarios. First, Phase II would be developed with the ideal 46 townhome units
and operated as part of Countryside Meadows, growing the overall operation into a 154-unit
townhome rental community. Second, Phase II would be developed with the ideal 46 units and
operated as a stand-alone community.

The Solution:

MVS first determined the ideal improvements for the 4.51 acre site. This determination was
based on independent research conducted by MVS in the local submarket and adjacent
submarkets. MVS considered a detailed analysis of local competition and demographic data.
Next, MVS applied several feasibility tests to narrow potential uses to the use of maximum
productivity. Based on information obtained from hundreds of actual appraisals on multifamily
properties over the last few years, MVS was able to forecast a reliable construction budget for
Phase II and an operating pro forma with lease-up schedule. MVS developed value indications
by referencing its own database for comparable sales, actual income statements, actual
capitalization rates, and hundreds of market interviews with multifamily market participants over
the last few years.

The Result:

The maximally productive use and ideal improvements of the 4.51 acres was determined to be
development of 46 townhouse style units with built-in garages operated as part of the
Countryside Meadows Townhomes. A 154-unit townhome rental community would enjoy the
benefits of economies of scale that neither property could enjoy alone.

With market evidence, MVS was able to demonstrate that development was feasible if part of a
larger operation. An operation exceeding 150 units typically benefits from economies of scale
(i.e. lower operating expense ratio) and increased marketability to regional and possibly national
investors. A notable benefit of a larger community that attracts regional and national investors is
their willingness to accept lower returns, which means lower capitalization rates and higher
values.

In conclusion, the collective operations would increase the value of both Phase II and the
existing 108-unit development. A stand-alone community was not considered financially feasible
and therefore did not represent the highest and best use of the subject. The addition of 46 units
would increase the overall community to 154 units, allowing for operational efficiencies and
value enhancement, and moreover the asset becomes more attractive to a larger pool of regional
and national investors.

LITIGATION SUPPORT AND EXPERT

WITNESS TESTIMONY

Mainland Valuation Services is staffed by professional appraisers who have the experience and
qualifications not only to perform commercial valuation, market research, and real estate
consulting, but also to report the results of our findings in a manner that is credible, clear and
easy to understand. In many cases, this includes acting as expert witnesses or assisting clients in
litigation support.

As experts in commercial valuation, our team can provide litigation support services such as
determining the diminution in value for a property, working on cases involving eminent domain
and condemnation appraisal, and tax appeal appraisals. Whatever the situation, we make it our
business to provide clear and credible analysis that will ensure our clients receive just
compensation for property-related losses and provide expertise that can help property litigation
cases run more smoothly.

RESEARCH AND OTHER SUPPORT SERVICES

While our partners have often taken the stand as expert witnesses in property litigation cases,
litigation support from Mainland Valuation Services goes far beyond simply offering an expert
opinion. We prepare valuation statements and perform market research and analysis that can be
presented in court, as well as real estate consulting services that can help to determine everything
from just compensation, diminution of value, insurance valuation, or real property losses.

We at Mainland Valuation Services are also prepared to act as consultants and facilitators on
behalf of a client involved in litigation, including settlement discussions, mediation, or
arbitration, and to serve as a neutral party for arbitration and mediation proceedings.

EXAMPLES OF LITIGATION SUPPORT SERVICES

Property tax appeals

Value disputes
Bankruptcy cases
Bank seizure
Just compensation disputes
Appraisal review
Diminution in value
Insurance valuation
Eminent domain
And many more

Whether we're assisting a client in litigation, arbitration, settlement, mediation, or tax appeal,
Mainland Valuation Services has the expertise and resources to help ensure just compensation,
accurate information, and knowledgeable testimony throughout the process.

If you're in need of commercial property litigation supp

MARKET RESEARCH AND REAL ESTATE
CONSULTING

As a full-service commercial valuation and real

estate consulting firm, Mainland Valuation Services offers more than simply the best in
commercial real estate appraisals. Our clients come to us for market research and other
information to help them make the best investment and development decisions, and to enable
them to make the best use of their property, both now and in the future.

With offices in Kansas and Nebraska, our team proudly serves regions across the nation,
including recent work in Alabama, Illinois, Indiana, Arizona, Colorado, and South Dakota, and
our partners actively maintain appraisal licenses in Kansas, Missouri, Nebraska, Iowa, South
Dakota, Oklahoma, and Texas.

REAL ESTATE CONSULTING

You want to know how much your propertyor a property that you're thinking of investing in
is worth, but many of our clients also have more probing questions about how to put their
commercial properties and investments to the best use. That's where our market research and real
estate consulting services come into play. When clients come to us with questions about how to
use their property to its highest and best use, and how the property or region may change in the
next few months or years, we turn to in-depth research and real estate consulting using a team of
experts with access to market analysis and historical data to provide the answers that our clients
need to make the most of their property investments and plan for their future.

Whether you're looking to invest in a new property, breathe new life into an existing structure by
a value add scenario, or manage your properties to their best potential, real estate consulting
from Mainland Valuation Services can help you and your properties to do just that.
EXAMPLES OF OUR MARKET RESEARCH WORK
Mainland Valuation Services provides market research and real estate consulting work for
commercial properties of all types, from retail shopping centers to apartments and from
entertainment venues to warehouses and self-storage facilities. Whatever kind of property you
have an interest in, we can provide you with the information you need to answer your questions
and plan for your future, including:

Highest and Best Use Studies

Market Analysis Focusing on Supply and Demand
Occupancy and Rent Studies
Feasibility Studies

Our team takes a hands-on approach to real estate consulting, performing Market Surveys in the
area around your propertyor similar areas in other neighborhoods or regionsto provide
detailed reports, as well as surveys of rental and occupancy rates, to get you the answers you
need to manage your property and plan for the future.

COMMERCIAL PROPERTY APPRAISAL

There are many factors that influence the final valuation of a given property. Here is a look at the
Mainland Valuation process:

Identify the appropriate scope of work to be completed in the appraisal process.

Complete a thorough inspection of the asset.
Interview participants concerning the history of the asset.
Research legal and physical aspects of the asset (ownership, zoning, flood zone, etc.).
Determine the highest and best use of the asset that will generate the highest sale price.
Research land values and replacement costs.
Survey and analyze recent comparable sales from the marketplace.
Research competing properties, rent, and occupancy levels the market is able to support.
Report the findings of our research and conclude a credible opinion of value.

Thorough research and market analysis is how we are able to provide the most accurate and
reliable commercial real estate appraisals possible.

AREAS OF PROPERTY SPECIALIZATION

With nearly 90 years of combined experience in commercial valuation, our team at Mainland
Valuation Services has expertise in a wide variety of commercial properties, from drug stores
and retail shopping centers to self-storage facilities, multi-family residential buildings, and so
much more. Our proven approach to commercial real estate appraisals allows us to handle
extremely complex properties and portfolios of almost any type, including special purpose
properties, green buildings, senior housing, real estate holding companies, partnership interests,
real estate intangibles, eminent domain and condemnation appraisal, and even value in use
analyses and valuation for financial reporting, to name just a few of the properties and services
that we can accommodate.

Property Services built a wealth of knowledge and expertise in property market. We undertake
market studies and feasibility studies for various types of properties which include collection and
analysis of data relevant to decisions on site development, potential end-uses, tenant-mix, demand
and supply analysis, rental levels, project timing / phasing.

Property and market research -