RockSpringCluB-Hendricks Appraisal.pdf

THE COMPARATIVE APPROACH - AS A VALUATION INDICATOR Discussion of Adjustments Time/Market Conditions: As previously discussed, the comparable sales utilized in connection with this assignment represent the most recent conveyances of competitive single family residential subdivision sales available within the subject's general Northern New Jersey market. It has been noted that sales one and two are older transactions having occurred in 2011 and 2013, Based on my review and interpretation of the market data, including multi-family development type transactions, | have estimated that the market for properties of this type had been appreciating approximately three (3%) percent annually through 2016. At that point, it appears that the market had stabilized with no time or market condition adjustments being warranted. Based on the above, | have applied upward three (3%) percent annual adjustments to sales one and two through 2016. The remaining transactions occurred between December 2016 and July 2017 and did not require any time or market condition adjustments. Conditions of Sale: In each instance, the sales were acquired for cash and/or typical-conventional financing with no unusual terms or conditions reported. No adjustments were necessary. Location: The subject property is located within West Orange, a suburban residential community. It is also situated along the northern Village of South Orange Township border. The subject's immediate area is predominantly residential in character and is regarded as having generally average overall appeal. Based on a review of the Garden State Multiple Listing Service (GSMLS) statistical data, the average neighborhood value level ranges from $500,000.00 to $1,000,000.00 and could readily support new single family development in the range of $750,000.00 to $1,000,000.00. The sale properties are located within Bergen, Essex, Morris and Somerset counties. In each instance, the sales were regarded as being superior to the subject location in terms of area appeal, value levels, etc. Therefore, a uniform downward adjustment has been applied to each of the comparable sales for location. View: The subject property is situated along the top or ridge of the First Watchung Mouniain and as such, it offers New York City skyline views. In addition, the property features an approximate five (5) acre lake (Cable Lake) that would

d along the top or ridge of the First Watchung Mouniain and as such, it offers New York City skyline views. In addition, the property features an approximate five (5) acre lake (Cable Lake) that would serve as a focal point in any development plan. With the exception of sale four, none of the comparables transactions feature a view amenity similar to that of the subject. Therefore, upward adjustments have been applied. It has been noted that sale four is located along a mountain ridge and does provide view amenities and no adjustment is warranted. | r | REAL ESTATE - 73 - APPRAISALS a G& RESEARCH

THE COMPARATIVE APPROACH - AS A VALUATION INDICATOR Discussion of Adjustments No. Potential Building Lots: As previously discussed, in this appraisal | have considered the inverse relationship between size and price. The foregoing is commonly known as the principal of economies of scale which is generally based on the premise that when a smaller (sale) property is compared with a significantly larger (subject) property, the individual price per lot may warrant downward adjustment as the smaller sale property would typically reflect a higher cost on a per lot basis. Conversely, if the sale property is significantly larger than the subject, an upward adjustment may be necessary. As previously discussed, based on the analysis of highest and best use included elsewhere in this report, | have concluded that the highest and best use of the subject property is for single family residential subdivision and development in accordance with R-1 zoning. Therefore, based on the subject's combined area of 139.9755 acres, with an area deduction for Cable Lake as well as an allocation of ten (10%) percent for roadways, detention areas, areas, setbacks, etc., the total land area potentially available for development would be approximately 5,276,800 square feet. In view of the minimum lot size requirement of 80,000 square feet, | have estimated that the property could be subdivided into sixty-six (66) residential building lots. The sale properties range from twenty-five (25) to seventy-eight (78) individual residential building lots. In my opinion, only sale one which had twenty-five (25) proposed residential building lots warranted downward adjustment. The remaining sales are considered to be generally similar to the subject and the disparities in the number of lots would not typically be recognized in the market. Therefore, no adjustments for the number of lots has been applied to sales two, three or four. Topography: The subject property features level to rolling topography. In each instance, the sale properties also featured similar topography and no adjustments were required. Average Lot Size: In view of the minimum lot size required under current R-1 zoning (80,000 square feet - 1.83 acres) | have utilized an average lot size for the subject individual building lots of 1.83 acres. It has been noted that sale one has a minimum (average) lot size of 2.54 acres and

square feet - 1.83 acres) | have utilized an average lot size for the subject individual building lots of 1.83 acres. It has been noted that sale one has a minimum (average) lot size of 2.54 acres and is superior to the subject in this regard. A downward adjustment has been applied. It has also been noted that sales two and three are inferior to the subject as they have average lot sizes of 1.00 acres to 1.25 acres and nominal upward adjustments have been ascribed to these transactions. Comparable sale four features half-acre average lot sizes which is substantially inferior to that of the subject. Therefore a greater adjustment then that applied to sales two and three is warranted. [ | es Lt t | & RESEARCH

THE COMPARATIVE APPROACH - AS A VALUATION INDICATOR Discussion of Adjustments Miscellaneous: As discussed throughout this report, the subject property has no development approvals except those as a right under zoning. The subject would require municipal approvals for residential subdivision and development. The foregoing would also take considerable time and labor to obtain. All of the sales were conveyed with, or subject to, development approvals and therefore they are superior to the subject. In recognition of the foregoing as well as consideration given to the time involved in obtaining the approvals, | have applied a uniform downward adjustment of twenty (20%) percent to each of the transactions. As discussed throughout this appraisal, the highest and best use of the Rock Spring Club property is single family residential subdivision and development under current R-1 zoning. However, it has also been noted that the typical developer of a large parcel such as the subject would undoubtedly pursue a change in zoning that would permit multi-family (condominium-townhouse-rental apartment and/or mixed-use) development at a substantially greater density. This type of use is not a legally permitted use under current zoning. Furthermore, a change in zoning which would allow greater density and multi-family development of the property cannot be reasonably assumed, anticipated or projected. _ iH REAL ESTATE APPRAISALS & RESEARCH

THE COST APPROACH — AS A VALUATION INDICATOR As previously discussed, this appraisal assignment has employed a Comparative (market data) Approach in the site valuation of the Rock Spring Club under its highest and best use. In this regard, | have deducted the cost of demolishing the improvements as reported by Core Logic - Marshall & Swift. It has been noted that the cost of demolition is based on a percentage of the replacement cost new per square foot of the individual improvements. | have therefore prepared individual replacement cost new estimates for the subject (major improvements) clubhouse, poo! house, cart storage building and the maintenance garages. It should also be noted that the removal of the golf course improvements (i.e., tee boxes, greens, fairways, etc.) are considered to be nominal and would generally be included with the grading costs involved in any future residential development of the property. Nonetheless, | have included an estimated, lump-sum deduction of $700,000.00 for the cost of removing the golf course improvements such as tee boxes, greens, bunkers, irrigation, cart paths, along with the parking lots, poo! and tennis courts. The lump sum deduction is an estimate based on the reported costs for the demolition of similar improvements at the High Mountain Country Club in Franklin Lakes and an includes an increment for additional tennis and paddle tennis courts found with the subject. A review of the Core Logic Marshall & Swift cost manual (Section 96, Page 1 - Insurance Exclusions) the following specifically addresses demolition costs. A review of the costs for each several years reveals the same percentages and therefore, | have applied the same demolition cost percentage to each Tax Year. “The percentages listed are averages of costs of complete building demolition and removal, excluding any hazardous material abatements, and apply to the entire cost of a building and basement.’ .... Contractors' profit and overhead are included in all costs in this manual and can never be excluded. They are as definitely a part of the construction cost as the cost of any other labor." Building Class 12.00% _| 45.60% 13.40% 10.60% 8.80% 7.60% 6.70% 16.00% 12.80% 10.70% 9.30% 7.40% 6.20% 5.40% 4.80% 13.70% 11.00% 9.30% 8.10% 6.50% 5.40% 4.70% 4.20% ¢0) 0] of 00] >| 12.70% 10.30% 8.70% 7.60%, 6.10% 5.20% 4.50% 4.00% Building Costs

7.60% 6.70% 16.00% 12.80% 10.70% 9.30% 7.40% 6.20% 5.40% 4.80% 13.70% 11.00% 9.30% 8.10% 6.50% 5.40% 4.70% 4.20% ¢0) 0] of 00] >| 12.70% 10.30% 8.70% 7.60%, 6.10% 5.20% 4.50% 4.00% Building Costs Per Square Foot & Corresponding % For Demolition A 480% 440% 4.00% 3.50% 3.10% 2.80% 2.60% 2.40% 8 6.00% 5.50% 5.00% 4.30% 3.80% 3.40% 3.10% 2.80% c 4.30% 3.90% 3.60% 3.10% 2.80% 2.50% 2.30% 2.10% D 3.80% 3.50% 3.20% 2.80% 2.50% 2.20% 2.00% 1.90% | Ss 3.70% 3.40% 3.10% | 270% 2.40% 2.20% 2.00% 1.90% | ~~ om REAL ESTATE APPRAISALS & RESEARCH

THE COST APPROACH — AS A VALUA’ TOR The Marshall and Swift Core Logic Cost Valuation service is a national cast index with local building costs defined by zip-codes or local cost multipliers. The direct costs of construction are based on building specifications with classification of building quality and quantity. Indirect costs include architect and engineering fees which reflect plans, building permits, surveys, interest on construction loans, sales tax, normal site preparation, excavation, backfill, utility hook-ups to lot line, contractors overhead and profit (including supervision). The Marshall and Swift Core Logic cost estimates do not include the value of the land, legal fees, real estate taxes during construction period, demolition (if required), storm drains, rough grading, pilings or hillside/rocky building sites. In addition, leasing costs for an initial tenancy as well as fixtures and equipment are specifically excluded unless noted. In connection with the replacement cost new of the improvements (utilized as the basis for the percentage of demolition costs) such as the clubhouse, pool building, cart storage structure and maintenance garages, | have employed the Core Logic-Marshall & Swift Calculator Cost program. The following occupancy codes have been utilized in the replacement cost new estimates for the improvements and are defined by Marshall and Swift Core Logic as follows: 314 Country Club: Country clubs are designed for entertainment and have few, if any, sleeping rooms Group entertainment normally requires good kitchen facilities, minimum restrooms with or without lockers and showers, and large general use rooms. They typically have small offices and meeting rooms. Higher quality structures have a ballroom, bar, banquet and pro shop facilities, as well as extensive locker and shower rooms. The following are not included in the costs: Balconies, fireplaces, swimming pools, lockers, kitchen, bar equipment and pro shop fixtures. 523 Golf Cart Storage Building: These buildings are designed for the storage of golf carts. They have some unfinished partitioned shop-office areas with minimum cabinets, lighting, and plumbing. The following is not included in the costs: Battery-charging equipment. §29 Snack Bar: (Poo! Building) These structures have no seating area and include the very marginal seasonal camp- type facility to the best

is not included in the costs: Battery-charging equipment. §29 Snack Bar: (Poo! Building) These structures have no seating area and include the very marginal seasonal camp- type facility to the best municipal structure with completely finished food preparation area. The basic snack bar cost includes normal overhangs commensurate with the quality, but not large canopies. The lower qualities are built to minimum building and health codes. The following are not included in the costs: Canopies, kitchen or seating equipment and signs. 406 Storage Warehouse (Maintenance Garages) These buildings are designed for storage and include an amount of office space commensurate with the quality of the building (typically 3 to 12 percent). Typically, they have Plaster or drywall interior partitions and may have some finished ceilings. The better qualities have small office fronts with ornamental materials at the front elevation, while lower cost structures are plain with very little if any ornamentation. Heating and ventilating facilities are sufficient to protect goods from freezing and other spoilage. The following are not included in the cosis: Special climate contro! equipment and dock levelers and material handling equipment. eS eos mea a & RESEARCH

THE COST APPROACH — AS A VALUATION INDICATOR The following is a summary tabulation of the individual buildings and corresponding occupancy codes as defined by Core Logic - Marshall & Swift and utilized in the replacement cost new estimates which can be found on the following pages. Occupancy Code 314 529 523 406 Included below will be found a summary of the estimated demolition and site clearing costs based on the Marshall & Swift - Core Logic replacement cost new for each improvement along with the lump-sum - $700,000.00 for the golf course improvements as discussed herein. Demolition Cost Estimates: Club House $195.03 PSF | 2.00% -$ 86,950.00 Pool House $148.02 PSF 2.65% -$ 11,438.00 Golf Cart Storage $ 90.63 PSF 3.90% -$ 10,858.00 | Maintenance Garage #1 $ 84.15 PSF 4.10% -$ 11,675.00 | Maintenance Garage #2 $ 93.96 PSF 3.75%-$ 6,342.00 Contingencies @ 15.00% $ 19,089.00 Lump Sum - Golf Course | Improvements, Parking Areas, Pools, Tennis $ 700,000.00 Courts, Paddle Tennis. Total Demolition Costs | $ 846,352.00 [ T ] REAL ESTATE - 78 - APPRAISALS [| & RESEARCH