REAL ESTATE APPRAISAL SELF CONTAINED REPORT NAPLES CAMPGROUND 295 SEBAGO ROAD NAPLES, MAINE 04055

Dates of Value As Is - November 9, 2012 As Completed - May 1, 2014 As Stabilized - May 1, 2015 Date of Report November 30, 2012

Client Gail Sarrazin, AVP Credit Department Manager Androscoggin Bank SBA and Granite State Development 30 Lisbon Street PO Box 1407 Lewiston, Maine 04243 Appraiser Brian P. Diskin, #CG585 Maineland Consultants 30 Exchange Street Portland, Maine 04101

Maineland C

O

N

S

U

L

T

A

N

T

S

REAL ESTATE APPRAISALS • FLOOD DETERMINATIONS

November 30, 2012

Gail Sarrazin AVP, Credit Department Manager Androscoggin Bank SBA and Granite State Development 30 Lisbon Street PO Box 1407 Lewiston, Maine 04234 Re:

Real Estate Appraisal Self Contained Report Naples Campground 295 Sebago Road Naples, Maine 04055

Dear Ms. Sarrazin: In accordance with your request, I, Brian P. Diskin, inspected the above captioned property for the purpose of forming an opinion as to the as is, as completed and as stabilized market values as of November 9, 2012, May 1, 2014 and May 1, 2015 respectively. Note: this does not include map R5 Lot 23. The subject is a 111-site seasonal campground with owner’s quarters all situated on 54.3 acres with a proposed expansion of 45 sites to be fully operational in 2015. The subject is located in the rural and shoreland zones per the town of Naples. The analysis and conclusions within the attached self contained report are based upon field research, interviews with market participants, and publicly available data collected by the appraiser. The accompanying report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice. Included is a summary description and analysis of the real estate, all pertinent data, valuation methodology, supporting relevant exhibits, and addenda to the attached report. It is our opinion that the as is, as completed and as stabilized market values for the subject’s fee simple interest are as follows: AS IS MARKET VALUE FOR REAL ESTATE ONLY-11/9/2012 $1,505,000 ONE MILLION FIVE HUNDRED FIVE THOUSAND DOLLARS

30 EXCHANGE STREET, PORTLAND, MAINE 04101 (207) 774-6226 FAX (207) 774-2503 WWW.MAINELANDCONSULTANTS.COM

TABLE OF CONTENTS PART I - INTRODUCTION SUMMARY OF SALIENT FACTS AND IMPORTANT CONCLUSIONS................................................. 1 INTENDED USE/USER OF APPRAISAL ........................................................................................... 1, 3 DEFINITIONS ......................................................................................................................................... 5 SCOPE OF WORK ................................................................................................................................ 6 UNDERLYING ASSUMPTIONS AND LIMITING CONDITIONS ............................................................. 7 CONTAMINATED LAND AND HAZARDOUS SUBSTANCES ................................................................ 9 PART II - FACTUAL DATA AREA ANALYSIS .................................................................................................................................. 10 NEIGHBORHOOD ANALYSIS ............................................................................................................. 29 PUBLIC AND PRIVATE LAND USE RESTRICTIONS ......................................................................... 30 PROPERTY DESCRIPTION ................................................................................................................ 31 HIGHEST & BEST USE ANALYSIS..................................................................................................... 37 THE APPRAISAL PROCESS............................................................................................................... 39 PART III - ANALYSES AND CONCLUSIONS INCOME CAPITALIZATION APPROACH ............................................................................................ 41 SALES COMPARISON APPROACH ................................................................................................... 58 FINAL RECONCILIATION.................................................................................................................... 66 CERTIFICATION................................................................................................................................... 68 PART IV - APPENDIX APPENDIX ........................................................................................................................................... 69 Legal Description ...................................................................................................................................... Zoning Excerpts ........................................................................................................................................ Property Exhibits ....................................................................................................................................... FF&E ......................................................................................................................................................... Income & Expense Data ........................................................................................................................... Occupancy Report .................................................................................................................................... Comparable Improved Sales Data Sheets ................................................................................................ Client Engagement Letter ......................................................................................................................... Appraiser Qualifications ............................................................................................................................

295 Sebago Road Naples, Maine

-1-

SUMMARY OF SALIENT FACTS AND IMPORTANT CONCLUSIONS Owner of Record: Crepeau Investments, 295 Sebago Road, Naples, Maine 04055 Location of Property:

295 Sebago Road, Naples, Maine 04055

Tax Map Reference:

Map R5 Lot 22: Does not include Map R5 Lot 23

Intended Use/ User:

The intended use of the appraisal is to assist the client/intended users, Androscoggin Bank, SBA, Granite State Development and/or affiliates, in underwriting purposes.

Values Appraised:

As Is: Market value of the real estate with allocations to goodwill and FF&E Prospective as completed: Market value of the real estate with allocations to goodwill and FF&E Prospective as stabilized: Market value of the real estate with allocations to goodwill and FF&E

Property Rights Appraised:

Fee Simple Estate

Dates of Value:

As is: November 9, 2012, the date of inspection Prospective as completed: May 1, 2014, the date of completion Prospective as stabilized: May 1, 2015, the date of stabilization

Date of Report:

November 30, 2012

Market Conditions:

Mixed market conditions

Zoning/Status:

Rural Area; legally nonconforming

Site Description

54.3 acres

Flood Hazard:

Zone C; none of the subject parcel is located in a SFHA per FEMA Map #230050 0015 & 18 B, dated 4/01/82

Improvements:

111-site seasonal campground with camp office/store/owner’s quarters, recreation hall, three bath houses, in-ground swimming pool, recycling shed and supporting infrastructure; Proposed 45 full service sites

Easements/Encroachments:

Typical utility easements, which are not adverse. There are no apparent encroachments.

Highest & Best Use:

As If Vacant Land –recreational campground As Improved – recreational campground

295 Sebago Road Naples, Maine

Value Indicators: As Is Income Capitalization Approach Sales Comparison Approach Cost Approach

-2-

$1,505,000 N/A N/A

As Is Final Market Value Conclusion: $1,505,000 Prospective Upon Completion Income Capitalization Approach Sales Comparison Approach Cost Approach

$2,335,000 N/A N/A

Prospective Upon Completion Market Value Conclusion: Prospective Upon Stabilization Income Capitalization Approach Sales Comparison Approach Cost Approach

$2,430,000 $2,615,000 N/A

Prospective Upon Stabilization Market Value Conclusion: Extraordinary Assumptions and/or Hypothetical Conditions:

$2,335, 000

$2,430,000

1.) The subject is completed in a professional workman like manner per plans and specifications; 2.) The subject receives approvals from all regulatory agencies; and 3.) There is no significant change in the economy prior to the completion of proposed improvements. The user of this appraisal is cautioned, as with any extraordinary assumption or hypothetical condition, if the conditions to the appraisal are not met or they change, it could have a direct impact on the values reported herein.

Market Time:

6 to 12 months

Exposure Time:

6 to 12 months

295 Sebago Road Naples, Maine

-3-

Subject Property Identification of the Real Estate The subject is located at 295 Sebago Road in Naples, Maine. It is identified on the Town of Naples assessor’s map as Map R5 Lot 22. The subject is a 111-site seasonal campground with camp office/store/owner’s quarters, recreation hall, three bath houses, in-ground swimming pool, recycling shed and supporting infrastructure. It is located between the Sebago Road and Trickey Pond. The site is 54.2 acres with an estimated 450’ of road frontage. The subject is located in the Rural area, Limited Residential District and Shoreland zone (250’ from water). The subject is considered legally non conforming as it predates current zoning. Purpose of the Appraisal The purpose of the appraisal is to estimate the as is, prospective as completed and prospective upon stabilization market values with allocations to FF&E, goodwill and real estate. Intended Use/ User The intended use of the appraisal is to assist the client/intended user, Androscoggin Bank, SBA and Granite State Development and/or affiliates, in underwriting purposes. Property Rights Appraised The subject is an owner-occupied campground that is operated as a hospitality facility for transient guests. The subject’s marketable rights are best characterized as fee simple, defined as: "Absolute

ownership unencumbered by any other interest or estate, subject only to limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." The Dictionary of Real Estate Appraisal, 5th Edition at 78.

295 Sebago Road Naples, Maine

-4-

Property/Sale History The subject has operated as a seasonal and transient campground since its approval in 2003. It was approved for 116 sites but was modified in 2007 for the relocation of the recreation hall thus 5 sites were lost and now operates as 111 sites. The original campground consisted of 26.1 acres with 28.2 acres added in 2007. There has been a conceptual plan presented to the Naples Planning Board for an additional ±143 sites but no approvals have been granted. A new conceptual plan is being developed for 45 sites (Phase I). Designing and engineering is currently being undertaken and will be presented to the regulatory agencies for approvals in 2013. Phase I will encompass ±14 acres. Phase I is anticipated to be completed for the camping season in 2014. There will be an estimated ±14 acres remaining for future expansion. The subject predated current zoning. Zoning was approved in 2008. Campgrounds are not a permitted use in the subject’s rural zone. The subject is legally non-conforming. Per Naples Planning Board minutes (August and September 2008) the subject’s 2 parcels were combined prior to the enactment of the current zoning thus the campground could expand onto the parcel purchased in 2007 (28.2 acres). This grandfathered use allowing for future expansion provides the subject a competitive advantage that other parcels in this same zone do not have. The subject is not currently listed for sale or under any purchase and sales contract. Easements/Encroachments Typical utility easements are referenced in the deed, which is not adverse to marketability. No encroachments were noted. Tax Assessment Data for Map R5 Lot 22 Land: $ 440,532 Building: $ 392,181 Total: $ 832,713 Mil Rate 2012-2013: $ 12.30 Taxes: $10,242.37 The Town of Naples assessment ratio is reported at 100%. The assessment appears reasonable as compared to similar properties within Naples. Assessed values are created using mass appraisal technique. At a given point in time, a pricing system is developed using recent sales data. This system is used to price all property in the community. The value herein (as is) is higher than the assessment due to the assessment relying strictly on the cost approach and no other valuation scenarios. It is also likely that the land assessment does not fully consider the subject’s grandfathered use and/or expansion potential. Effective Dates of the Appraisal The effective date of this appraisal for the as is value is November 9, 2012, the date of inspection. The effective date of this appraisal for the prospective as completed value is May 1, 2014, the date of completion. The effective date of this appraisal for the prospective as stabilized value is May 1, 2015, the date of stabilization. The date of this report is November 30, 2012. Exposure Period and Marketing Time The value estimate contained in this report is based upon a 6- to 12-month exposure time prior to the hypothetical consummation of a sale on the effective date of the appraisal. If properly priced and marketed, the property would be expected to sell within a 6- to 12-month marketing period.

295 Sebago Road Naples, Maine

-5-

DEFINITIONS Market Value Market value as defined in the Interagency Appraisal and Evaluation Guidelines (Federal Register, Volume 75, No. 237, Page 77472) as: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition are 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 own 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.

Client

“The client may be an individual, group, or entity, and may engage and communicate with the appraiser directly or through an agent.” Source: USPAP 2012-2013 Edition

Going-Concern Value 1.) AThe market value of all the tangible and intangible assets of an established and operating business 2.)

with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern. The value of an operating business enterprise. Goodwill may be separately measured but is an integral component of going-concern value when it exists and is recognizable.@

Dictionary of Real Estate Appraisal, 5th ed. at 88

Furniture, Fixtures, and Equipment (FF&E)

“Business trade fixtures and personal property, exclusive of inventory.” Dictionary of Real Estate Appraisal, 5th ed. at 85

Marketing Time

“An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing differs from exposure time, which is always presumed to precede the effective date of an appraisal.” Source: The Dictionary of Real Estate Appraisal, 5th Edition at 121

Exposure Time

“Estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.” Source: USPAP 2012-2013 Edition

Prospective Value

A forecast of value expected to occur at specified future date. A prospective value estimate is most frequently utilized in connection with real estate projects that are proposed, under construction, under conversion to a new use, or that have otherwise not achieved sellout or a stabilized level of long-term occupancy at the time the appraisal report is written.

295 Sebago Road Naples, Maine

-6-

SCOPE OF WORK Prior to developing the appraisal, we identified with the client the intended use and intended user, and the value (as is, prospective as completed and prospective as stabilized market values) to be appraised. To complete this appraisal, we have made a number of independent investigations and analyses. We have relied upon data collected in the marketplace from sources deemed to be reliable and on data in our office files on sales and other transactions in Maine over long periods of time. Our comprehensive database is periodically updated for use in all assignments. Listed below is a summary of steps taken in this assignment. Area and Neighborhood Analysis We have consulted with town officials, local real estate brokers and fellow appraisers to ascertain development patterns and trends for the subject's market area. Property Description and Analysis The Town of Naples assessment records, Code Enforcement Office, and Planning Department were researched, as well as the FIRM flood hazard maps. The description of the property is based on personal inspection along with the owners, Conrad and Pamela Crepeau. Building sizes are based upon measurements in the field and owner’s information. Sales Comparison Approach Transfers of improved properties in Naples and competing areas were researched. An attempt was made to contact buyers, sellers and real estate brokers involved in the conveyances to verify transaction data and ensure that the sales were arm’s length. The subject is the type of property that is most often purchased and operated by an owner user. Details of the sales are included in this report. Several sales are available for analysis purposes. Income Approach The income and expense statements were reviewed with owners and compared to similar operations in southern Maine. A stabilized income and expense are presented and valued via direct capitalization technique. Cost Approach The subject is of mixed age and condition being constructed in varying stages. In estimating all forms of depreciation makes the cost approach very subjective and unreliable. The cost approach was not completed. Final Reconciliation The appropriate and applicable methods of estimating the subject's market value are analyzed and reviewed.

295 Sebago Road Naples, Maine

-7-

UNDERLYING ASSUMPTIONS AND LIMITING CONDITIONS The certification of the appraiser(s) appearing in the appraisal report is subject to the following conditions and to such other specific and limiting conditions as are set forth by the appraiser(s) in the report. 1.)

2.) 3.) 4.) 5.) 6.)

7.)

8.) 9.)

10.) 11.)

12.)

The appraiser(s) assumes no responsibility for any matters of a legal nature affecting the property appraised or the title thereto, nor does the appraiser(s) render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership. Any sketch in the report may show approximate dimensions and is included to assist the reader in visualizing the property. The appraiser(s) has made no survey of the property. The appraiser(s) is not required to give testimony or appear in court because of having made the appraisal with reference to the property in question, unless arrangements have been previously made therefore. Possession of this report, or a copy thereof, does not carry with it the right of publication. Any distribution of the valuation in the report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. The appraiser(s) assumes there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraiser(s) assumes no responsibility for such conditions, or for engineering which might be required to discover such factors. Information, estimates and opinions furnished to the appraiser(s), and contained in the report, were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished to the appraiser(s) can be assumed by the appraiser(s). Disclosure of the contents of the appraisal report is governed by the Bylaws and Regulations of the professional appraisal organizations with which the appraiser(s) is affiliated. Neither all nor part of the content of the report, nor copy thereof (including conclusions as to the property value, the identity of the appraiser(s), professional designations, reference to any professional appraisal organizations, or the firm with which the appraiser(s) is connected), shall be used for any purposes by anyone but the client specified in the report, the borrower if appraisal fee paid by same, the mortgagee or its successors and assigns, mortgage insurers, consultants, professional appraisal organizations, any State or Federally-approved financial institution, any department, agency or instrumentality of the United States, or any state or the District of Columbia, without the previous written consent of the appraiser(s); nor shall it be conveyed by anyone to the public through advertising, public relations, news, sales or other media, without the written consent and approval of the appraiser(s). On all appraisals subject to satisfactory completion, repairs or alterations, the appraisal report and value conclusion are contingent upon completion of the improvements in a workmanlike manner. In this appraisal assignment, the existence of potentially hazardous materials used on construction or maintenance of the building, such as the presence of urea formaldehyde foam insulation, and/or existence of toxic waste, which may or may not be present on the property, has not been considered. The appraiser(s) is not qualified to detect such substances. We urge the client to retain an expert in this field, if desired. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation or approval of a loan.

295 Sebago Road Naples, Maine

13.)

14.)

15.)

-8-

The Americans with Disabilities Act (ADA) became effective January 26, 1992. At this time, a set of guidelines has been established regarding building code requirements affecting access to buildings. Codes vary for different building types, and different types of ownership, as well as, the financial capability of the owner. The appraiser(s) has viewed the building in the context of the generally stated guidelines, and attempts to report same. The appraiser(s) is not empowered to form a declaration of compliance (a building code issue) nor does the market have sufficient experience with this issue to render opinions regarding marketability or market adjustments for compliance or noncompliance. Further, legal tests and precedents have yet to be established, and it is with the further passage of time, that such market standards will be developed. Since there is no currently available direct evidence relating compliance or noncompliance to value, the appraiser(s) does not consider noncompliance with the requirements of ADA in estimating the value of the property, unless otherwise stated within the appraisal report. Unless otherwise stated, all mechanical systems are assumed to be operational. While the appraiser(s) attempts to ascertain such information, the appraiser(s) assumes no responsibility for such data, either via physical inspection, or information reported correctly, incorrectly, or by omission, purposeful or otherwise. The appraiser(s) has given, and cite in various later sections, financial statements or data prepared by the client and/or leasing brokers for the project. The appraiser(s) considers this information to be sensitive, proprietary information. Further, this information has not (to the appraiser(s) knowledge) been independently audited. The appraiser(s) is relying, in part, on this information which is believe to be reliable, but makes no guarantee of its accuracy. Per the assignment authorization, we acknowledge "all information received in performing this agreement shall be considered non-public and confidential" and will comply with 12 CFR 1606.11 regarding non-public information. Thus information only to the extent the appraiser(s) deems necessary to support the observations or conclusions is presented herein.

Extraordinary Assumptions and/or Hypothetical Conditions: 1.) The subject is completed in a professional workman like manner per plans and specifications; 2.) The subject receives approvals from all regulatory agencies; and 3.) There is no significant change in the economy prior to the completion of proposed improvements. The user of this appraisal is cautioned, as with any extraordinary assumption or hypothetical condition, if the conditions to the appraisal are not met or they change, it could have a direct impact on the values reported herein.

295 Sebago Road Naples, Maine

-9-

QUALIFICATIONS ON CONTAMINATED LAND AND HAZARDOUS SUBSTANCES The appraisers are not qualified to test, evaluate, or measure remediation expenses regarding the possibility of contaminating substances which may have been or will be, in the future, identified as environmentally harmful. The appraiser will comment on these situations when known or suspected. Some items that the appraiser may (but without specific warrant) detect, are items like asbestos insulation, the possibility of lead paint (an assumption and recommendation of further testing) or possibly bioaerosols, like evident molds and airborne odors. The presence of contamination, regardless of the source, could have a significant negative impact upon the property's value. In almost every case, and unless clearly specified in this report, the value determined assumes no hazard exists. This is not an attempt by the appraiser to avoid responsible reporting. If a hazard is subsequently detected, the value without a potential hazard must first be determined so that the cost to cure or remediate the problem can be deducted from it. The appraiser rarely receives authorization from clients to hire specialists to do an environmental review, and even then, environmental reviews without detailed and expensive soils testing, may not reveal actual contamination situations. While the appraiser endeavors to question property owners or users regarding possible hazardous situations, property owners are not always truthful, and there are appraisal situations that are adversarial, where property owners are not cooperative. Requests are made of all clients to provide an environmental assessment when available, but such reports are not always available to the appraiser, even if they exist. Certain evidence of environmental problems, such as test wells or soils staining, may be obscured from the appraiser due to heavy rains, standing water, or snow cover, at the time of inspection. Further, data sources for various forms of hazards are fragmented and difficult to find. The appraisers do make a good faith effort to ascertain various environmental situations when evident. The appraisers then, disclaims all and any liability regarding the detection or presence of possible environmental contamination. Unless otherwise stated, the appraised value reported herein, assumes no environmental hazard to exist. The user of this appraisal is advised that if an environmental hazard is found to exist it could have a negative impact on the property's value, marketability, and could subject the property owner to liability in excess of the property's value. All lenders and prospective purchasers are advised to have an environmental assessment conducted on any property that they may be considering.

295 Sebago Road Naples, Maine

-10-

LOCATION AND MARKET ANALYSIS

INTRODUCTION The development of the “Classical” value theory, formulated in the 18th and 19th centuries, set forth the premise that “Land” provides the foundation for the cultural and economic activities of a society. Scholars of the time identified four agents of production, land, labor, capital and entrepreneurial reward. The complex interaction of the four agents affects the availability and the demand of a commodity in a marketplace. The product of the interaction of the agents can be demonstrated in the supply and demand model, an economic principal forming the basis for the valuation of tangible and intangible commodities in a defined market area. The value of real property is influenced by dynamic forces, which include demographic change, employment-income trends, and the expansion and/or contraction of a region’s economic base. The following overview describes and analyzes economic trends, government policy, social forces and environmental issues influencing the current supply and demand for real property. NATIONAL OVERVIEW The U.S. has the largest and most technologically powerful economy in the world with a per capita GDP of $47,400. In this market oriented economy, private individuals and business firms make most of the decisions while federal and state governments buy needed goods and services predominantly in the private marketplace. U.S. business firms enjoy greater flexibility than their counterparts in Western Europe and abroad. Yet at the same time, U.S. businesses face higher entry barriers than their rival foreign firms do entering the U.S. market. The past decade began with tremendous prosperity which continued through 2005. As the second half of the decade began, signs of a retreating economy slowly began to emerge. The war in 2003 between a U.S. led coalition and Iraq, and the subsequent occupation of Iraq, required major shifts in national resources to the military. Soaring oil prices between 2005 and the first half of 2008 threatened inflation and unemployment, as higher gasoline prices ate into consumers’ budgets. The global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit pushed the United States into a recession by mid 2008. GDP contracted until the third quarter of 2009, making this the deepest and longest downturn since the Great Depression. To help stabilize financial markets, the U.S. Congress established a $700 billion Troubled Asset Relief Program (TARP) in October 2008. The government used some of these funds to purchase equity in U.S. banks and other industrial corporations, much of which had been returned to the government by early 2011. In January 2009 the U.S. Congress and President Barack Obama signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years, two thirds on additional spending and one third on tax cuts, to create jobs and to help the economy recover. Approximately two thirds of these funds were injected into the economy by the end of 2010. In March 2010, President Obama signed a health insurance reform bill into law that will extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished. In July 2010, the president signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a bill designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are “too big to fail”, and improving accountability and transparency in the financial system, in particular by requiring certain financial derivatives to be traded in markets that are subject to government regulations and oversight. In late

295 Sebago Road Naples, Maine

-11-

2010, the U.S. Federal Reserve Bank (The Fed) announced that it would purchase $600 billion worth of U.S. Government bonds by June 2011, in an attempt to keep interest rates from rising. Although the crisis was brought under control by the enactment of TARP, the nation was left in a deep and grinding economic slowdown dubbed by some as the “Great Recession.” In the fall of 2010, the National Bureau of Economic Research (NBER) declared the recession to have come to an end in June of 2009, 18 months after it commenced. While the recession has technically ended based on the return of measured economic growth, the economic impacts remain. Long term problems remain and include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, size trade and budget deficits, and stagnation of family income in the lower economic groups. The merchandise trade deficit reached a record $840 billion in 2008 before shrinking to $506 billion in 2009. In 2010, the trade deficit soared back to $630 billion. Currently the Global economy and the strength of the Euro are playing a large role in our National Economy. Congress continues to strengthen the economy through job creation and budget reform. Experts are predicting a continued slow and elongated recovery. Gross Domestic Product and the Consumer A published survey reported the following overview of recent GDP (seasonally adjusted) activity. 4Q 2009 +4.0% 1Q 2010 +2.3% 2Q 2010 +2.2% 3Q 2010 +2.6% *Advance Estimate

4Q 2010 1Q 2011 2Q 2011 3Q 2011

+2.4% +0.1% +2.5% +1.3%

4Q 2011 1Q 2012 2Q 2012 3Q 2012

+4.1% +2.0% +1.3% +2.0%*

The NBER declared the end of the recession to have occurred in June 2009. Since that time, growth in GDP has been uneven and disappointing. The current consensus appears to be that growth in 2012 will fall below 2%. Growth in spending going forward is expected to remain subdued. The overall state of the economy has been concisely summarized by the Federal Reserve’s Federal Open Market Committee in its most recent statement dated December 13, 2011, as follows: Information received [by] the Federal Open Market Committee . . suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth. While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed. Inflation has moderated since earlier in the year, and longer-term inflation expectations have remained stable. The Committee also decided to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that economic conditions—including low rates of resource utilization and a subdued outlook for inflation over the medium run—are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. Consumer Confidence The Consumer Confidence Index (CCI) is a barometer of the health of the U.S. economy from the perspective of the consumer. How confident people feel about the stability of their incomes determines

295 Sebago Road Naples, Maine

-12-

their spending activity and therefore serves as one of the key indicators for the overall shape of the economy. Manufacturers, retailers, banks and the government monitor changes in the CCI in order to factor in the data in their decision making process. While index changes of less than 5% are often dismissed as inconsequential, moves of 5% or more often indicate a change in the direction of the economy. The table below shows the dramatic drop from 2007 and a slow but modest improvement from the low of 2009.

Real Estate Sector Recent declines in the nation’s housing market have had a profound effect on most of the developed world’s economic picture. A combination of weakening demand for single family housing and the subprime financial market meltdown threw the U.S. into the worst recession since the “Great Depression.” Nationally, there has been a decline in new home construction not experienced in decades. Though we appear to have reached bottom there are no clear signs of the national market returning to vigorous growth. Since 2005/06 the country has experienced substantial declines in both the median sales price of a home and number of new home starts. Total housing unit starts plunged from its 2006 peak of 2.3 million to 625,000 in late 2008. As noted in the accompanying table, new single family homes sales are also down significantly since their July 2005 peak. Nationally, average home prices declined about 20% from the peak in April 2006. Economist projections for the housing market’s future vary. The trajectory of housing prices and sales rates are currently difficult to assess. This is due to the impact of temporary tax incentives and the large variability from one metropolitan area to another. However, in general, it appears that both the number of sales and prices have stabilized in recent months. Pricing forecasts for the coming year vary with some economists predicting continuing decline as the market attempts to deal with millions of foreclosed homes still unsold and in the pipeline. NationalAssoc. Assoc. ofofHome Builders National Home Builders

295 Sebago Road Naples, Maine

The following table clearly notes that varying markets throughout the nation have experienced price increases and declines at differing rates. Those markets which experienced some of the greatest appreciation prior to the 2008 crash also fell the hardest. As with politics, residential real estate can be a much localized matter.

-13-

Commercial real estate has suffered as well as the residential. However, other than the development market, these declines have not typically been as severe as those experienced in the residential market. Preceding declining values have been decreases in rental rates and increases in vacancies. Falling retail sales has led to failing businesses and thus an excess of commercial space. With the economy lacking significant growth many feel that a stagnating or declining commercial real estate market will be ongoing for several years. There is the potential the commercial market’s downturn may be a longer period than the residential correction as lenders have been slow to recognize nonperforming loans and failed loan conditions. The preceding graph depicts commercial real estate’s relative strength. When compared to other investment opportunities, including residential homes, US REIT’s have outperformed the S&P 500 and 7 to 10-year Treasury Bonds. Thus, investment grade real estate, though having faced a significant decline in 2008, has experienced a value gain over the past 10 years. S&P/Case-Schiller

Labor Markets As a result of the financial crisis businesses began to rapidly reduce employment levels in 2008 resulting in elevated levels of joblessness. In 2007, the unemployment rate was as low as 4.3%. By July 2009, the rate had climbed to 9.7%. The “real” unemployment rate, counting discouraged workers who have removed themselves from the workforce, rose to around 18%. Since the January 2010 (10.6%) unemployment peak, the unemployment rate has remained high with continuing layoffs and a reluctance to hire new workers in the face of soft demand and weak consumer confidence. Since the peak and as of September 2012, the national unemployment rate has declined to 7.6% (not seasonally adjusted). Interestingly, corporate profits have been surprisingly robust as input prices have been relatively stable, and employers have found ways to increase productivity. Federal Government Intervention In December 2008, the Federal Reserve Board lowered the Federal Funds Rate to its current floating level of 0 to 0.25% as part of its efforts to stabilize the economy. The discount and prime rate followed the downward trend and short and long term financing is available to qualified borrowers at historically low rates. The FOMC statements continue to indicate that the federal funds rate is likely to be maintained at a low level for an extended period. In early 2009, Congress enacted a direct $800 billion program of fiscal stimulus. That program had many elements, but included tax incentives for hiring, and for the unemployed, aid to municipalities and funding for infrastructure projects such as roads and bridges. In the fall of 2010, the FOMC added to the prior stimulus measure by initiating a $600 billion program of “quantitative easing” whereby it makes regular purchases of treasury securities in order to

295 Sebago Road Naples, Maine

-14-

keep interest rates low and encourage the purchase of riskier asset classes. Underlying inflation remains low. While economic difficulties remain, the consensus among economists appears to be that the economy will continue to recover at a modest pace with GDP growth in the 2% range and unemployment remaining stubbornly high. STATE OF MAINE OVERVIEW Maine, the 23rd state of the union, was separated from Massachusetts in 1820. It is by far the largest state in New England, and boasts miles of unspoiled coastline, thousands of lakes and great stretches of untamed forest. For the most part the State retains its wild flavor and millions of tourists flock to it to enjoy the great outdoors. Tourism is Maine’s number one source of revenue. State and local governments recognize the importance of maintaining the pristine nature of the state and have enacted legislation designed to preserve its beauty. A brief outline of the state’s relevant statistics follows: STATE OF MAINE STATISTICAL OVERVIEW Population “2010 Census”

1,328,361

Lakes & Ponds

6,000

Land Area

30,862 Square Miles

Forest Land

17,000,000 Acres

Length of Coastline

3,500 Miles

Population per Square Mile

41.3

Counties

16

Maine is a rural state, the bulk of the population and the largest employers are located in the two most southern counties: COUNTY Androscoggin Aroostook Cumberland York Source: *2010 Census

SQUARE MILES

POPULATION

POPULATION/ SQUARE MILE

470

38,786

229

6,672

71,870

11

836

281,674

337

991

197,131

199

Cumberland County has the highest population and the greatest population density within Maine, with York County second in population and Androscoggin County second in population density. As a comparison, Aroostook County, situated at the northern extreme of the state, has the largest land mass but a very low population density. Throughout Maine the population of the rural counties is stable or in some instances declining. Many long term residents move south for employment opportunities, some are forced to leave the state. A major concern is the flight of the educated youth, who leave Maine seeking jobs and opportunity. The state’s long term projections predict a stable but aging population. Population growth can only occur if new employers are attracted to the state, and this is only likely to happen if enticed by tax benefits such as TIF’s or other monetary incentives. Maine’s largest employers are longstanding profit and non-profit corporations, all of which appear to be faring well even during these difficult recessionary times. Most of these employers are in health services sector.

295 Sebago Road Naples, Maine

-15-

MAINE’S LARGEST EMPLOYERS * Employer # Employees Employer # Employees Wal Mart/Sam’s Club 7,001 to 7,500 Shaw’s Supermarkets 2,501 to 3,000 Hannaford Bros Co. 7,001 to 7,500 Mercy Hospital 1,501 to 2,000 1,501 to 2,000 L.L. Bean, Inc. 7,001 to 7,500 Verso Paper Corp Maine Medical Center 6,001 to 6,500 Lowe’s Home Centers Inc. 1,001 to 1,500 Bath Iron Works Corp. 5,001 to 5,500 Pratt & Whitney Aircraft Group 1,001 to 1,500 Eastern Maine Medical Center 3,001 to 3,500 SD Warren 1,001 to 1,500 UNUM Provident 3,001 to 3,500 Home Depot USA Inc. 1,001 to 1,500 TD Bank, N.A. 3,001 to 3,500 St. Mary’s Regional Medical Center 1,001 to 1,500 1,001 to 1,500 Maine General Medical Center 3,001 to 3,500 Southern Maine Medical Center Central Maine Healthcare Corp 2,501 to 3,000 Rite Aid of Maine Inc. 1,001 to 1,500 *All Ownerships; Source: Maine Dept. of Labor, Center for Workforce Research and Information (Updated June 11, 2012)

Maine’s unemployment rate has out-performed the country for the past several years. As of year-end 2011 it was 1.5% less than the national level. Both York and Cumberland Counties have low rates while the rural counties traditionally have high unemployment. The disproportionate spread in the employment levels, frames the story of the “Two Maines”. Southern Maine is better linked to NH, Boston, NY, and other large markets and thus has fared well. Southern Maine attracts established corporations that provide high paying jobs, with desirable benefit packages. Unfortunately the rural counties are struggling to replace the shoe and textile manufacturers that in the recent past employed a large percentage of the population. Even the paper industry, a fixture of the north woods for over a century, has closed plants and eliminated thousands of well-paying jobs. Only time will tell if employment opportunities spreads to the rural counties. Economic Overview In January 2012, Mr. Charles Colgan, Chairman of the Community Planning & Development Program and professor of Public Policy and Management at the University of Southern Maine’s Muskie School, presented his 2012 Maine’s Economic Forecast. Colgan’s immediate outlook for the Maine economy was summarized by the following quotation: “Maine’s economy in 2012 will look a lot like it did in 2011, with little growth and more job losses”. Mr. Colgan’s most recent outlook for Maine was less optimistic than in the past. Colgan said: “his past few forecasts have anticipated a recovery being about a year away from kicking into high gear, but this year he thinks it will be much longer before the economy gets significantly better”. A key factor of Colgan’s economic forecast included: ** ** **

Pre Recession job levels will not take place until 2017 with preliminary figures showing Maine lost 1,400 jobs in 2011. The European debt crisis could plunge that market into a recession, hurting export prospects. Iran could follow through with its threat to close the Strait of Hormuz causing oil prices to skyrocket.

State economist Amanda Rector stated, “Colgan doesn’t appear to be out on a limb: most economists share his sense that the recovery will be anything but brisk.” Rector noted that the state’s economic forecasting committee has projected that employment will reach pre-recession levels in 2015, a couple

295 Sebago Road Naples, Maine

-16-

of years ahead of Colgan’s prediction. Rector also stated “businesses are still wary of hiring back workers, there is so much uncertainty right now that everyone is unwilling to take any big risks.” As reported by the Maine Department of Labor, statewide employment as of September 2012 (not seasonally adjusted) was 658,930, representing only a frictional year over year change. The statewide unemployment rate as of September 2012 (not seasonally adjusted) was 6.7%. At its peak in 2011 the rate was 8.9%. While unemployment rates continue to represent difficulties for many Maine families, they also indicate that the prior economic forecast in job growth were too optimistic. Statewide economic reports generally show a slow and gradual improving economic environment. CONCLUSION Many feel that Maine’s cautious stance for controlling growth, limits the traditional boom-bust cycles that affect the larger markets. To many investors this factor enhances the appeal of Maine as a stable “less risky” marketplace. Local commercial lenders are fairly careful in their lending practices, resulting in few poorly conceived projects ever breaking ground. Very little inventory of “see-through” or dark properties exist. In the short term this factor bodes well for the state and the local economy, lessening the time and money necessary to rid the market of nonperforming assets, thus freeing up credit and encouraging a quicker recovery. GREATER PORTLAND Greater Portland is comprised of 14 communities: Portland, South Portland, Westbrook, Cape Elizabeth, Scarborough, Gorham, Windham, Falmouth, Cumberland, Yarmouth, North Yarmouth, Pownal, Gray and Freeport. All of the communities are situated in Cumberland County and the Cumberland Economic Summary District. As defined by the Maine State Planning Office, these districts are segmented into three sub-districts: Portland ESA; Portland Suburban; and Sebago Lake ESA. Also included in the ESAs are the towns of Bridgton, Casco, Harrison, Naples, Raymond, Sebago, Standish (lakes region) and numerous Casco Bay islands. The Greater Portland area is situated in southwestern Maine approximately 40 miles north of the State’s southerly border and 100 miles north of Boston. Physical landmarks form natural borders. The Atlantic Ocean defines the area to the south and east, mountains and rivers to the north and west. Portland is Maine’s commercial capital, its largest city, and the main hub of business activity for the region. The appeal of the region is derived from its natural setting, as its many rivers, bays, islands and protected harbors enhance the natural beauty of the area. There are many recreational facilities located along the coast and at the numerous lakes within the region. Most communities are easily accessible to employment centers in Portland, South Portland, Westbrook, Freeport and emerging Scarborough. ECONOMIC TRENDS Analysis of Greater Portland’s economy focuses on its demographics, employment, base industries and median income estimates. All of which affect the area’s economy and its appeal to potential investors and/or new residents. To follow, Maineland will summarize Greater Portland’s historic performance, report on its current economic status and forecast likely patterns and/or trends.

295 Sebago Road Naples, Maine

-17-

Population The following table summarizes changes in population for Portland and the Portland MSA between 1990 and 2010. The US Census Bureau conducted a new census during the summer of 2010. Data has been released for the City of Portland. The population shown for 2010 is from the State Planning Office’s projections. POPULATION 1990 – 2010 Year

City of Portland #

% Change

Portland MSA #

% Change

1990

64,358

215,281

2000

64,249

-0.17%

243,537

13.13%

2010

66,194

3.0%

263,927*

3.4%

Source: U.S. Census; 2010 Portland MSA from State Planning Office estimate

The Portland MSA includes 23 towns and cities in a ±45-minute travel radius around Portland. Its boundaries extend northeast to Freeport, northwest to Casco, west to Limington, southwest to Hollis and south to Old Orchard Beach. The MSA includes a population of approximately 250,000 people. The population grew 13% in the 1990's and is projected to grow 8.5% between 2000 and 2010. POPULATION – GREATER PORTLAND CORE COMMUNITIES – 1980 to 2010 City 1980 Population 1990 Population 2000 Population 2010 Population Δ from 2000 % Δ 2000 Portland 61,572 64,358 64,249 66,194 1,945 3.0% South Portland 22,712 23,163 23,324 25,002 1,678 7.2% Westbrook 14,976 16,121 16,142 17,494 1,352 8.4% Total 99,260 103,642 103,715 108,690 4,975 4.8% Source: US Census

The City of Portland’s population has remained stable for the past several decades. Its current population is estimated to be 66,194, essentially changeless since the late 1980's. Greater Portland’s population however has increased, specifically in the communities of Gorham and Windham, the fastest growing towns in Maine during the past 10 years. The population growth to the outlying communities is primarily attributed to the availability of developable land near established linkage routes. It’s important to note that prior to the 2008 economic crash, developers were converting apartments and/or erecting new buildings in the downtown area of the city. Properly timed projects were quite successful. The marketing scheme focused primarily on the reputation of Portland as a “livable city”. To encourage downtown “green” development, the City planners increased density formulas and cutback on certain aspects of the parking requirements. The results enhanced proposed projects profitability and encouraged developers to move forward. When the real estate market rebounds and as a direct reaction to the nation’s call for “smart development”, intown construction will once again regain a foothold in the city’s urban core. Greater Portland is very well suited for next wave of development schemes, which bodes well for it and all of Southern Maine in the upcoming decades.

295 Sebago Road Naples, Maine

-18GREATER PORTLAND PRIMARY SUBURBS POPULATION 1980 TO 2010

Yarmouth Windham Standish Scarborough Gray Gorham Freeport Falmouth Cumberland Cape Elizabeth

2010 Population 2000 Population 1990 Population 1980 Population

0

5,000

10,000

15,000

20,000

Employment Greater Portland is the hub of business activity in southern Maine. Major employers in the region include UNUM, Bath Iron Works (a major shipbuilder whose main operation is in Bath), L.L. Bean, Maine Medical Center, Hannaford Bros., Fairchild/National Semiconductor, the City of Portland, and many other 100+ employee businesses. These employers have stabilized employment within greater Portland. Most employment in the area is service-based, i.e., retail trade, government, manufacturing and finance/insurance/real estate industries. Major employment centers are easily accessible via the network of primary and secondary roads. These factors, coupled with the outstanding reputation of its work force, make Greater Portland very attractive to new businesses. Employment Growth Comparision 2000 - 2010

800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2000

2010

Total Employment Self-Employed, Private Household, and Unpaid Family Workers Goods-Producing Sector Service Producting Sector

The Maine Dept. of Labor projection needs to be adjusted to reflect the impact of the current recession. Over 30,000 jobs have been lost since 2008. The current unemployment rate is 6.7% statewide but Greater Portland is faring much better at 5.6%. Job growth in the area is projected for health, insurance, service and tourism. Manufacturing is expected to continue to decline. People will require retraining to meet the demands of the ever changing employment base. Cumberland County is expected to have a job growth at a rate higher than that of the state as a whole. The Greater Portland area unemployment rate is lower than rates in other parts of the state as well as outperforming the state as a whole. Looking forward the general consensus is that Maine’s

295 Sebago Road Naples, Maine

-19-

unemployment rate will mirror the national rate. Information in the table below is for the most recent reporting period. Labor Market Area September 2012 Unemployment Rates Portland, South Portland, Biddeford MSA 5.6% Statewide 6.7% USA 7.6% Source: Maine Department of Labor, Division of Labor Market Information Services, in cooperation with the U.S. Bureau of Labor Statistics (rates not seasonally adjusted)

Income The general price level for real estate within a defined market area is affected by the growth or decline in real purchasing power for area residents. Maine’s per capita personal income of $36,717 rose slightly in 2010 ranking it 31st in the country which is 92% of the national average of $39,945. State projections anticipate slow growth for 2012. Interest Rates In reaction to difficulties within the U.S. housing and mortgage markets the Federal Reserve Board has lowered the federal funds rate from its peak of 5.25% in July 2007 to a “target range” of between 0.00% and 0.25%. The “subprime market” near collapse continues to ripple through world financial and economic markets, with the ultimate outcome still to be determined. The Federal Reserve continues to assess the economic and financial outlook for the U.S. as well as its effect globally. According to the Federal Reserve Statistical Release dated October 1, 2012, the current prime rate is 3.25%; the 10-Year Treasury Note is at 1.64% and Aaa Corporate Bonds are at 3.41%. Interest rates at current levels continue to encourage refinancing and investment in real estate. The impact appears to differ in the residential and commercial markets. In the residential market, high unemployment is keeping home mortgage defaults and foreclosures high, whereas in the commercial market, low interest rates appear to be forestalling what some predicted would be a collapse of this market segment. Locally, Maine’s community-based banks continue to lend; current forecasts are for interest rates to increase as Federal Reserve policies react to the likelihood of inflation. Inflation has remained in check, averaging less than 3% during the past several years. As of September 2012, the Bureau of Labor Statistics reports that core CPI (ex food and energy) increased by 2.0% for the previous 12-month period (not seasonally adjusted). The rapidly increasing budget deficit and the growth in money supply are of growing concern over the long term. Inflation is expected to grow in 2012 and to increase in later years as economic activity improves. As concerns over foreign debt have increased, the dollar has stabilized. The lower relative value of the dollar has allowed U.S. corporations to increase exports, somewhat lessening of the nation’s trade imbalance. Retail Sales Total retail sales in the Cumberland County ESA category declined from 2005-2011. During the cited period, sale revenues increased in 2006 then declined each subsequent year through 2009. Beginning in 2010, sales have trended upward, 2.63% from 2009-2010 and 3.85% from 2010-2011. Most are hopeful that retail revenue will rebound in step with an improving economy. The following is a summary of total retail taxable sales from the area.

295 Sebago Road Naples, Maine

Year

2005

-20-

TOTAL RETAIL TAXABLE SALES IN THOUSANDS 2006

2007

2008

2009

2010

2011

Annual Percent Change 20052011

20102011

Portland

$2,557,273 $2,556,504 $2,524,485 $2,413,586 $2,214,854 $2,275,644 $2,378,428 -1.20% 4.52%

Cumberland ESA

$4,065,592 $4,146,612 $4,085,455 $3,966,094 $3,705,271 $3,803,669 $3,950,061 -0.48% 3.85%

GOVERNMENTAL/SOCIAL Area communities employ city council or selectman type governments. Portland utilizes a city council form of government which appoints a Mayor. Most of the Greater Portland communities have full time fire and police departments and ambulance services. Many communities have public water and sewer systems, while outlying rural towns rely upon private septic systems and onsite wells to support new development. Every community has adopted a Comprehensive Plan, and most have a Zoning Ordinance in place to regulate land use and development density. The time line and expense associated with commercial development are affected by environmental permitting, which is issued by both the Maine Dept. of Environmental Protection and, in some instances, the Army Corp. of Engineers. The Greater Portland area has a highly regarded public transportation system. There is a public bus system, an international airport, an international ferry (seasonal), island ferry service, and an Amtrak commuter train. The Downeaster passenger train provides round trips daily between Portland and Boston, with eight stops along the way. There is an active freight train line that connects Portland to Boston, Burlington, VT and other points north. Portland Harbor is a very active port of call, with commercial and passenger shipping. Both the Sprague break-bulk transport facility and Hapag-Lloyd container shipping have realized significant gains in shipping tonnage during the past five years. I-95 (Maine Turnpike), I-295, and U.S. Route 1 connect Greater Portland to points north and south. Within the last few years, I-95 was widened to three lanes from York northward to Portland. Area roads are generally well maintained by their respective communities or the state. The Greater Portland region has more than 100 public, private, and parochial schools serving children in grades K-12. There are also several colleges and universities, including two regional community colleges, as well as specialized secondary schools. Portland is home to Maine’s largest newspaper (Portland Press Herald), as well as radio and television stations. The state’s largest regional banks are headquartered here (Peoples United, KeyBank, TD Bank, N.A., and Bank of America). In addition, there are several smaller community banks that call Portland home. Financing is available at relatively stable interest rates ranging from 4.5% to 6.5%, depending on property type and the financial strength of the borrower. Tourism is the largest industry in Maine. Recently, three new full service hotels were constructed in Portland’s Old Port. Points of interest include the famous Portland Head Light, the Old Port Exchange and the islands of Casco Bay. Portland is culturally diverse and there are a number of events, festivals, and performances that reflect this diversity. The numerous cultural resources include public libraries, movie theaters, art museums,

295 Sebago Road Naples, Maine

-21-

golf courses, a symphony and a civic center. There are also several public/private launching facilities, marinas and boat yards. CONFORMITY OF DEVELOPMENT The cities of Portland, South Portland and Westbrook have established Downtown Business Districts, as well as a healthy mix of industrial and commercial development. The residential neighborhood boundaries are defined and, for the most part, the properties are well maintained. The cities of Portland and South Portland have working waterfront neighborhoods along the shores of Portland Harbor. Many of the older areas in Portland and South Portland have a compatible mixture of commercial and residential uses. Outlying communities (mostly towns) have typical small village districts surrounded by suburban and rural residential neighborhoods. Despite the downturn in the economy there is still moderate development of both commercial and residential properties, although at a much lower rate than previous years. Commercial development is occurring in established park settings and along commercial corridors, generally constructed for end users. Little if any “speculation” development has or is anticipated to occur in the near future. Entrepreneurs and lenders both are requiring tenants to commit to space prior to construction. Residential construction has become less prevalent as new housing starts have declined substantially during the past 36 months. A large portion of the new construction market has been aimed at first time buyers. While the residential housing market remains somewhat active, it is at much lower levels then the peak of 2004 through 2006. CoreLogic, a data and analytics company, stated in its National Foreclosure Report for September 2012 that foreclosure inventory has declined to its lowest level since April 2010, falling 31% from a year ago. Maine has fared better than most and was one of the five states with the lowest in number (625) of completed foreclosures for the 12 months ending in September. GREATER PORTLAND COMMERCIAL REAL ESTATE MARKET The existing demand for commercial properties is a function of the overall decline of the nation’s economy and the lack of consumer confidence. Although interest rates are at historic lows, commercial lenders have taken a very conservative stance in entertaining new loans. Money is available but only for the best deals, interpreted as credit worthy borrowers and properties that are well located, fully tenanted and in good overall repair. Typically, lenders are seeking loan to value ratios of 65 to 75%. Money for new construction has essentially dried up, most new projects are not feasible to develop at the current rental rates and construction cost. It’s been many years since the last purely market based apartment complex was constructed in Southern Maine. However, during the boom years 2003-2007 many retail and office projects were successfully developed. Several of the office projects were constructed as turn-key buildings for health care providers. The retail developments include large regional plazas anchored with a “Big Box” national retailer. The new centers have a distinct competitive advantage over the older plazas that are scattered throughout the communities. There is a significant difference in rents and pricing between the two products. Although commercial vacancy levels have increased in all of the major market segments during the past 3 years, most experts are somewhat optimistic that within Greater Portland, modern, functionally correct properties with a stable tenancy will continue to attract buyers. The following discussion outlines the four major commercial market segments with statistics reflecting the state of the markets as of December 2011. Some of the data employed for this section was

295 Sebago Road Naples, Maine

-22-

obtained from CB Richard Ellis|The Boulos Company, NAI The Dunham Group and Malone Commercial Brokers, all highly regarded local commercial brokerage firms that publish annual reports. Retail From 2000 through 2008 there was unprecedented activity in the planning and development of big box retail buildings, shopping centers and the redevelopment of dated centers throughout the state. Despite the significant decline in retail sales post 2008, many projects were completed or began construction during the latter part of this cycle. In consideration of Maine’s stagnant population and slow growing economy, the number of centers built and their respective sizes may prove to be a bad idea. We have experienced some indication of this with the closing of two Maine Lowe’s stores in October of 2011, located in Biddeford and Ellsworth. Between 2001 and 2002 vacancy increased from 3.7% to 10.20%. This was followed by 6 years of single digit figures until 2009 when vacancy jumped to 10.8%. As of year-end 2010 the overall vacancy declined to 8.34% which equates to a net absorption of 272,720 sf. Greater Portland’s current retail vacancy rate, and as of year-end 2011 the overall vacancy further declined to 6.24% which equates to a net absorption of 166,589 sf. Greater Portland’s current retail vacancy rate, although still relatively high from a historic perspective, is tracking well below the national level estimated at 12.7%.

# Of Centers Square Footage

2003 48 4,507,484

GREATER PORTLAND RETAIL SPACE 2004 2005 2006 2006-2007 49 49 51 53 4,563,204 4,612,659 4,661,500 4,742,778

2008-2009 57 5,188,762

2010-2011 57 5,270,982

Historically Maine has consistently outperformed the national average. In our view this is likely due to the previous balance of supply and demand which was achieved over time. With the recent addition of large centers built in abundance and surprisingly close together, we now have an “excess” of retail space. The excess coupled with the cutback in consumer spending has had a devastating effect on demand for space throughout Southern Maine. A closer look at the data indicates that the older, smaller scale plazas have a much lower occupancy rate. With lease rates fluctuating or moving downward, there is an opportunity for the smaller businesses to move into larger better located space. Per Malone’s Survey the average Overall Lease Rate for Retail space is approximately $13.30/sf. for 2011, a decrease of 8% from $14.40/sf. in 2010. Furthermore, the 2011 figure represents a 45% drop from the 2006-07 high at $19.30/sf. Along with adjusting rents; landlords are forced to offer incentives to secure tenants. Examples include; free rent, TI allowances, and long term leases with no escalators or bump clauses, and caps on net expenses. With such discounts and incentives, actual lease rates are 15% to 25% less than the asking lease rates.

RETAIL EXPANSION Books-A-Million, So. Portland: 30,000 sf. opened in 2011, former Border’s Goodwill I, Windham:

New construction

Red Robyn, Scarborough:

New construction, opening 2012

Hampton Inn, Portland:

Old Port, 122 rooms

Tractor Supply, Windham:

New construction, 19,000 sf. on Route 302, opening in 1st Qtr 2012

Olympia Sports, Freeport:

140 Main Street

Nordic Theatre, Freeport:

6 screens, Freeport Village Station

Walgreens, Marginal Way:

12,500 sf. store, opening in 2011

Former Tweeter locale:

8,000 sf. redeveloped for Eyemart & Vitamin Shoppe, opened 2011

Reny’s, Topsham:

40,000 sf. in Topsham Fair Mall

295 Sebago Road Naples, Maine

-23-

Malone reports, while 2011’s vacancy rate has improved, it has not improved equally across all classes of retail. Power centers and strip centers have made more gains than community centers and single tenant (over 10,000 sf.) retail space. The vacancy rate for power centers and strip centers is 5.18% and 3.60%, respectively, while the vacancy rate for community centers and single tenant retail space is 9.6% and 11.29%, respectively. While vacancy appears to have moderated, new retail space for 2011 declined to only 34,090 sf. This marks a sharp decline from years past when on average, 144,106 sf. of new retail space was the annual norm. The primary retail center in southern Maine is the Maine Mall neighborhood in South Portland, anchored primarily by the Maine Mall, a two-million sf. enclosed mall with four anchor stores. There is a complex of smaller retail centers and freestanding retail stores surrounding the mall. This neighborhood has demonstrated continuous growth throughout the past decade. After two years with very little retail development activity, there are two new Maine Mall area projects that have been completed in 2010; a 34,000 sf. retail building at 85 Western Avenue (part of the Western Avenue Crossing retail center) and a complex of four pad sites surrounding the Wyndham Towers on Maine Mall Road. Two of the sites at Wyndham Towers are leased (Cracker Barrel and Chipotle’s Grill) while 85 Western Avenue now has all but one suite leased to Buffalo Wild Wings, Subway, Gentle Dental, Portland Nutrition Corner and Elevation Burger. In 2011, a Red Robin Restaurant was constructed in the Scarborough Gallery with an early 2012 opening planned. The Freeport village center area, anchored by L.L. Bean and factory outlet stores, is also a major shopping location and destination for many tourists. There are also shopping center neighborhoods around Exit 48 in Portland at the Westbrook line, along Route 1 in Falmouth, where a new retail complex was completed in 2001, in Scarborough at numerous locations to include Scarborough Gallery, Cabela’s at Exit 42 and along Route 1, in the Knightville section of South Portland, some limited development in Yarmouth along Route 1, and there is a shopping center adjacent to Exit 53 SHOPPING CENTER SALES 2003 – 2011 off I-95 in West Falmouth. Sebago Plaza, Windham: Meadow Mall, Boothbay: Gray Plaza, Gray: The Meadow Mall, Boothbay 42 Main St., Freeport: Mallside Plaza: 209 Western Ave.: Clark’s Pond: Maine Mall: Jetport Plaza: Cornerbrook: Shops @ W. Falmouth: Shop ‘N’ Save Plaza: Scarborough Marketplace: Bow & Main St., Freeport: Well Plaza, Wells: Best Buy Center, Topsham:

$1,200,000 ($73.76/sf.) $2,900,000 ($82.38/sf.) $1,750,000 (32.62/sf.) $2,900,000 (82.38/sf.) $11,500,000 ($478.67/sf.) $22,700,000 ($201.00/sf.) $4,627,000 ($293.00/sf.) $20,050,000 ($96.24/sf.) $270,000,000 ($270/sf.) $8,850,000 ($89.90/sf.) $4,600,000 ($105.60/sf.) $2,300,000 ($154.57/sf.) $9,000,000 ($160.70/sf.) $3,600,000 ($100/sf.) $10,500,000 $6,000,000 ($63.90/sf.) $9,425,000

The recent trend in retail development is to lessen the commuting distance from established residential areas by developing smaller easily accessible shopping centers. Examples of recent redevelopment in the past few years are Pine Tree Plaza and Westgate Shopping Center (both in Portland). Newly developed retail centers off the Maine Turnpike are the Shops at Biddeford Crossing at Exit 32, West Falmouth Crossing at Exit 53 in West Falmouth, and the Gateway Shoppes at Exit 42 in Scarborough.

With the abundance of new retail space on the market and the overall weakness in the economy, it is our position that the absorption of retail space will continue to be slow yet steady and most property owners will have to offer incentives to fill vacancies. In the Portland area, vacant retail spaces have begun to fill, and rents appear to be stabilizing, albeit at levels below those prevailing prior to the recession. Nationally, retailers are closely monitoring their portfolios and real estate strategies, most likely resulting in less expansion and increased consolidation of sites. According to The International Council

295 Sebago Road Naples, Maine

-24-

of Shopping Centers, 143,000 stores were actually closed in 2008 while 2009 had a decline of approximately 98,500. It’s important to note that ICSC estimates 112,000 in new retail establishments opened in 2008 resulting in a net loss of 31,000 stores. This same level of turnover has been experienced in the local market. In the Maine Mall area alone five national chains closed their store locations; Border’s, Office Depot, Circuit City, Linen & Things and Tweeter. In 2010 and 2011, however, several of these locations have been released to new occupants indicating positive absorption. Biddeford has also experienced some closings, to include Lowe’s in October of 2011. Smaller spaces in Biddeford have been absorbed in 2011 by occupants including Michael’s Arts and Crafts and Casa Fiesta Restaurant. Office The Greater Portland office market is represented by six major categories; Downtown Portland Class A and B, Suburban Class A and B, and Medical Office Class A and B space. The Boulos Company reports a total office inventory of ±11,653,065 sf. As of December 2011, the total office vacancy rate was estimated to be approximately 10.7% which is below the posted national average and that of nearby Boston Metropolitan Area and Southern New Hampshire. Prior to the beginning of the “Great Recession”, the best performing segment of the Greater Portland’s submarkets had been Portland’s Class A downtown space. Since 2008 this market segment has experienced a steady increase in vacancy: 2008 @ 4.2%, 2009 @ 6.2%, and 2010 @ 10.7% with yearend 2011 coming in at 14.6%. The Pierce Attwood’s vacancy of 80,000 sf. at Two Monument Square had a significant impact on the 2011 year end figure. Conversely Portland’s Class B office space retreated slightly this past year from 13.9% to 13.5%. Overall Downtown Portland’s vacancy ranges between 6% and 12% with the current overall Class A & B space at 12.6%. In 2007 and 2008, over 200,000 sf. of new medical office space was constructed. As a result, there was an abundance of Class B Medical space available. Many of Maine’s larger medical practices took advantage of ADA compliant and functionally correct space and vacated those older buildings. This exodus consequently resulted in 100,000 sf. of positive absorption and for the third consecutive year the vacancy rate has declined. Class A Medical office vacancy stands at a 1.3%, down from 2.4% in 2010 and 5.56% in 2009. Class B Medical remained stable for 2011 with a year-end vacancy level of 6.2%. Two examples of this continued expansion in 2011 include the Martin’s Point Health Center addition of 18,000 sf. to its administrative center at Washington Park and InterMed’s expansion of its Yarmouth facility from 15,628 sf. to 28,358 sf. Both of these expansions are representative of the continued growth within the medical office market segment.

295 Sebago Road Naples, Maine

-25-

Overall leasing agents report that demand for office space will be somewhat spotty again in 2012. The major component of demand for space will be generated by the expansion of local service industries. Southern Maine hospitals continue to grow thus resulting in positive absorption in this market segment. However developers and lenders are reluctant to move forward with new complexes without ±75% preleasing. Rents are thus expected to remain flat while vacancy will fluctuate at or near existing levels. There were several significant sales of prime OFFICE SALES suburban and downtown office properties prior to 2011 2008. While demand was stronger pre-2007, there 100 Waterman Dr. So .Portland $1,600,000 have been several large transactions recorded 155 Gannett Dr. So. Portland $3,650,000 236 Gannett Dr. So. Portland $945,000 between 2008 and 2011. Most recently sales have 700 Technology Way Scarborough $1,200,000 been more modest in scope with fewer transactions 443 Congress St. Portland $1,600,000 6-8 City center Portland $1,500,000 in excess of $3,000,000. Brokers report many property owners are unwilling to sell due to a lack of 2010 250 Commercial Street, Portland $2,100,000 alternative investment options. As a result there 1685 Congress Street, Portland $3,800,000 have been fewer investor orientated sales. 505 Fore Street, Portland $3,355,000 Northgate, Portland 10 Southgate Road, Scarborough

$2,650,000 $11,025,000

A year-end 2011 survey completed by CB Richard 2009 Ellis|The Boulos Company estimates a total of 110 Free St., Portland $3,500,000 ±11.65 million sf. of office space. Since 2005, ±1.6 300 Southborough Dr., So. Portland $9,600,000 1,2,3 Canal Plaza, Portland $31,000,000 million sf. has been added to the inventory. The 385 Congress St., Portland $6,300,000 newest addition to the market is Pierce Atwood’s 2008 redevelopment of Merrill’s Wharf with 95,000sf. 1 Schoodic Dr., Belfast $22,050,000 Other major additions to the market by way of One Cole Dr., Yarmouth $12,700,000 Hatley Road, Belfast $6,100,000 redevelopment in 2010 included MaineHealth 245 Commercial St., Portland $4,300,000 completion of 85,000 sf. at 110 Free Street and 645 Congress St., Portland $2,200,000 PowerPay’s renovation of the former Public Market. To follow is a summary of the Boulos 2011 report (year-ending December 2011) which breaks down the office market into six sub-markets.

Rentable Area 12/2006 Class A Downtown 1,767,081 Class B Downtown 2,551,567 Class A Suburban 3,240,147 Class B Suburban 2,075,228 Class A Medical 696,563 Class B Medical 310,873 Totals 10,641,459 Classification

GREATER PORTLAND OFFICE MARKET SURVEY (AS OF DECEMBER 2011) – ESTIMATED Rentable Rentable Rentable Rentable Rentable Area Area Area Area Area 12/2007 12/2008 12/2009 12/2010 12/2011 1,862,210 1,947,614 1,931,776 1,931,776 2,026,776 2,562,245 2,507,742 2,501,664 2,596,358 2,553,623 3,324,070 3,398,345 3,417,269 3,497,099 3,553,310 2,100,692 2,306,095 2,394,125 2,430,144 2,540,905 719,363 787,460 787,392 854,225 808,151 310,873 310,444 311,680 272,856 260,300 10,879,453 11,343,906 11,343,906 11,582,458 11,653,065

Industrial Greater Portland has gradually been shifting from a manufacturing to a service-based economy. Over the past decade the trend has been accelerating. Still there is evidence of an industrial and distribution market segment. Against the backdrop of closures we have examples of new construction of large industrial buildings (most constructed in

Available Observed Space Vacancy 295,359 344,165 276,870 191,395 10,467 16,189 1,134,445

14.57% 13.48% 7.90% 7.81% 1.30% 6.22% 9.73%

MARKET SUMMARY Total # of Buildings: 473 Total Market Size: ±15,166,204 sf.* Direct Vacancy: ±1,192,680 sf.** Total Vacancy 7.86% * Totals as of April 1, 2012 per NAI The Dunham Group Industrial Market Survey ** Totals as of April 1, 2012 per New England Commercial Property Exchange

295 Sebago Road Naples, Maine

-26-

2005-2008). Recently however, brokers report essentially little demand for industrial zoned lots. At this juncture there is ample standing inventory ready to satisfy demand. Sales are limited; however there is moderate activity in the leasing sector. NAI The Dunham Group recently completed an Industrial Market Survey for Greater Portland. Within this study, the competitive industrial market was defined as; Portland, South Portland, Westbrook, Gorham, Scarborough and Saco. NAI Dunham’s survey tallied the total industrial inventory within this area at 15.17 million sf. The majority of this inventory is contained within 17 parks or clusters with Pleasant Hill in Scarborough containing the largest stock at 1,225,100 sf. Using the New England Commercial Property Exchange as a source, NAI The Dunham Group survey concluded an overall vacancy rate and average rental rate per sf. for each community. The following table summarizes their findings. VACANCY SURVEY – AS OF APRIL 1, 2012 Town

Rentable

Available SF

Direct Vacancy

Avg Rental Range NNN

Gorham

859,421

70,975

8.3%

$5.73

Portland

6,022,644

673,517

11.2%

$4.98

Saco

1,278,302

23,152

1.8%

$6.25

Scarborough

2,207,318

65,085

2.9%

$5.48

South Portland

2,683,936

233,282

8.7%

$4.76

Westbrook

2,100,583

126,669

6%

$5.59

Totals

15,166,204

1,192,680

7.86%

$5.47 average

Evidenced by the survey, Saco is experiencing NATIONAL & REGIONAL DIRECT VACANCY RATES the lowest current vacancy rate and the highest United States Vacancy Rate: 13.5% average rental rate. The survey also concludes Northeast Vacancy Rate: 14.0% that Portland has the highest current vacancy Boston Vacancy Rate: 14.5% rate at 11.2%, followed by South Portland at 8.7%. Both Portland and South Portland have a Greater Portland Vacancy Rate: 7.86% considerable amount of inventory that is dated Per data collected from NAI Global, Jones Lang LaSalle and CBRE International or functionally inadequate thus influencing the vacancy and rental rates within these cities. The industrial parks that are populated by modern functional industrial buildings have the lowest vacancy rates (Five Star, Evergreen IP, etc.) while the older parks and clusters (Presumpscot Street & Warren Notable Sales Transactions 2011 Avenue) have the highest levels of vacancy. Although Goodwill purchased 34 Hutcherson Drive in Gorham, a the survey provides good insight into the overall market, 142,484 sf. facility for $4,100,000 or $28.78/sf. the results can often be skewed by a single large JHR purchased a 200,625 sf. facility at 56 Milliken property being vacated. It is also recognized that the Street in Portland for $6,457,000 or $32.18/sf. quoted vacancy rates within the survey are calculated Candew LLC purchased 299 Presumpscot Street in based upon the available for lease inventory noted in Portland, a 40,435 sf. facility for $1,275,000 or $31.53/sf. NECPE, which does not include every vacant space in the market. 465 Maine Street LLC purchased 865 Spring Street in Westbrook, a 73,154 sf. office and warehouse facility for $2,800,000 or $38.28/sf. Alpine R.G. purchased 1 Rice Street in Portland, a multi tenant warehouse for $1,750,000 or $30.32/sf.

Within Greater Portland the industrial market is an enigma. There is data suggesting a balanced market with some evidence of new construction. At the same time there are numerous business closings and as of Year-end 2011 there was approximately 2 million sf. of

295 Sebago Road Naples, Maine

-27-

available space. From a National and Regional perspective, the Greater Portland Industrial Market is outperforming these sectors. One can only conclude that although a significant change has occurred, Greater Portland remains fairly well positioned. Projecting forward into 2012, brokers are not overly optimistic of a substantial change. They anticipate flat rental rates with landlord concessions necessary in oversupplied areas. New construction will be sporadic and lease rates will be flat with only minimal escalators factored into the contract. It is hoped that favorable interest rates will encourage more construction activity as owning vs. leasing may cost less with a solid capital down payment. This may help to stabilize pricing. Multifamily Properties The multifamily investment market has cooled during the past several years; however there was an increase in activity in 2011. Multifamily sales in the City of Portland (per MLS) consisted of 96 transactions with a total of 234 units. In the Commercial (5 units or higher) market segment there were a total of 11 known sales. Their price per unit was an average of $61,883. Rents have effectively stabilized and operating expenses, specifically real estate taxes, insurance and utility costs have continued to creep upward. The majority of Portland’s multifamily inventory is comprised of 19th and early 20th century 2 to 6-unit buildings. Most are well maintained but need ongoing maintenance to meet renters’ expectations. The larger projects, say 20 to 100 units, are a mix of circa 1940 converted military housing and fairly modern 50 to 100-unit projects, constructed throughout the city. John Graham of Sullivan Multi Family Realty reports current vacancy levels for Portland multifamily properties is less than 4%. For Biddeford, the rate stands at 10 to 15% and in Lewiston/Auburn, 20 to 25%. Historically Portland has always fared better than its competition to the north and south. A recent published survey from Sullivan Multi Family Realty cited the following rental rates applicable to the Greater Portland market. GREATER PORTLAND RENTALS RATE - YEAR-END 2011 1-Bedroom

2-Bedroom

3-Bedroom

Heated

Unheated

Heated

Unheated

Heated

Unheated

$767

$656

$858

$819

$950

No data available

The condo market has remained flat with very few conversions. Development of large projects has been stymied, mostly as a result of the economic conditions. Numerous Portland peninsula apartment buildings have been converted to condominium ownership during the past several years. This has reduced the urban rental stock substantially.

Portland Condominium Conversions ±700 apartment units have been converted into condominiums January 2002 - December 2008

The City of Portland took an aggressive posture and established a goal in April 2002 to create ±4,267 units over the next 10 years. They created an R7 Zone, which allows for a higher density of units per sf. of land area. In addition, new commercial projects must create housing units as an adjunct to the proposed development. In the last five years, city planners and leaders have effectively brought this acute rental housing shortage to the public, attracting a number of development proposals. Almost all of the proposed developments include some affordable units, as it is still considered unfeasible by most developers and investors to develop market-rate units, except luxury units that rent for ±$1,500 and up. With a combination of low income housing tax credits (LIHTC), low interest rate loans and grants,

295 Sebago Road Naples, Maine

-28-

development of affordable housing is feasible. The government subsidies on these projects support the market-rate units that are built in the same projects. Thus far, the completed development has been absorbed without dramatically increasing the area’s vacancy rate. The consensus between city planners and housing professionals is that there is sufficient demand to absorb all of the remaining proposed units, and more, within a very short period of their completion date. CONCLUSION Greater Portland is the economic engine that drives the state of Maine. The region’s coastal location, amenities and educated workforce led to its development as the state’s financial and retail center. This status is not expected to change. Locally, there appears to be sufficient demand to absorb well located and well performing properties. Local lenders have continued to lead in supporting purchase and refinancing activity in the area. These institutions appear to have the capacity and motivation to fund acquisitions of commercial properties to qualified borrowers. This activity may be selective, however, as buyers can choose among the bestlocated and most appealing properties. The Federal Reserve Board has lowered rates and is prepared to do what needs to be done to assure that the credit markets are well funded. As of mid-year 2012, the economy appears to be in a slow recovery mode with the commercial real estate market stabilizing. TOWN OF NAPLES The Town of Naples is located ±25 miles northwest of Portland, in the center of the "Lakes Region." It is a rural community, ±32 square miles in size, and is bordered by the communities of Bridgton, Harrison, Sebago, Casco and Raymond. There are many lakes and ponds or portions thereof, in the Town of Naples, which makes it an attractive destination for summer residents and tourists. Naples contains ±50% of Long Lake, 100% of Brandy and Trickey Ponds, a portion of Peabody Pond and a very small portion of the northern most part of Sebago Lake, Maine's second largest and most popular lake. Long Lake is connected to Brandy Pond via a very short waterway which is crossed via an arched bridge known as “the causeway." One can travel in a southerly direction via boat on Brandy Pond to the Songo River which empties into Sebago Lake. This chain of lakes and rivers is very popular for summer residents, tourists and boaters. There are several marinas that are located near the causeway on Long Lake and Brandy Pond, which is evidence of the seasonal interest in this area of Naples. Access to Naples is gained via major traffic Route 302 which runs east to west from Portland to Bridgton, and then to Fryeburg. The town is accessed via Route 114 from Sebago, and Routes 35 and 11 from Harrison and Casco. The year-round population, according to the 2010 Census, is ±3,872, an 18.3% increase from the 2000 Census figure of 3,274. The summer population swells in excess of ±12,000, which provides a substantial boost to local retailers, according to town officials and market participants. Many summer residents occupy lakefront cottages, and campground sites or trailers. The major employer, other than seasonal retail and service businesses, is the local school district. Most other employment in Naples is generated by small retail or service businesses. Many residents commute to the Greater Portland area for employment. Needless to say, tourism is a major factor in the area's economy and development. The area is popular for visitors and as a second home (vacation home) retreat.

295 Sebago Road Naples, Maine

-29-

Naples has a "Selectman" form of government and small, full time staff in the Town Office. There is a volunteer fire department and police protection is provided by the Cumberland County Sheriff's Department. Area children attend local elementary schools and the Lakes Region High and Middle Schools located on Route 302 in Naples, near the Bridgton town line. Lakes Region High School also serves several abutting communities. Naples does not have a fully developed zoning ordinance, akin to other Greater Portland towns and cities. There is Shoreland Zoning in addition to a Site Plan Review Ordinance. The primary retail focal point of Naples is at the Causeway. There are several retail shops and restaurants, as well as tourist attractions such as the Songo River Queen, a touring paddle boat, many marinas, boat rental and seaplane rides. Most of the retail and service establishments located at the causeway are seasonal businesses. Approximately a half mile east of the causeway is a strip development on Route 302. This development provides an array of tourist oriented businesses, convenience stores, lodging facilities, gasoline service stations, and specialty and general retail facilities. Neighborhood The subject is located 1.5 miles southerly of Naples’ causeway between Brandy and Trickey Ponds with Long Lake to the north and Sebago Lake to the south. The area is dominated by seasonal camps and cottages with recreational uses dotted among them: golf course, campgrounds, miniature golf, boys and girls summer camps, marinas, seasonal retail and restaurants. The water frontage has the highest concentration of camps and cottages on typically small sites with the interlaying land heavily wooded of large estate size parcels and woodlots. The infrastructure is a mix of State, Town and private roads. Most sites require onsite water supplies and private septic systems. The major thoroughfares are typically State maintained while the interior and connector roads are Town and privately maintained. The neighborhood is serviced by quasi public power, phone and cable. In addition the neighborhood and outlying areas are serviced by wireless phone and internet providing there are no physical interferences. However most service maps indicated there is good coverage in the subject’s neighborhood. Development or expansion of the neighborhood has been slow at best given the seasonality of the area and the lack of stable year round work. Most commute to larger employment areas of Windham, Portland, Norway-Paris or the Mount Washington Valley in New Hampshire. Naples is part of a regional school system with high, middle and grade schools within Naples that are shared with the towns of Bridgton, Casco and Sebago. Both the high and middle schools are underperforming schools thus they are on a state mandated watch program.

295 Sebago Road Naples, Maine

-30-

PUBLIC AND PRIVATE RESTRICTIONS The Town of Naples does not have fully developed zoning regulations. It does have mandatory Shoreland zoning. There are four districts within the Shoreland zone: resource protection, limited residential, limited commercial and stream protection. A portion of the subject is located in the Shoreland zone, however the existing campground sites and proposed sites have excluded this area and it does affect the overall utility. Per the Town of Naples’ zoning map the subject is located in the Rural” district, however there are no regulations specific to the district beyond the general lot size and setback requirements outlined below. The Town of Naples describes the “Rural” district with the following statement: Limited Residential Area. Home occupations and commercial activities in the rural area are grandfathered for their present use. Forestry, agricultural activities and residential uses except for mobile home parks are allowed in the rural area. Excessive growth and sprawl should be discouraged in the rural area. Space & Bulk Requirements Minimum Lot Size: Minimum Road Frontage: Minimum Front Yard Setback: Minimum Side Yard Setback: Minimum Rear Yard Setback: Maximum Height:

40,000 sf. for a single-family residential unit 100’ 20' 20' 20' 55'

The subject predated current zoning. Zoning was approved in 2008. Campgrounds are not a permitted use in the subject’s rural zone. The subject is legally non-conforming. Per Naples Planning Board minutes (August and September 2008) the subject’s 2 parcels were combined prior to the enactment of the current zoning thus the campground could expand onto the parcel purchased in 2007 (28.2 acres).

295 Sebago Road Naples, Maine

SITE DESCRIPTION

-31-

PROPERTY DESCRIPTION The subject site is located on the westerly side of the Sebago Road and southerly of the Family Circle Road. Per survey it contains 54.3 acres with ±450’ of frontage on the Sebago Road. Family Circle Drive is a private road owned in fee by the subject but with a right of way for the benefit of others.

The site is very irregular in shape but not adverse. Currently the primary portion of the site is improved with a 111-site seasonal campground that contains 26.1 acres. It extends ±2,050’ from Sebago Road to within ±175’ of Trickey Pond. The width varies from ±220’ to ±750’ at its widest point. Family Circle Drive runs along the northerly sideline entirely on the site for ±950’ from the Sebago Road to an adjoining campground, Loon’s Haven Family Campground. The maintenance of the roadway is the responsibility of Loon’s Haven campground. The second section of the campground contains 28.2 acres. It is adjacent to the existing campground along the southerly sideline for ±75% of its length. This section is “hatchet” shaped with 2 rectangular sections of good utility. The northerly section is ± 1,600’ on the northerly sideline and ±850’ on the southerly portion of the “head” with an average width of ±750’. The handle section is ±370’ wide x ±730’ long. The topography has an overall relief of ±70’ from Sebago Road to the height of land ±75% into the site. It falls away to the west from a ridge that runs northerly through the site. The site is heavily wooded with mix of hardwoods and softwoods in both the developed and undeveloped sections. There is a single gravel roadway that enters from Sebago Road to about midway into the existing campground where it forms a figure eight with a short spur to the north. The camp sites are found primary on the westerly section along the roadway with 13 sites near the entrance. They are typically 40’ x 65’ with a level pad site of crushed stone and gravel. All are serviced by sewer, water, 50 amp electric (metered), cable and WiFi. There are 2 playgrounds on the westerly and easterly sides. There is an open space area on the most easterly section at the entrance due to wetlands and vernal pools. The campground is serviced by a private water system with storage tanks in the basement of the store. There is a septic system with 6 leach fields throughout the campground. Most are gravity while some sections requiring pump systems to reach the fields. IMPROVEMENTS Office/Store/Owner’s Quarters

The office is located in the center of the existing campground. It contains 1,568 sf. on 2 levels over a full basement. The exterior is horizontal pine tongue and groove, double hung or by-pass thermopane windows, glass and steel doors and gabled roof covered with asphalt. There are 2 overhangs for cover over firewood and walk-in cooler and freezer. On the northerly side is a deck with translucent panels for a roof. There are pavers at the entrance out to the swimming pool. The interior is an open floor plan with an office area, store, kitchen, private bathroom and public

295 Sebago Road Naples, Maine

-32-

bathroom with an exterior and interior access. On the second floor is a loft bedroom. There is a stone hearth and wood stove. The finish is typically painted OSB flooring, pine tongue and groove walls and sheetrock ceiling. The kitchen area has a 9’ stainless steel hood, gas stove, 20” grill/pizza oven/fryolator, sandwich prep counter and assorted coolers and freezers. There is a full basement accessed from the interior. It contains mostly the mechanicals for the store and campground: 400 amp electric, water pressure tanks, 4 water storage tanks, Rennai/LP on demand hot water. Overall the building is good condition. Swimming Pool

The swimming pool is located between the store and the recreation hall. It is a heated 60’ x 30’ gunite pool with a maximum depth of 4.5’. There a concrete paver deck surrounding the pool and a chain link fence. There is a small pool shed for the pump and filtration system. The pool is heated with an electric heat exchanger. There is a dry hydrant on the exterior connected to the pool.

Recreation Hall

The recreation hall is a steel and wood frame on a slab with 3,576 sf. The exterior is covered with horizontal pine tongue and groove, steel doors with glass, awning windows, asphalt shingle roof with vent cupolas. There is a covered patio along the southerly side next to the pool. There is concrete paver patio connecting to the swimming pool. The interior is a vaulted ceiling in the rec. hall with exposed steel trusses, plastic covered insulation on the ceiling, pine and tongue groove walls and concrete floors. There are men and women bathrooms, card room and video and pinball arcade. This section has similar finish except with sheetrock ceilings. The recreation hall is unheated. Bath Houses

There are 3 bath houses in the campground, each strategically located within a short walk from the camp sites. They are wood frame with a concrete slab over a frost wall foundation. They are typically horizontal pine tongue and groove, by-pass windows, gabled roof covered with asphalt shingles and steel doors. The interior has men and women bathrooms with private stalls and/or urinals, sinks and a handicap stall, 2-3 pay showers and coin operated laundry. The finish is typically ceramic tile flooring, sheetrock ceiling, pine shiplap walls. Hot water is on demand propane.

295 Sebago Road Naples, Maine

Recycling Shed

L P Tank

Campsite

-33-

This a wood frame shed with 216 sf. built on post. The exterior is horizontal pine tongue and groove, asphalt shingle roof and glass entry doors. The interior is open stud and trusses.

The liquid propane tank is 1,000 gallons. There is a chain link fence surrounding the tank. It is utilized for the sale of propane to campers. It is located some distance from the store. The campground owners fill the tanks only a couple a times a day. Otherwise the campers can borrow a replacement tank until such time the empties can be filled.

Typical campsite is level with crushed stone surface. They are typically 40’ x 65’ with little to no buffer from one site to the next. Most back up to a wooded area. Each site is serviced with sewer, water, 50 amp electric that is metered, cable and there WiFi throughout the campground. The adjoining campground does not have WiFi and some campers purchase an access code for the season.

Proposed Expansion There are no formal plans available for the proposed expansion of the campground. The owners have provided a conceptual plan for another version but it is to be redesigned but with some of the basic design layout. There will be 45 sites with full hook-ups, 1 bath house with laundry. A group site to handle ±20 campers is proposed with no hook-ups but water and electric provided. Within the proposed 45 new sites are 15 pull through sites for the larger RVs. There is reported adequate water capacity in the community system to expand. The expansion will be located on ±14 acres of the 28.2 acres parcel to the rear of sites # 21 to #29 with an access road between sites #12 and #22. There is an estimated 2,000’ of roadway or ±44.5’ per site. The owner has estimated a cost of $595,000 for the expansion. As noted the owner has their own heavy equipment and is a licensed septic system installer in the State of Maine. The cost includes all the infrastructure needs for the 45 new sites including but not limited to roads, sewer line, septic system, electrical, water lines, bathhouse, site preps, amenities i.e. drive-in movie area, disk golf, basketball court, shuffleboard, skateboard area and pond. There are also access roads for Phase II although not essential at this time. The campground owners have considerable sweat equity in the existing and proposed sites. The cost would be considerable higher if outside contractors were to complete the work so much so it might not

295 Sebago Road Naples, Maine

-34-

be financially feasible. The subject is one of the more modern campgrounds in the State of Maine. The skill level of the owners has made most of this possible whereas similar campgrounds could not complete the infrastructure to the level of the subject. Summary The subject is a 111-site campground (approved for 116) on 54.3 acres with ±450’ road frontage. The campsites are all full service of water, electric, cable, WiFi and sewer. The interior roads are crushed stone. The campground is supported by three bath houses/laundries, camp office/store/owner’s quarters, recreation hall, shed and storage yard. The structures are in good condition. The proposed 45 sites and group campsite is/will be well planned based on the design of the existing campground and support structures. There will be ±14 acres of remaining land after Phase 1 is completed. The overall marketability and appeal is considered good benefiting from its Lakes Region location. The subject’s grandfathered status provides a competitive advantage i.e. expansion. SUMMARY OF SITE CHARACTERISTICS Land Area

54.3 acres

Shape

Irregular

Road Frontage

±450’ (scaled)

Accessibility/Visibility

Average

Topography/Soils

Level to sloping; adequate

Flood Plain Utilities

Zones C; none of the is in a SFHA per FEMA Map #230050-0015 and 18 B, dated 4/01/82 Public electric, private onsite septic systems and water, cable, WiFi

Easements

Typical and not adverse

Environmental Concerns

Assume that the property is in compliance with applicable laws, rules and regulations

Zoning

Rural, legally nonconforming

Functional Utility

Adequate functional utility for commercial uses SUMMARY OF BUILDING CHARACTERISTICS

Building

Store/Office/Owner’s Quarters: Wood frame Recreation Hall: Wood and steel frame Bath Houses: Wood frame Recycle Shed: Wood frame

GBA

Store/Office/Owner’s Quarters: 1,568 sf. Recreation Hall: 3,576 sf. Bath Houses: 2@ 560 sf. 1@ 864 sf. Recycle Shed: 216 sf.

Year Built/Condition

Store/Office/Owner’s Quarters: 2004 Recreation Hall: 2007 Bath Houses: 2004 Recycle Shed: 2004

Foundation

Store/Office/Owner’s Quarters: Full Recreation Hall: Slab Bath Houses: Slab Recycle Shed: Post

Exterior Walls/Roof

Store/Office/Owner’s Quarters: Pine T&G, asphalt Recreation Hall: Pine T&G, asphalt Bath Houses: Pine T&G, asphalt Recycle Shed: Pine T&G, asphalt

295 Sebago Road Naples, Maine

Interior Finish

HVAC

Electrical System

SUMMARY OF BUILDING CHARACTERISTICS

-35-

Store/Office/Owner’s Quarters: Pine T&G, Sheetrock, OSB Recreation Hall: Pine T&G, open frame, sheetrock, concrete Bath Houses: Pine shiplap, ceramic, concrete Recycle Shed: Open stud, OSB Store/Office/Owner’s Quarters: FHA/propane Recreation Hall: None Bath Houses: None Recycle Shed: None Store/Office/Owner’s Quarters: 400 amp Recreation Hall: Off store Bath Houses: 100 amp Recycle Shed: None

Special Features

Store/Office/Owner’s Quarters: Hearth Recreation Hall: None Bath Houses: None Recycle Shed: None

Functional Utility

Store/Office/Owner’s Quarters: Good Recreation Hall: Good Bath Houses: Good Recycle Shed: Good

SPECIAL NOTATION REGARDING HANDICAP ACCESSIBILITY Please note that the Americans with Disabilities Act took effect on January 26, 1992 (please see Item 13 in the Underlying Assumptions and Limiting Conditions section), which requires that properties be accessible to the handicapped. Items of particular interest within a building include 32" minimum width doors with push/pull or lever hardware and maximum ½" threshold sills, signs in Braille, adequate maneuvering clearances and unobstructed travel paths in corridors, etc. Interior space must have nonslip hard surface floors, maximum ½" carpet pile; customer service counters 36" above the floor, water fountains that are 36" above the floor and visual alarms. Elevators, if any, must be marked in Braille, have a wheelchair radius of 51" and controls that are not more than 48" from the floor. Stairs must have a minimum tread of 11" and full extension handrails on both sides. Restrooms must be near the building entrance and doors must be a minimum 32" wide. They must contain a wheelchair stall (54" x 56") with grab bars on the side and back 32"-36" above the floor, sinks 30" high with recessed pipes, soap dispensers and towel 48" above the floor and lever, push or automated type faucets. The property site must have adequate parking with signage that is mounted high enough to be visible over vehicles and a minimum 5' x 8' wide aisle to the building entrance, as well as a "drop off" zone. Curb ramps must be a minimum 36" wide and cannot be obstructed by grates, etc. There must be ramps or lifts to the door, if necessary. Certain types of properties have specific guidelines. The above listed items are minimum requirements. In summary, the property must be "readily achievable", which is open for interpretation because it involves considerations of cost, size of the company, number of employees and financial ability of the owner, because the owner's financial ability to correct barriers to public access is a factor in the extent to which his building must comply.

295 Sebago Road Naples, Maine

-36-

AMERICANS WITH DISABILITIES ACT - ISSUES Subject Property Compliance Are designated handicap parking spaces present? No Are wheel chair ramps or door lifts present? Yes Do door widths and door hardware (push/pull levers) appear to be adequate for handicap accessibility to Yes the entrance of the building, service areas, and bathroom facilities? Are bathrooms designed to accommodate the disabled, i.e., raised toilet seats, grab bars in stalls, insulated Yes lavatory pipes beneath sink, height of soap and paper cup dispensers, and towel bars obtainable? Are full extension hand rails present on both sides of stairwells? Yes Are elevators designed for handicap use, i.e., controls no more than 4' from the floor, markings in braille, Yes/Pool and of sufficient width for wheelchair access (4.25' wide)? Are floor surfaces hard or comprised of low pile, high density carpeting? Yes Are paths of travel free of obstruction between desks, entrances, and corridors? Yes

As currently configured, the subject improvements do meet all of the cited requirements of the Americans with Disabilities Act.

295 Sebago Road Naples, Maine

-37-

HIGHEST & BEST USE ANALYSIS Prior to the completion of the approaches to value, a determination of the property's highest and best use (or most probable/profitable use) must be completed. The highest and best use conclusion provides the premise from which the property value estimate is derived. The definition of highest and best use as recognized by the Appraisal Institute is: AThe reasonably probable and legal use of vacant land or an improved property that 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. Alternatively, the probable use of land or improved propertyCspecific with respect to the user and timing of the useCthat is adequately supported and results in the highest present value.@ (The Dictionary of Real Estate Appraisal, 5th ed.)

1.) 2.) 3.) 4.)

Physically Possible: What uses are physically possible on the site? Legally Permissible: What uses are legally permissible under current zoning and deed restrictions on the subject site? Financially Feasible: Which uses produce a positive return on investment? Maximally Productive: Of the financially feasible uses, the use that produces the highest residual land value consistent with the rate of return warranted by the market for that use.

As previously defined, highest and best use is that reasonable and probable use which will support the highest present value as of the date of the appraisal. Alternatively, it is the most profitable and likely use to which a property can be put. In order for a use to fit this definition, it must pass all the phases of the analysis, i.e. physically possible, legally permissible, financially feasible use, and it must be maximally productive; the most profitable use amongst the competing alternate uses. To complete a highest and best use study, the site and improved property must be considered separately. Since they may not have the same highest and best use, a value must be established for each, based on the principles of valuation. The following analysis will provide a basis for the estimation of the present worth of the improvements as it relates to the property value as a whole. SITE AS IF VACANT AND AVAILABLE Physically Possible and Legally Permissible Uses The subject site contains 54.3 acres with a total of ±450’ of road frontage. It is accessed via a public road. It is irregular in shape but not adverse. The topography is level to sloping with an elevated ridge line running north to south. There are average soils with designated vernal pools. The subject is located in the Rural zone which limits the uses to residential and agricultural. A small portion along the westerly sidelines is within the shoreline zone (Trickey Pond). Financially Feasible and Maximally Productive Uses The demand for residential housing is moderate at best under the current economic condition. There have been only 6 single family building permits granted year to date for the Town of Naples. For the years 2009 to 2011 there have been 32, 14 and 11 single family building permits respectively. There has been no formal residential developments before the Naples Planning Board in the past ±3 years. Most construction has taken place in pre-existing developments or from simple splits along existing town and private roads. The most productive use for the subject is a large estate size parcel, woodlot or hold until such time development is feasible or the market warrants.

295 Sebago Road Naples, Maine

-38-

AS-IMPROVED ANALYSIS Physically Possible and Legally Permissible Uses The subject is approved for 116 sites of which only 111 have been developed and are operational. There is additional area for expansion. There is an adequate water supply and soils (septic system). There are areas of unsuitable soils due to wetlands (vernal pools). The subject is legally nonconforming as it pre-existed current zoning. Any commercial use can expand in the Rural zone if it were in operation prior to the enactment of zoning (2008). The subject was purchased in 2 parcels and joined prior to the enactment of zoning. It was determined (planning board minutes) that since the 2 parcels were joined prior to zoning that the grandfathered use could expand into the second parcel. Financially Feasible and Maximally Productive Uses The subject has averaged 81.7% occupancy since commencing full operation in 2005. The last three years (2010-2012) it has averaged 86.3% occupancy. Most of this high occupancy level is due to the ±72 seasonal campsites whereas a campsite is rented out for the entire season (May to October). The remainder are transient (daily) and 5 week specials. Per the owner the town of Naples asked that the campground be limited to only 80% seasonal so as to eliminate the potential of a formal “trailer park”. It is noted however that mobile home parks are not a permissible use in the Rural zone per zoning. The subject has attracted a loyal following. The campsites are all full service with sewer (septic), water, electric (50 amp) and cable with WiFi available. There are no primitive sites (tenting, pop-ups, group sites). Most inland campgrounds (non-coastal) typically only enjoy 40% to 60% occupancy levels. There subject is fairly new with modern bath/laundry houses, recreation hall with a game room and an in-ground heated swimming pool. The campground operates with theme weekends and there is a recreational director during the high season. The campground has a 4-star rating from Woodall’s out of a possible 5 stars which is due in part to not having an asphalt roadway. The subject continues to operate at or near capacity. There is a consistent income stream. There is the potential for expansion. Based upon the historic success and anticipated expansion the most productive use of the subject is the continued use of the legally non-conforming campground with planned and future development that satisfies demand.

295 Sebago Road Naples, Maine

-39-

THE APPRAISAL PROCESS Once the highest and best use of a property has been determined, the appropriate valuation approaches are applied to the subject, each of which forecasts a value estimate. To complete an appraisal the one approach to value is employed, the income approach. Certain hybrid valuation techniques for specialized properties are categorized as one of these three approaches to value. The approaches are described as follows. Sales Comparison Approach The sales comparison approach, as the name suggests, compares the sale of similar and comparable properties, to the property being appraised to provide an estimate of value. This approach is widely applicable to vacant land valuation, as well as most improved property types for which a market exists. The approach is based upon the economic principle of substitution, that is, the property with the lowest price enjoys the greatest demand. It affirms a competitive marketplace, and relates value to the prevailing market prices, established and exhibited by comparable sales. The specific application and technique is described with the use of the approach. This approach relies upon an active market for the type of property being appraised, for the underlying data. Cost Approach The cost approach is applicable to improved properties. In this approach, land value is determined separately via the sales comparison approach or other recognized valuation models. The cost of the property’s improvements are estimated as if new. Depreciation is deducted from cost new to arrive at the current contributory market value of the improvements, which added to land value provide the indication of value. In a broad sense, depreciation is the difference between cost new and value. Depreciation takes three forms: 1.) 2.) 3.)

Physical Depreciation from factors of age, wear and tear, and deferred maintenance; Functional Obsolescence caused by design, or the use of materials, either in excess or insufficiency; and Economic Obsolescence, caused by market conditions in the environment surrounding the property, but not the property itself.

The approach is specifically well suited to special purpose properties for which a limited market exists and is generally more reliable when the improvements are newer. The underlying rationale applies when a prospective property purchaser would consider developing a property new, as part of the consideration of alternatively buying an existing property. The approach is applicable only if the property is improved to its highest and best use. Most of the inputs for cost and depreciation are derived from market data using a variety of extraction techniques. Income Approach The income approach is applicable to value properties that are either leased for the production of income or operated for the production of income, and therefore appeal to investors. An office building, apartment, or warehouse may be leased to a tenant producing income, or a restaurant, motel/hotel, or a convenience store may be operated to produce an income. In this approach, the property is viewed as an investment and its ability to maintain an income stream become the primary criteria. The quantity, quality, and duration of the income stream are primary determinants. While there are a number of specialized valuation models for various property types, they fall primarily into two valuation model categories:

295 Sebago Road Naples, Maine

-40-

1.) Static valuation models; and 2.) Dynamic valuation models. In a static model, a single current year’s income is evaluated and stabilized, then converted to value using the formula: Value = Income / Rate (V = In / R) There is a variety of rate development techniques described in the application. The dynamic valuation model is also known as the Discounted Cash Flow technique (DCF) and involves forecasting a series of annual incomes less the applicable expenses to produce a series of annual net cash flows. The cash flows are discounted to a present value and added to the discounted assumed future sale of the property (known as the reversion) to produce an indication of value. The DCF models accommodate varying assumed conditions, is especially suited to anticipated irregular cash flows, and is widely used when lease by lease analyzes are required. The approach is often the preferred approach for income producing properties. Reconciliation of Value The type of property appraised, and/or the scope and format of the appraisal assignment dictate which of the valuation approaches are used and are applicable in any given appraisal. If multiple value approaches have been applied, this section evaluates each of the approaches developed to a single valuation conclusion. The appraiser’s rationale is summarized, and typically is based upon the applicability of the specific approaches to the property and the quality of data available for use in each of the approaches. Specific Application The income and sales comparison approaches have been completed. Given the steady income source, the income approach is considered the most appropriate valuation model for this analysis. The sales approach is also considered and given equal consideration given the owner-operated nature of campgrounds. The cost approach was not completed due to the varying ages of the structures, the unique nature of the campground and all forms of depreciation. The appraisal assignment requested is for the as is value (day of inspection), value upon completion (all infrastructure completed for the new 45 sites and amenities) and the value upon stabilization (subject fully operational-existing sites and new sites). The as is value is November 9, 2012. The as completed is May 1, 2014 and the date of stabilization is May 1, 2015. I will first value the subject upon stabilization. There is excess land in all 3 scenarios. This will be valued separately and lumped sum at the end of the valuation section.

295 Sebago Road Naples, Maine

-41-

INCOME APPROACH The income approach to value is based upon the rationale that a relationship exists between the amount of income a property can generate and its value. The first step in the income approach is to estimate the property's gross rent that can maximally be achieved, measured from current and historic performance and the marketplace. A vacancy and collection loss is applied, to reflect what income may actually be collected, allowing for vacancy. The result is called effective gross income. Expenses that the property owner can be expected to incur, to include a reserve for building component replacements, are estimated and deducted from the income stream, resulting in an estimate of net operating income. This term is referred to as the net operating income, or NOI. The NOI is converted into value by either a static capitalization rate or a dynamic capitalization technique, the discounted cash flow technique (DCF). The static technique views one year's income and converts it into value by means of an appropriate capitalization rate. There are a variety of applicable techniques available to estimate a capitalization rate, often depending upon the specifics and its value. This relationship is often expressed as a rate, or capitalization rate, and may be measured directly in the marketplace, assuming adequate data, or synthesized based upon a variety of related assumptions, common to income property ownership. The yield capitalization, or discount rate technique, projects a series of net incomes for a number of future years, normally a typical holding period. The resultant series of cash flows are then discounted to an indication of present worth. The total of the present worth of the cash flows and the present worth of the reversion are totaled for the indication of value. A reconciliation will then occur, evaluating the quality and applicability of each technique to determine a singular value conclusion. This section presents the income approach for the subject property. For this analysis, the direct capitalization technique is selected as the most applicable for use in the valuation of the subject. CAMPGROUND Competitive Environment The subject competes in the recreational camping environment. It is a modern campground with a split between seasonal campers and transient campers. These are typically located in a setting adjacent to, or in close proximity to, other amenities, i.e., beach, mountains, lakes, etc. Full service campgrounds typically include water, electric and sewage hook-ups at a percentage of their sites. This varies depending upon the location and the market segment for which they compete. The remaining sites typically offer water nearby with centrally located bathrooms/showers. The direct competition for the subject would include, in general, the inland region of Maine. This geographic area allows day trips in and around the lakes region and interior Maine which includes other rivers, lakes, arts and cultural events and fairs. The subject itself is equipped to handle 100% of the more advanced RVs, with 30-50 amp electric service. There is sewer hookup and water on 100% of the campsites. Ratings by national camping directories typically include one for facility, i.e., sites, roads, service buildings, restrooms, hookups. A second rating goes to the recreation portion. Ratings depend on the quantity and quality of the criteria elements but not to be underscored by the cleanliness of the facility and the general maintenance. The following are the ratings as categorized by Woodall’s Camping Guide, a national recognized resource.

295 Sebago Road Naples, Maine

Entrance: Services: Restrooms:

Sewage Disposal: Sites: Hookups: Interior Roads: Grounds: Recreation:

-42-

Quality of sign, landscaped entrance, wide entry and access; Full-time manager, registration building, laundry; Full professional finish inside, ceramic tile floors, Formica counters, factory built partitions. Ratio of 1:10 for non-sewer sites and 1:50 for sewer sites; 4' x 6' concrete pad sloped to flush, self-closing cap, flushing water, regularly daily management pump-out service; 75% of the sites must be level, easy access, picnic tables, shade. 100% have surface preparation; 50% individual full hookups, 50% electric and water, electric 50-amp at full and 20-amp at all electric hookups; All-weather roads of exceptional quality and width; Superior grounds development and lighting at all buildings and activity areas plus good camping area lighting; and Recreation hall with a minimum of 900 sf., swimming, planned group activities with full recreation director.

The preceding is the optimized rating any campground could receive and serves as a basis for comparison and level of rates that could be charged within the competitive market. The subject’s campground appears to be at or near the top in respect to the cited ratings. The entrance is natural with some landscaping, has modest signage and allows for an in/out with a wide entrance. There is full-time management, office, store and laundry. The bathrooms are in good condition and/or good quality finish. The ratio of bathrooms appears to be good. Sewage disposal is above industry standards. All the sites are level and do have some degree of surface preparation. The sites are 100% full hook-ups. The interior roadways vary in width and the surface is crushed stone. The grounds are a mix of lawn and wooded, there is adequate lighting, and 2 playgrounds. There is a recreation hall and a full time recreation director during the high season. Overall the subject received a 4 star rating from Woodall’s. INCOME In order to establish a market rate for the subject’s campsites, an inventory of competitive campgrounds was undertaken in the region. Campground Colonial Mast CG Naples Brandy Pond Park Naples

Loon’s Haven Family Naples

MAINE RATE SUMMARY – SUMMER 2012 Rates Campsite w / E&W: $48.00 / day Waterfront: $51.00 / day Full hookup sites; $51.00 / day Seasonal: $3,650 plus tax

Comments

110 sites; indoor pool; 50-amp electric; Long Lake

Off water site: $40.00 / day Guest fee: $5.00 / day, $10.00 overnight 75 sites; 30-amp; mostly seasonal campsites; beach Seasonal: $2,550, $2,650, $2,750 Wooded w/sewer: Sun-Thurs; $25-$45 Fri. & Sat; $30-$50 Week: $160-$325 151 sites; 30 amp; beach; docks; next to subject Month: $480-$975 Seasonal: waterfront - $4,167 water view - $2,868-$2,737 wooded - $2,986

295 Sebago Road Naples, Maine Campground Vacationland Harrison

Lakeside Pines CG Bridgton, ME

-43-

MAINE RATE SUMMARY – SUMMER 2012 Rates Comments W&E: $30-$40 W,E,& S: $35-$49 100 sites; 30 amp; full service sites; waterfront beach and dock Waterfront W&E: $35-$55 Seasonal: $1,600- $3,700

Waterfront / Off water sites: $44/day, 50-acre campground with 3,500’ frontage on Long $308/week Lake; 185 sites; 30-amp; 2 beaches, marina, cabins, Guest fee: $5.00 / $10 cottages; water and electric only Boat slips: $10.00 / day

Waterfront: $64.00 / day Four Seasons Camping Off water: $46.00 / day Naples, ME Guest: $8.00 / day, $12.00 / night

115 sites; 30-amp electric; marina, beach; Long Lake

The following are the existing rates for the subject. Seasonal Campsites: Tent Sites $1,859 RV/ Camper $3,245

water and electric full hook-up

Sun-Thurs. Fri.-Sat Week (no holiday) Month (no holiday) Holidays / Events Aug 22-29 (7 days)

Peak Season Tent RV $ 25 $ 35 $ 40 $ 50 $ 205 $ 275 $ 605 $ 950 $ 50 $ 60 $ 0 $ 195

Off Season Tent RV $ 20 $ 25 $ 25 $ 40 $ 145 $ 195 $ 350 $ 395 $ 50 $ 60 $ 0 $ 0

6 Weeks Special:

April 20-June 10 $450

Sept. 3–Oct. 15 $450

Camper Rentals Sun-Thurs./Fri-Sat Weekly Monthly Midweek

Off Season $ 65 / $95 $ 450 $ 975 $ 200

Peak Season $ 85 / $125 $ 675 $1,950 $ 325

Guest Daily Overnight Combo

$ 5 $ 10 $ 15

Transient Rates

The general campsites appear to fall well within the competitive market for the Lakes Region and Naples. The seasonal rates for similar sites appear reasonable as well. The adjoining campground Loon’s Haven for non-water front is slightly lower however the subject offers 50 amp, new amenities, heated in-ground pool. Similarly the trailer rentals fall well within the competing market.

295 Sebago Road Naples, Maine

-44-

Potential Gross Income – Campsites In developing the value upon stabilization there is a total of 156 sites (111 existing, 45 proposed). Currently ±65% of the sites are rented on a seasonal basis. It is assumed that the same percentage will be rented as seasonal at stabilization and the remainder as transient. There are also 4 sites that are rented with campers included in the transient sites. I increased the rates by 2.5% for 2015 and in most cases rounded. POTENTIAL GROSS INCOME CAMP SITES/CAMPERS Sites Seasonal Full season

# Sites

Rate

Days

Income

156 101

$3,326

167

Comments May 1-Oct. 15

$335,926

65% of total sites April 26-Oct. 15

Transient 167

Off Season Mid week

51

$31

64

$101,184

RV, Camper

Weekend

51

$45

24

$55,080

RV, Camper

Mid week

51

$36

55

$100,980

RV, Camper

Weekend

51

$51

24

$62,424

RV, Camper

Mid week

4

$67

64

$17,152

RV, Camper

Weekend

4

$97

24

$9,312

RV, Camper

Mid week

4

$97

55

$21,340

RV, Camper

Weekend

4

$138

24

$13,248

RV, Camper

Sub-total

$380,720

Transient

Total

$716,646

Peak Season

Camper Off Season

Peak Season

The above income is based on the optimal transient camper having an RV. Tent campers are typically $10 less per night for the off season and $20 less per night during peak season OCCUPANCY This section will deal with occupancy levels as it relates to income levels that can be anticipated from campers. Investors/owner-operators are interested in property productivity as it relates to net income. Campgrounds do not operate at full capacity throughout their season. Data is relied upon from historic operations of the subject, and a study completed by the Maine Campground Owners Association. Although the study has not been completed in the last several years, the historic information provides a guide to the operations of coastal and inland campgrounds. Typically coastal facilities operate at close to 60% occupancy for the season, and inland at ±52%. This is for full service campgrounds that have both transient and seasonal campgrounds. The subject’s historic occupancy levels are as follows from 2004 to 2012 and the monthly for 2012.

295 Sebago Road Naples, Maine Year 2012 2011 Annual Occupancy 85.8% 86.3% Month 2012 April May 2012 Monthly 21.4% 82.6%

2010 86.8% June 80.7%

2009 85.7% July 88.6%

2008 85.1% August 89.1%

2007 79.8% September 84.4%

2006 74.8% October 85.8%

2005 69.5%

-452004 60.0%

The seasonal campers alone will account for a ±65% (paid) occupancy in the 2012 season. The levels of seasonal campers vary between campgrounds. It is a business decision by the owner-operators that ranges from as little as none to 100% seasonal campers. Seasonal campers provide a consistent income with less work however other campgrounds feel there is more income potential from daily campers, although this comes with more work. Given the current condition, location, theme weekends, and amenities it is reasonable to presume the current level of seasonal campers will be able to be sustained. There are numerous competing campgrounds with water access (lakes) campgrounds in the area with similar or superior amenities. Occupancy levels from competing campgrounds are safely guarded for transient campers. There are a wide variety of conditions that affect occupancy levels: weather, economy, natural disasters, national emergencies (911), etc. The seasonal campsites are contract incomes for the camping season however some level of collection loss is applied at an estimated 3%. There are 55 seasonal sites available. Per the subject’s occupancy statistics the transient sites had an occupancy level of ±59%. It has been Maineland’s experience the occupancy level is typically 40% for the transient sites. The current management (owners) has created a family atmosphere with theme weekends, recreation director during the peak season, off season outings at the campground, onsite kitchen and catering service (within campground). Campers on their own have held off season reunions typically during the holidays both in state and out of state. The campground has developed a personality of its own that brings back campers year after year. Prudent management would continue with this operation provided it is cost effective. I would select 50% as a stabilized occupancy level for the transient sites. Historic Camp Site Revenues The historic camp site revenues as reported by the owner are as follows. The revenue was subsequently analyzed on a per unit/site basis. This method melds overall occupancy with revenue. CAMP SITE REVENUES Year Camping Fees Per Site (111 sites)

2012

% Chng

2011

% Chng

2010

% Chng

2009

% Chng

2008

% Chng

$324,167

9.0%

$297,313

1.1%

$294,166

25.9%

$233,671

6.5%

$219,517

-6.2%

$17.49

$16.04

$15.87

$12.61

$11.84

CAMP SITE REVENUES Year Camping Fees Per Site (111 sites)

2007 $233,030 $12.57

% Chng 4.9%

2006 $222,053 $11.98

% Chng 15.6%

2005 $192,091 $10.36

% Chng NA

2004 $45,376 $2.45

The camp site revenues for 2012 are preliminary as some of the seasonal campers pay on a monthly schedule and all revenues as of December 3, 2012 are not collected. The average increase has been 8.1% per year from 2005. For 2004 it was the first year of operation and all sites were not operational. The average revenue per site per night has also demonstrated a positive trend, the exception being 2008, the result of the national recession.

295 Sebago Road Naples, Maine

-46-

Camp Site Income Reconciliation Effective Gross Income – By Occupancy at Stabilization (2015) Seasonal: $335,926 x 97% (occupancy) = $325,848 Transient: $380,720 x 50% (occupancy) = $190,360 Total: $516,208

Effective Gross Income – By Historic Operation Since 2005 the subject has averaged an increase of 8.1% per year in camp site revenues. Reflected in the revenues is the occupancy levels, pre and post seasonal specials, in-kind work for free camping, discounts, daily and nightly visitor fees and the following year’s deposits. Based on the prior historic income, average annual increase and the year to date, the estimated 2015 camp site income per site is projected at $18.83 ( $17.49 x 2.5% year-CPI 3 years’ growth) $18.83/site x 156 sites x 167 days = $490,559 rounded to $490,000. The current owners have built and operated the campground since 2004. The owners have their own heavy equipment to install roads, campsites, infrastructure, septic systems (licensed installer) and buildings. They have their management style including inter-personnel relationship with campers that is reflective in the income/occupancy levels. This level of hands on management increases the going concern or intangible element. Other Income Other income is generated from the store, prepared foods, vending machines, special functions, dayovernight quest, cancellation fees, propane sales, laundry income, and firewood. The following is the income from 2004 to 2011 and year to date for 2012 (12/03/12). CAMPGROUND REVENUES Year Camping Fees

2012

% Rev

$324,167

2011

% Rev

$297,313

2010

% Rev

2009

$294,166

% Rev

$233,671

2008

% Rev

$219,517

Retail Store

$45,105

13.9%

$69,600

23.4%

$82,152

27.9%

$84,526

36.2%

$81,244

37.0%

Prepared Foods

$24,042

7.4%

$24,200

8.1%

$27,198

9.2%

$21,352

9.1%

$21,256

9.7%

Electricity

$14,059

4.3%

$13,655

4.6%

$17,920

6.1%

$17,605

7.5%

$19,431

8.9%

Laundry/Arcade

$8,276

2.6%

$16,200

5.4%

$19,266

6.5%

$24,785

10.6%

$29,082

13.2%

Other

$8,714

2.7%

$0

0.0%

$0

0.0%

$0

0.0%

$0

0.0%

Total

$424,363

$420,968

$440,702

$381,939

$370,530

CAMPGROUND REVENUES Year Camping Fees

2007

% Rev.

$233,030

2006

% Rev.

$222,053

2005

% Rev.

$192,091

% Rev.

$45,376

Retail Store

$65,053

27.9%

$53,048

23.9%

$65,741

34.2%

Prepared Foods

$15,337

6.6%

$10,987

4.9%

$12,500

Electricity

$17,476

7.5%

$16,531

7.4%

$6,223

Laundry/Arcade

$26,898

11.5%

$9,775

4.4%

Other

$0

0.0%

$0

0.0%

Total

$357,794

$312,394

2004 $17,170

37.8%

6.5%

$0

0.0%

3.2%

$187

0.4%

$5,800

3.0%

$1,027

2.3%

$0

0.0%

$0

0.0%

$282,355

$63,760

295 Sebago Road Naples, Maine

-47-

Retail Store: The retail store has ranged from 13.9% to 37.0% of camping fees from 2005 to 2012. I have excluded 2004, the startup year. For 2012, the revenues have not been finalized and these are preliminary amounts as of December 3, 2012. The average percentage is 28.1%. A 40% increase in the number of campsite will not translate into a proportional percentage of sales. I have selected 20% of camp site revenues. Prepared Foods: The prepared foods category has ranged from 4.9% to 6.7% excluding 2004. Similar there will not be a proportional percentage of sales with the increase in campsites. It has averaged 7.7% of the camping fees. I have selected 8.0% of camp site revenues. Electricity: The sale of electricity is from the seasonal rentals and the 6-week specials that have an electric meter charge. This is a pass through as reported on the campground income statement. This category will not be shown as an income line. There is however an expense line for the unmetered sites as well as campground operations under utilities. Laundry/Arcade: There are laundry machines in each of the bathhouses and there are arcade machines in the recreation hall. The reported income has been 2.3% to 13.2% with an average of 7.2%. In this case I have selected 5% of the camp site revenues. VALUATION To estimate the value of the subject via the income approach, important information is derived from the analysis of the operating income and expenses. Historical figures for 2004 to 2012 were provided and reviewed to track trends. The information is derived from the campground’s income and expense statements. The statement was reviewed with the current owners. Any expense not associated with the campground operation was excluded in order to reflect actual cost of operations. Naples Campground has been under continuous ownership since 2004. Operating expenses reflect the state of the operations with some exceptions. The following discussion of income and expenses is based on reconstructed income statements normalizing certain expense categories. The projections likewise do not include unusual expenses such as depreciation, pass through charges and expenses. Expenses Cost of Goods - This category accounts for the cost of goods sold in the store and prepared foods. The cost of goods is projected based on past expenses and similar properties. Operating Expenses - Operating expenses are the periodic expenditures necessary to maintain the property and to continue the production of its income. The expense items, usually included in a reconstructed operating statement, consist of fixed and variable expenses and a replacement allowance. The estimates made in this section of the report have been based upon interviews with knowledgeable market participants, the subject property’s historical expense data, operating expense histories of similar properties and verification of town hall assessment records. Copies of the historic income are located in the addendum. Fixed Expenses These are operating expenses that generally do not vary with occupancy and must be paid whether or not the property is occupied. Property Taxes - The current assessment is a total of $832,713 resulting in property taxes of $10,242. The current MIL rate is $12.30. Projected out to 2015, the MIL rate is estimated at $12.92. This

295 Sebago Road Naples, Maine

-48-

produces an estimated assessment of $1,170,000 for 2015, which equates to taxes of $15,116 rounded to $15,100. Insurance - The historical expense for insurance included other items. This category is typically for property insurance only. The estimated insurance is $2,900 based on the current and proposed structures. Variable Expenses These are expenses that vary with occupancy. The degree of usage will cause a rise or fall in the associated costs. Advertising - This category typically includes advertising in camping magazines, camping shows (lodging, meals, etc.), flyers, booth rentals, internet page, meetings and conferences. The reported expenses ranged from $5,480 to $10,285. I have utilized $10,000 with the anticipated enlargement. Transportation - This covers the campground equipment and personnel vehicles for the day to day operation of the campground. A gas/fuel cost of $3,256 was reported only for 2012. It appears to cover other items than what is typically associated with a transportation expenses. I have included $1,000 to cover this expense. Credit Card & Bank Fees - This category is for bank charges on credit cards and bank fees. This expense has ranged from $2,278 to $8,869 from 2005 to 2011. The owners have been charging a convenience charge to recover a portion of this expense. I have reconciled the expense at $6,000 based on the existing and proposed campground improvements. Dues-Membership - Belonging to professional organizations helps maintain contacts within the campground business as well as professional relationships with other campground owners. There was no expense item reported for this category. I have estimated $1,100. Insurance - This covers a broad category of insurance, i.e. workers’ comp, liability. The reported 2011 expense was a total of $7,400 for all insurances and $8,364 year to date for 2012. I have utilized $10,000 based on historic and proposed expansion. Office - This covers the day to day items for the operation of the office; paper, print cartridges, printers, etc. The reported 2005 to 2011 expenses ranged from $2,726 to $8,358 and year to date $2,916. I have utilized $6,500. Postage - This covers all mailing for brochures, bills, etc. There was no reported expense for this item. I have estimated $500. Maintenance/Repairs - Typical maintenance costs range from 5% to 10% of the effective gross income depending on the type of campground. Maintenance is a critical item to keep repeat customers, as well as to attract new guests. The 2005 to 2011 expense ranged from $6,311 to $18,795. The year to date for 2012 was reported to be $21,429. The current owner owns their own excavating equipment and some work is sweat equity. Therefore I have selected 8% of EGI. Landscaping – The subject has a landscaped entrance, lawns on the play grounds and septic systems and bathhouses. The reported expense was from $610 to $5,030. I have estimated $5,600.

295 Sebago Road Naples, Maine

-49-

Utilities - This cost covers the electric to the sites, bathhouses, store, ice machine, campground lights, propane, phones etc. This cost is very site specific due to the number of campsites and buildings. The cost has ranged from $8,624 to $13,882 for the existing campground. The year to date was reported to be $7,660. Given the proposed expansion I have estimated $10,000. Salaries - This category covers the day to day operations. The subject is owner-managed (see management). There are both full time and part time employees. This expense was typically in the $2,000 to $4,000 range with 2011 reported at $23,925 and 2012 at $26,672. I have selected $40,000 with consideration given to the expansion. Management - This is a critical component of a seasonal lodging operation. The operation year is so short that management must optimize its sales and marketing. Typical management rates for seasonal operations such as the subject range between 3 to 5% of EGI. The store functions as a private residence on the site. The current owner utilizes one of the campsites for a travel trailer. In operations such as the subject, like most campgrounds or hospitality, part of the compensation is housing. The operation of the campground also pays for all the utilities, insurance (property and health), and incidentals. $85,000 appears to be adequate compensation for the operation of the camp for both a full time manager and part time. Sales Tax- This item covers the rooms and meals tax and taxable sales in the store. This has varied depending upon the occupancy of the campground. I have determined this expense line as $16,000. It is noted that this does not cover deposits on the camp sites for the following year (2013); in 2012 the reported income was $114,528 year to date. Trash Removal - There are trash cans at each camp site. The average expense ranges from $1,000 to $2,000 per season. A yearly expense of $2,500 is utilized with consideration to the expansion. Professional Fees - This covers legal, accounting, etc. A yearly expense of $1,500 is estimated based on the historic and similar properties. Licenses and Permits – This covers any license and permits in order to maintain the legal operation for the campground. No expense item was provided except for year to date of $1,800. A yearly expense of $1,000 is estimated as the reported amount covered other items. Supplies – This covers all items needed for the day to day operation: cleaning supplies, bathroom supplies, tools, hardware, trash bags, etc. This expense varies from a few hundred dollars to $1,680. I have estimated $2,500. Miscellaneous - This covers any uncategorized item. An estimate of $8,000/year is utilized. Reserves for Replacement - A typical expense to cover the replacement of FF&E is 3 to 5%. Most of the FF&E is associated with maintenance equipment for the grounds and items such as picnic tables used at each campsite, playground, etc. The subject has the additional replacement of short-lived items in the vehicles, kitchen equipment, lawn mowers, golf carts, septic systems, etc. $11,000/year is estimated as appropriate for reserves. The reported income and expenses differ due to items not reported or extraordinary expenses not typically associated with the campground operation i.e. individual campsite site improvements.

295 Sebago Road Naples, Maine

-50-

Conversations with management and confirmed through documents these items were corrected. I have relied on Maineland’s files for comparison with similar campgrounds. FORECASTED INCOME STATEMENT Forecast 2015 Camping Income

$490,000

Other Income

Comments Income based on historic and market Based on historic and market data

Retail Store

$98,000

20% of campsite revenues

Prepared Foods

$39,200

8% of campsite revenues

Laundry / Arcade

$24,500

5.0% of campsite revenues

Effective Gross Income

$651,700

Cost of Goods

$53,900

35% COG retail; 50% COG foods

Property taxes

$15,100

Assessment records; MIL $12.92

Insurance-real estate

$2,900

Historic, similar properties; 8,208 sf.

Advertising

$10,000

Historic, similar properties

Transportation

$1,000

Historic, similar properties

Credit card, bank fees

$6,000

Historic, similar properties

Dues, membership

$1,100

Historic, similar properties

Insurance

$10,000

Historic, similar properties

Office

$6,500

Historic, similar properties

$500

Historic, similar properties

Postage Maint., repair

$52,136

8% of EGI

Landscaping

$5,600

Historic; similar properties

Utilities

$10,000

Historic, similar properties

Salaries with payroll tax

$40,000

Historic, similar properties

Management

$85,000

Similar properties

Sales tax, lodging tax

$16,000

5% sales, 7% lodging,prep food (not deposits)

Trash

$2,500

Historic, similar properties

Professional fees

$1,500

Historic, similar properties

Licenses/Permits

$1,000

Historic, similar properties

Supplies

$2,500

Historic, similar properties

Miscellaneous

$8,000

Similar properties

Reserve for replacement

$11,000

Based on short lived items

Total

$342,236

$2,194/site

Net Operating Income

$309,464

$1,984/site

Overall Capitalization Rate To capitalize the property’s estimated NOI into an indication of value, an overall rate was derived from the analysis of actual market sales for which reliable income and expenses were known. An overall rate is the direct ratio between NOI and the sale price. The rate is abstracted by dividing the NOI by its cash equivalent sale price. Overall capitalization rates (cap rates), in their simplicity, reflect perceptions of market participants regarding rental rate growth, vacancy and collection loss, location, condition of the property, etc. Properties perceived to have less risk tend to sell at lower cap rates. The subject is

295 Sebago Road Naples, Maine

-51-

considered to have an average plus level of risk in consideration of its location, parking, degree of modernization, condition and overall appeal. Band of Investment Technique A technique that is used to derive a cap rate is the band of investment, which is a weighted average of the mortgage and equity components. The components are expressed as follows: Mortgage Component Equity Component Weighted Average

= = =

M x (1 - M) x

Rm Re Ro

Prevailing mortgage terms for properties of the subject’s type range between 5.00% to 6.00% interest rate, 20-year amortization and 75% loan to value. Thus, M Rm

= =

.75; and .082546 (5.5%)

Equity dividend rates vary by property, investor, and all the same variables that influence cap rates. A typical equity dividend rate that would be sought by a purchaser of the subject property, reflecting its overall appeal, is considered to be 12%. Thus, Re

=

.12

The financially derived overall cap rate, denoted as Ro, can be solved as follows. .75 .25

x x

.082546 .1200 Ro

= = =

.061910 .030000 .091910, say 9.2%

With consideration to the band of investment, it is concluded that 9.0% is an appropriate capitalization rate for the subject. Market Abstracted Capitalization Rate A second means of estimating an appropriate overall cap rate is to capitalize a recent sale utilizing the property’s estimated NOI and the sales price. This market abstracted or direct capitalization rate is the direct ratio between NOI and the sale price. The rate is abstracted by dividing the NOI by its cash equivalent sale price. The following are abstracted capitalization rates from the market.

295 Sebago Road Naples, Maine Location Augusta/Gardiner KOA 30 Mallard Dr. Richmond, ME Pleasant Hill Campground 45 Mansell Rd. Hermon, ME Harbor Hill Campground 189 Whittier Rd. Meredith, NH

CAMPGROUND CAPITALIZATION RATES Sales Date Cap Rate Comments

-52-

6/30/2011

9.0%

75 sites with 5 cabins; 22.25 acres; 27 sites with full hook-ups; 2 bathhouses; owner’s quarters over rec. hall

5/04/2011

6.47%

101 sites with 4 cabins; ±58 acres; 50 sites full service; owner’s quarters; rec. hall, swimming pool, camp store, 2 bathhouses

2/24/2011

8.02%

157 campsites; 54.91 acres; ±75 sites full service; swimming pool, rec. hall, 3 bathhouses; owner’s quarters

Vacationland Campground 233 Vacationland Rd. Harrison, ME

7/7/2010

13.2%

Timberland Campground Route 2 Shelburne, ME

6/28/2010

6.25%

Woodmore Campground 21 Woodmore Rd. Rindge, NH

5/12/2010

9.5%

100 sites; 16.5 acres; 1,250’ frontage Crystal Lake; owner’s quarters, rec. hall, store/office, 2 bathhouses, dock, beach; income/NOI based on stabilized income/expenses, prior owner funneled personal expenses through campground; non-owner managed 113 sites; ±33 acres; right of way to Androscoggin River; water and electric to ±75 sites; swimming pool, rec. hall, camp store, 1 bathhouse; owner’s quarters over rec. hall; income declined due to health of owner 118 sites with 3 cabins; ±23 acres; 1,150’ Contoocook Lake (±215 acres); all full service sites; swimming pool, rec. hall, camp store, 3 bathhouses, owner’s quarters over rec. hall

A third source is RealtyRates.com which reports for the third quarter of 2012 a rate of 9.08% for Mobile Home/RV parks. These are typically nationally branded campgrounds in excess of 100 sites and full service. The direct capitalization rates noted above range from 6.25% to 13.2%. The lower cap rates are reflective of campgrounds with 1/2 of the subject’s income and the upper cap rate is reflective of an operation that was not owner managed with personal expenses being passed through the operation. Therefore the income and expense where stabilized. The Band of Investment reflects typical scenarios of mixed equity/mortgage positions, as properties are rarely purchased with 100% equity positions. This means of estimating an overall rate does not allow for variables such as future appreciation. Current interest rates levels are relatively low. The subject has illustrated a consistent occupancy history and income. The subject property’s immediate location offers average plus appeal, campsites are in good condition of average quality and tenant appeal is considered good. Properties that are in desirable locales, are of average quality and well maintained are found to support mid-range cap rates. These properties are typically associated with moderate risk and capable of commanding somewhat safe cap rates. Considering the subject’s location, the property’s physical condition and market conditions at 3 years time, a capitalization rate of 10.5% is considered to be appropriate for the subject property in its “stabilized” condition; $309,464 / 10.5% = $2,947,276 rounded to $2,950,000 Allocation of Goodwill and FF&E Typically, excess management fees of 2% to 8% of total revenue are used in the hospitality industry to allocate for the intangibles associated with the going concern. In the subject’s case, it has generated excess income associated with the hands-on operation and sweat equity by the management (owner). In the hospitality industry, incentive fee structures have coalesced into 10% to 20% of cash flow that exceeds performance threshold. Given the subject’s size and location, 10% of the property’s effective gross income is selected. In this scenario, an adequate excess management fee to satisfy the intangible component would be $65,170 ($651,700 x 10%). This expense must be capitalized to arrive

295 Sebago Road Naples, Maine

-53-

at a measure of the value of the goodwill. The capitalization rate applicable to this intangible and potentially shorter-lived asset is 3.5% to 4% higher than the capitalization rate above the entire going concern. It is estimated that 14.0% when applied to the estimated cost of professional management service, the allocated asset is $465,500, rounded to $465,000. (References: “Hotels and Motels: Valuations and Market Studies,” Stephen Rushmore, MAI; “A Business Enterprise Value Anthology,” Second Edition, Appraisal Institute) I have been provided a list of FF&E that is essential in the day to day operation of the campground. There are some items that are considered part of the real estate and not FF&E. Also the owner has heavy equipment: excavator, Bobcat loader, dump truck, etc. All have been excluded as they are not considered part of the campground operation. The maintenance cost associated with the complex takes this into account. The estimated current FF&E is $82,837 rounded to $85,000. There will be an additional FF&E for the new 45 sites at an estimate of $10,000 for a total of $95,000. A copy is located in the addendum. The final estimated value via the income approach is $2,390,000 ($2,950,000 $465,000 - $95,000 = $2,390,000). PROSPECTIVE MARKET VALUE INDICATOR FOR REAL ESTATE ONLY-5/01/2015 VIA THE INCOME APPROACH $2,390,000 TWO MILLION THREE HUNDRED NINETY THOUSAND DOLLARS (excludes surplus land) Extraordinary Assumptions and/or Hypothetical Conditions: 1.) The subject is completed in a professional workman like manner per plans and specifications; 2.) The subject receives approvals from all regulatory agencies; and 3.) There is no significant change in the economy prior to the completion of proposed improvements. The user of this appraisal is cautioned, as with any extraordinary assumption or hypothetical condition, if the conditions to the appraisal are not met or they change, it could have a direct impact on the values reported herein. As Completed The subject is proposed to be completed in the spring of 2014. All the camp sites, infrastructure and amenities are completed: i.e. water, sewer, electrical, cable, bathhouse, roadways. It is anticipated that there will be a rent up period for the absorption of the new sites into the market. The seasonal sites of which there is an estimated 29, would be absorbed at a rate of 50% the first year with the remainder in 2015.The owners are prohibited from advertising prior to any approvals, therefore most if not all would be by word of mouth and recommendations. Also there is anticipated the relocation of existing seasonal renters from within the campground. The remaining sites (16) are for transient campers. In the stabilized operation the transient camp sites have a market occupancy of 50% for the season. These new transient sites represent ±29% of the total transient sites in the campground based upon historic demand. It is not unreasonable to assume that the sites would attain the same occupancy level in the first year. There are also the un-rented seasonal sites available as well (±14) that could be utilized as they become absorbed. However, only the 16 transient sites are considered. The camping fees are the same as posted for 2013. All the operating costs are the same as the stabilized year.

295 Sebago Road Naples, Maine

-54-

The difference in the as completed and the as stabilized is the lost income associated with the new sites. I have utilized the same income per site analysis as it implies all the occupancy levels, specials etc. It is calculated as follows. Seasonal Sites: Transient Sites: Total: Seasonal Transient Loss Income Summary: As stabilized Loss Income

15 sites x $18.38/site/day x 167 days = $46,042 16 sites x $18.38/site/day x 167 days = $49,111 $ $ $

46,042 49,111 95,153

$2,390,000 $ 95,153 $2,294,847 rounded to $2,295,000

AS COMPLETED MARKET VALUE INDICATOR FOR REAL ESTATE ONLY- 5/01/14 VIA THE INCOME APPROACH $2,295,000 TWO MILLION TWO HUNDRED NINETY-FIVE THOUSAND DOLLARS (excludes surplus land) Extraordinary Assumptions and/or Hypothetical Conditions: 1.) The subject is completed in a professional workman like manner per plans and specifications; 2.) The subject receives approvals from all regulatory agencies; and 3.) There is no significant change in the economy prior to the completion of proposed improvements. The user of this appraisal is cautioned, as with any extraordinary assumption or hypothetical condition, if the conditions to the appraisal are not met or they change, it could have a direct impact on the values reported herein.

295 Sebago Road Naples, Maine

-55-

As Is Value This valuation scenario will follow the same process as the stabilized valuation except that the subject is in the as is condition with 111 sites: 72 seasonal and 39 transient. Potential Gross Income – Camp sites POTENTIAL GROSS INCOME CAMP SITES/CAMPERS Sites Seasonal Full season

# Sites

Rate

Days

Income

111 72

$3,245

167

$233,640

Transient

Comments May 1-Oct. 15 65% of total sites April 26-Oct. 15

167

Off Season Mid week

35

$30

64

$67,200

RV, Camper

Weekend

35

$45

24

$37,800

RV, Camper

Mid week

35

$35

55

$67,375

RV, Camper

Weekend

35

$50

24

$42,000

RV, Camper

Mid week

4

$65

64

$16,640

RV, Camper

Weekend

4

$95

24

$9,120

RV, Camper

Mid week

4

$95

55

$20,900

RV, Camper

Weekend

4

$135

24

$12,960

RV, Camper

Peak Season

Camper Off Season

Peak Season

Sub-total

$273,995

Total

$507,635

Transient

Effective Gross Income – By Historic Operation Similar to the as stabilized value scenario I have chosen to reconcile the 2012-13 income by the historic daily income per site: $17.49/site/day x 111 sites x 167 days = $324,212.

295 Sebago Road Naples, Maine

-56FORECASTED INCOME STATEMENT As Is 2012-2013

Camping Income

$324,212

Other Income

Comments Income based on historic and market Based on historic and market data

Retail Store

$64,842

20% of campsite revenues

Prepared Foods

$25,937

8% of campsite revenues

Laundry / Arcade

$16,211

5.0% of campsite revenues

Effective Gross Income

$431,202

Cost of Goods

$35,663

35% COG retail; 50% COG foods

Property taxes

$10,250

Assessment records; MIL $12.92

Insurance-real estate

$2,570

Historic, similar properties; 8,208 sf.

Advertising

$7,000

Historic, similar properties

Transportation

$1,000

Historic, similar properties

Credit card, bank fess

$5,500

Historic, similar properties

Dues, membership

$1,100

Historic, similar properties

Insurance

$4,800

Historic, similar properties

Office

$5,000

Historic, similar properties

$500

Historic, similar properties

Postage Maint., repair

$34,496

8% of EGI

Landscaping

$4,500

Historic; similar properties

Utilities

$8,000

Historic, similar properties

Salaries with payroll tax

$25,000

Historic, similar properties

Management

$85,000

Similar properties

Sales tax, lodging tax

$14,000

5% sales, 7% lodging,prep food (not deposits)

Trash

$2,000

Historic, similar properties

Professional fees

$1,500

Historic, similar properties

Licenses/Permits

$1,000

Historic, similar properties

Supplies

$2,000

Historic, similar properties

Miscellaneous

$5,000

Similar properties

Reserve for replacement

$7,500

Based on short lived items

Total

$263,379

$2,374/site

Net Operating Income

$167,822

$1,512/site

Overall Capitalization Rate $167,822 / 9.0% = $1,864,689 rounded to $1,865,000 For the as is value, I have lowered the CAP rate to reflect the reduced risk associated with the existing cash flow (NOI). Although the prior prospective valuation model is market based and assumes no significant change in economic conditions, as of the date of the appraisal, buyers would view the risk (CAP rate) to be higher. Properties with a proven track record (financials) have greater appeal in the market. The subject’s as is property has less risk, thus a reduced overall rate.

295 Sebago Road Naples, Maine

Allocation of Goodwill and FF&E 10% of the effective gross income: 12.5% Capitalization rare: FF&E: Summary: Going Concern Goodwill FF&E Allocation to Real Estate Only

-57-

$431,202 X 10% = $ 43,120 $43,121 / 12.5% = $344,968, rounded to $345,000 $85,000 $1,865,000 $ 345,000 $ 85,000 $1,435,000

AS IS MARKET VALUE INDICATOR FOR REAL ESTATE ONLY-11/9/2012 VIA THE INCOME APPROACH $1,435,000 ONE MILLION FOUR HUNDRED THIRTY-FIVE THOUSAND DOLLARS (excludes surplus land)

295 Sebago Road Naples, Maine

-58-

SALES COMPARISON APPROACH The sales comparison approach is a method in which similar properties, which have sold, are compared to the subject property. The most important comparisons include: location, date of sale, age, and physical characteristics. Adjustments between the comparable properties are determined by the anticipated reaction of the typical buyers and sellers. The reliability of the sales comparison approach is affected by several factors: 1.) 2.) 3.) 4.)

Availability of comparable sales; Ability to accurately verify sales data with one or more parties to the transaction; The degree of comparability between the comparable sales and the subject property; and Estimation of adjustment for differences between the subject and the comparable sales.

Under conditions where ample comparable sales data exists, the sales comparison approach is a highly reliable indication of value. This is particularly true where the typical purchaser relies heavily on some physical unit of comparison. Accepted units of comparison in the market area are price per sf. of gross building area or price per unit. The market data approach becomes less reliable when few comparable sales are available in a changing marketplace to analyze the motivations of purchasers. The sales comparison approach depends upon comparing the subject property directly to similar properties that have sold in similar neighborhoods or have similar amenity packages. In the current market there have been few sales. Most campgrounds are owner-occupied whereas the proprietors derive an income and year round or seasonal living accommodations. They typically have family members as both seasonal and year round help. Some situations require outside employment in order to supplement living expenses. Giving up or selling a campground under these circumstances is a twofold life change: residence and job. Sales often take extended periods of time depending upon the location as the buyers are too changing a residence and job. The ownership type such as the subject is the norm at least in the Maine campground market. In the subject’s market there are several comparable campgrounds that have sold that operated exclusively as a seasonal campground. I have collected a summary of sales in the northern New England market (Maine, New Hampshire) for an analysis. The following is the most current summary of sales. Allocations to the sale price for any going concern and FF&E have been applied so as to result in the value of the real estate only.

Location Balsam Cove CG 286 Back Ridge Rd. Orland, ME Woodland Acres Camp N’ Canoe Brownfield, ME Sale 1 Crooked River CG State Park Rd. Casco, ME Sale 2

SALES SUMMARY # of Sites/ Sales Date Sales Price Price/Site Cabins Offering

$1,800,000 $150,000* $1,650,000

122

Offering

$1,800,000 $150,000* $1,650,000

114

7/20/11

$650,000

41/2

Comments

98 sites; ±38 acres; 660’ lake frontageToddy Pond; licensed for 150 sites, 24 $13,525 under development; owner’s quarters, office-store, pavilion, docks, 1 bathhouse, arcade *FF&E and goodwill 114 sites; 48.5 acres; Saco River frontage; $14,474 store/office, owner’s quarters, garage, bath houses, pavilion, canoe livery service, 41 sites; 59.62 acres; 2,200’ Crooked River; $15,116 owner’s quarters, rec. hall, 2 cabins; expansion potential

295 Sebago Road Naples, Maine Location Augusta/Gardiner KOA 30 Mallard Dr. Richmond, ME Pleasant Hill CG 45 Mansell Rd. Hermon, ME Harbor Hill Campground 189 Whittier Rd. Meredith, NH Sale 3

SALES SUMMARY # of Sites/ Sales Date Sales Price Price/Site Cabins 6/30/11

$506,000

75/5

5/04/11

$695,000

101/4

2/24/11

$1,795,000

157

Vacationland CG 233 Vacationland Rd. Harrison, ME Sale 4

7/7/10

$790,000 $60,000* $850,000

100

Timberland Campground Rt. 2 Shelburne, ME

6/28/10

$550,000

113

Woodmore Campground 21 Woodmore Rd. Rindge, NH

5/12/10

$1,200,000

118/3

Eastern Slope CG 584 White Mtn Hwy Conway, NH

8/07/08

$1,800,000

200

Balsam Woods CG 112 Pond Rd. Abbott, Maine

1/10/08

$535,000

63/2

Camp n’ Canoe Brownfield, ME

1/03/08

$1,030,000

109

-59Comments

75 sites with 5 cabins; 22.25 acres; 27 sites with full hook-ups; 2 bathhouses; owner’s quarters over rec. hall 101 sites with 4 cabins; ±58 acres; 50 sites $6,619 full service; owner’s quarters; rec. hall, swimming pool, camp store, 2 bathhouses 157 sites; 54.91 acres; ±75 sites full $11,433 service; swimming pool, rec. hall, 3 bathhouses; owner’s quarters 100 sites; 16.5 acres; 1,250’ frontage Crystal Lake; owner’s quarters, rec. hall, store/office, 2 bathhouse, dock, beach; income/NOI based on stabilized $8,500 income/expenses, prior owner funneled personal expenses through campground; non-owner managed; *buyers installed new septic system 113 sites; ±33 acres; ROW to Androscoggin River; water and electric to $4,867 ±75 sites; swimming pool, rec. hall, camp store, 1 bathhouse; owner’s quarters over rec. hall; income declined to owner’s health 118 sites with 3 cabins; ±23 acres; 1,150’ Contoocook Lake (±215 acres); all full $9,917 service sites; swimming pool, , rec. hall, camp store, 3 bathhouses, owner’s quarters over rec. hall 200 sites; long frontage Saco River; 90% $9,000 flood plain; pool, camp store, rec. hall, owner’s quarters 63 sites; 115 acres; office-store, rec. hall, pool, playground, pavilion; 2 cabins; paved $8,231 & gravel roads; water, electric, sewer; seasonal sites $1,710 w/w, e, $1,825 w/W, E, S 109 sites on Saco River; owner’s quarters, store, full hookups, group site, bathhouses $9,450 with showers; full service canoeing and livery service $6,325

I have selected three sales and one offering from the above summary and placed them on an adjustment grid along with the subject. The adjustments include property rights, financing, condition of sale, expenditures after sale, market condition, location, lot size/utility, number of sites, zoning, utilities, infrastructure, amenities, owner’s quarters, special features and non-realty components. The following is the rationale for the adjustments. Property Rights – All were purchased under fee simple interest with no long term leases or tenants at the time of sale. No adjustment is warranted. Financing – The transaction price of one property may differ from that of an identical property due to a different financing arrangements. A purchaser may assume an existing mortgage at a favorable interest rate, or buyer may have arranged a buy down by paying cash to a lender so that a mortgage with

295 Sebago Road Naples, Maine

-60-

below market rates could be offered. In both cases a buyer could have paid a higher price or conversely above market rates that will result in lower sales price. Sale 1 is assumed to be financed at market rates. Sale 2 was owner-financed at market rates. Sale 3 was both owner financed and bank financed at prevailing rates. Sale 4 was financed at conventional rates. Conditions of Sale – The condition of sale reflects the motivation of the buyer and the seller. Situations may arise that are not arms length such as an abutter assembling lots for a greater plottage value expected to result from the greater utility of a larger site. Other situations include a quick sale for the need of cash that results in a below market price. Any interrelated parties such as families, businesses may affect sales prices. All the sales were reported to be arms length sales. Sale 4 was purchased by the operating managers. Both had long term and family experience in campground operations. It was exposed to the open market and considered arms length. Market Conditions – These are sales that occurred under different market conditions than what is applicable on the effective date of value for the subject. This adjustment is for any market appreciation or depreciation. This is caused by the inflation or deflation or a change in the buyers perception of the market over time. There have been numerous sales of campgrounds throughout northern New England. However, the turnover rate is slow, thus the sales give no direct indications of market increases or decreases. It can only be surmised that the market had slowed in 2008 to 2009 from the recession. However the recovery has been slow. Reservations and income have started to return to pre-recession levels based upon the dates sold. Sale 1 is a current offering. It has been adjusted for list to sales price. Sales 2, 3 and 4 occurred in 2011, 2011 and 2010 respectively. The prospective value is out 3 years and it can only be surmised that some market improvement will occur. I have adjusted Sales 2,3 and 4 by plus 2%/year from 2012. Location – This accounts for differences in locational characteristics from the comparables to the subject. Sales within the same market have similar characteristics but variations may exist in the area of analysis. This adjustment recognizes that sales that are physically similar but in different locations may sell for higher or lower prices, hence affected by location. However, similarly priced properties in different locations may sell more rapidly, resulting in a locational difference. There is considerable difference between coastal and inland campgrounds. The subject is located inland in the Lakes Region of western Maine, a destination resort area. Sale 1 is located in the Mount Washington Valley area of Maine and New Hampshire although at the outer lying area. Overall it is inferior to the subject. Sale 2 is located in the heart of the Lakes Region district of western Maine and considered similar to the subject. Sale 3 is located in the heart of the Lakes Region of central New Hampshire, Lake Winnipesaukee. It is considered similar to the subject’s location. Sale 4 is located in Harrison at the northerly end of Maine’s western Lakes Region and is considered similar. Lot Size/ Utility – These account for the difference in the size of the campground and the utility of the site. The subject has a reported ±40 acres per the design of the existing 111 sites and proposed 45 sites. The site is level to sloping with an irregular configuration but not adverse. Sale 1 has 48.5 acres that is level to sloping, rectangular in shape with 400’ of frontage on the Saco River. The water frontage

295 Sebago Road Naples, Maine

-61-

is steep and has only a beach area when the water level is low typically July and August. There are areas in a flood zone that limits the use of the group sites. The adjustments are off setting slightly in this case. Sale 2 has a larger site, rectangular in shape, level to sloping with water frontage on the Crooked River, 2,200’. A portion of the site is located in a flood zone and limits the utility of the site. This sale is adjusted for size and water frontage. Sale 3 is larger in size with a rectangular shape that is level to sloping and strongly sloping. There are areas that limit any expansion due to slope. Sale 4 is smaller in size with a rectangular shape, level to sloping and with long frontage on Crystal Lake. The waterfront has a sandy beach with docks. The size and water frontage are off setting adjustments. Number of Sites – This adjustment is for an economy of scale. The subject has 156 campsites. Each of the sales is adjusted accordingly. Zoning –The subject is located in the rural and shoreland zones per Naples zoning. The subject is a grandfathered use and can expand. There is a small portion of the site located in the shoreland zone but has limited effect on the overall site. Sale 1 has no zoning per the town of Brownfield. It has only the mandatory State shoreland zoning. Overall it is similar to the subject. Sale 2 is located in a residential zone. The campground use is a permitted use. There is also the State mandatory shoreland zoning. This affects the entire water frontage within 250’ of the high water mark. This campground was constructed under shoreland zoning and appears not have negatively impacted the site. Overall it is similar to the subject. Sale 3 is located entirely in a residential zone. This zone is very restrictive as to commercial uses and is considered inferior. It was reported that any expansion would be restricted. Sale 4 has no zoning but has the mandatory State shoreland zoning. There are a number of sites located in the shoreland zone however they are all grandfathered. If constructed today they would not be permitted within 100’ of the water. The shoreland zone over lays a larger portion of the site. Overall this sale is inferior to the subject. Utilities –The subject is a full service campground. All the sites have sewer hook ups, 30-50 amp electrical service, water and cable. All the sales have similar hook ups but not to the level of the subject. Typically only a portion of the campgrounds have full sewer hook ups, electrical service and cable. All are adjusted accordingly. Infrastructure – One of the ratings a campground receives from camping associations is the ease of access to the campsites and the weatherability of the travel surface. The subject’s sites are level with crushed stone surfaces. The roadways are all gravel with crushed stone. The travel width is wide for the larger modern RVs with good turning radius. All the sales have gravel roadways, level sites with a mix of grass and stone surfaces. The turning radii are typically inferior. Overall they are all inferior. Amenities – As mentioned, campgrounds are becoming resorts with amenities within the campground and planned activities. The subject has a campground office/store, large recreation hall, 3 bathhouses, playgrounds, 4 rental campers and a heated in-ground pool. This all adds to the camping experience, hence occupancy levels. Sale 1 has a recreation hall, store/office, pavilion, barn for maintenance, and 2 bath houses. Overall it is inferior. Sale 2 has combination recreation hall/store/office, 1 bathhouse and a park model for rental. Overall it is inferior. Sale 3 has a swimming pool, recreation hall and 3 bathhouses. Overall it is similar. Sale 4 has a recreation hall, store/office and 2 bathhouses. Overall it is inferior as most of the amenities are dated except the recreation hall. Owner’s Quarters – The subject has a loft bedroom in the store/office. The set-up lacks privacy during the operation season but is adequate in the off season. Sale 1 has a ±1,000 sf. private owner’s quarters. It is superior to the subject. Sale 2 has a small owner’s quarters with ±1,000 sf. It is slightly

295 Sebago Road Naples, Maine

-62-

superior. Sale 3 has a 2-story freestanding 4-bedroom owner’s quarters. It is superior to the subject. Sale 4 has a double wide superior to the subject. Special Features – The subject has no special features. Sale 1 has group sites and a canoe livery service that accounts for ±42% of the campground income. This is a superior feature. The remaining sales have no special feature. Non-Realty Components – There are no non-realty components to consider for either the subject or sales. Reconciliation Once adjusted the four sales indicate a range of $13,065 to $18,485/site with a mean of $16,514. Sale 1 has a campground and canoe livery service components for income. The canoeing portion is very labor intensive as well as equipment wise. Sale 2 is a small campground with expansion potential which is the intension of the buyers. Sale 3 is a similar sized campground in a premier tourist area of New Hampshire. Sale 4 is the oldest sale and the lowest indicator. Equal weight is given to all four sales. The most probable indicator is $16,500/site and when multiplied by the subject's size of 156 sites yields $2,574,000 ($16,500 x 156) rounded to $2,575,000 for the real estate only. MARKET VALUE INDICATOR FOR REAL ESTATE ONLY VIA SALES COMPARISON APPROACH $2,575,000 TWO MILLION FIVE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS (excludes surplus land) On the following page is the adjustment grid. The Comparable Sales Data Sheets are located in the Appendix.

Sales Location Map

295 Sebago Road Naples, Maine

-63-

295 Sebago Road Naples, Maine

-64-

Surplus Land As configured there is excess land for both the as is and as completed / as stabilized. In the as is condition there is an additional 28.2 acres (not including Map R5 Lot 23) and for the as completed and as stabilized there is an additional 14.1 acres. In both scenarios the parcels are land locked and the only access would be through the subject’s site or an adjoining parcel. The most financially feasible use is for any abutter or the subject. This excess land is grandfathered for the expansion of the campground. It was joined with the existing campground prior to zoning being passed in 2008. The highest and best use (most productive use) is for a campground which only the subject campground has access too. If sold separately it would be severed and loose its grandfathered status. I have collected several sales where a campground use would be permitted from the area. The sales are from Bridgton where there is no zoning and from areas of Casco that permit campgrounds. There are no recent sales from Naples in zones that permit campgrounds. The following is a summary. Location Watkins Shore Casco Map 32 Lot 13-13 Tenney Hill Rd. Casco Map 7 Lot 24-13 Libby Rd. Casco Map 2 Lot 32 Winn Rd. Bridgton Map 4 Lot 20A HIO Ridge Rd. Bridgton Map 8 Lot 28 HIO Ridge Rd. Bridgton Map 13 Lot 52C Fosterville Rd. Bridgton Casey Dr. Bridgton Map 23 Lots C&E Knights Hill Rd. Bridgton Map 16 Lot 7 Wildwood Rd. Bridgton Map 9 Lot 9 Westview Lane Bridgton Map 16 Lot 5

Sales Summary

Date of Sale

Sales Price

Size

$/Acre

Comments

10/15/12

$53,000

11

$4,818

100’ common right of way to pond; 479’ road frontage

9/28/12

$38,000

19

$2,000

Open fields and wooded; 200’ road frontage

8/30/12

$55,900

10

$5,590

Wooded lot; 992’ road frontage

7/06/12

$115,000

75

$1,533

Wooded site with views; 750’ road frontage

7/31/12

$37,500

17.26

$2,173

Fronts on 2 roads; wooded site; ±1,000’ road frontage

4/20/12

$52,500

38.57

$1,361

950’ road frontage; wooded site

1/13/12

$40,000

24.61

$1,625

2 lots of 1.1 acres and 23.51 acres; 728’ road frontage

9/01/11

$45,000

83

$542

Wooded lot with views

8/12/11

$50,000

51

$980

Right of way for access; wooded site

5/16/11

$50,000

42.6

$1,174

175’ frontage; neighborhood

3/04/11

$76,564

76.38

$1,002

±250’ road frontage; located next to Knights Hill Rd. sale above

Wildwood

Pond

295 Sebago Road Naples, Maine

-65-

Sales range from $542/acre to $5,590/acre. Sales in the $542/acre to ±$1,500/acre range are inferior sites due to location, date of sale and utility of the site. Sales in the plus $1,500/acre to $5,590/acre have superior locations, views, utility and long road frontages. I have estimated that the subject’s excess land for the 28.2 acres (as is) is $2,500/acre or $70,500 rounded to $70,000. The excess land for the as completed and as stabilized valuations for the remaining 14.2 acres (28.2 acres – 14 acres = 14.2 acres) is estimated at $2,800/acre (economy of scale) or $40,000 rounded. As a test, the contributory value of the excess land is weighted against the incremental increase in value between the as is and the as complete (with consideration for the cost to complete). The proposed construction has a budget of $550,000. This cost is with the owner’s hands-on participation. The reported cost also lacks any contingency or profit. Soft cost, approvals and other expenses associated with the development also need to be accounted for. Using a more market oriented cost of ±$800,000 is estimated. The incremental value change between as is ($1,435,000) and as complete ($2,295,000) is $860,000. The following table summarizes the implied residual land value (the Phase I land area) of 14 acres. Although this model suggests a high value per acre, it requires several input assumptions hence reducing its reliability. Overall the sales approach is viewed as both reliable and consistent with market participants. Budget (hard cost) Soft cost & contingency Profit Subtotal Incremental value change as is & as complete Change in Lot Size 14 ac Value per acre Discount rate for 1 year @ 15% Implied value of excess land (14 ac) as is

Owner’s Cost $550,000 $0 $0 $550,000

Appraiser Cost $600,000 $50,000 $150,000 (25%) $800,000

$860,000 $310,000 N/A N/A N/A

$860,000 $60,000 $4,286/ac .8639 $3,702

295 Sebago Road Naples, Maine

-66-

FINAL RECONCILIATION A final reconciliation is a process in which all pertinent facts and data, which influence the value of the subject property, are consolidated into a final value estimate. In this review, all the mathematics and information are reexamined to assure accuracy. The strengths and weaknesses inherent in each approach are analyzed to ascertain their appropriateness in reflecting market behavior. Once completed, the appraiser then correlates all the information into a supportive and defensible estimate of value. In this assignment, two of the recognized approaches to value has been researched, verified, and completed in detail. As explained, the subject property consists of a 111-site campground with a proposed 45 new sites. The Lakes Region, of which Naples is a part, is experiencing a mixed economy and the pertinent factors indicate that this trend will likely improve in the coming ±2 years. The Town of Naples has both the State’s mandatory shoreland zoning and town-wide zoning which is typical to most Greater Portland towns. In this report, all market trends have been defined and analyzed, and the economic forces identified. The subject parcel's sizes, configurations, and topography are typical to the area and serviced by on site water, septic systems, electricity, cable and telephone. The political climate appears stable and able to meet the demand forecasted to be placed on its infrastructure. The highest and best use analysis indicated and supported the subject property's existing use. In summary, I have analyzed and defined the economic forces which will have an impact on the estimated market value of the subject property. All indicators supported a continuation on expansion of the existing norm. All factors were defined and verified, then considered in the following approaches to value. As Is Value for the Real Estate Only Income Approach Stabilized $2,390,000 plus excess land $40,000 = $2,430,000 As completed $2,295,000 plus excess land $40,000 = $2,335,000 As Is $1,435,000 plus excess land $70,000 = $1,505,000 Sales Comparison Approach Stabilized $2,575,000 plus excess land $40,000 = $2,615,000 Cost Approach N/A It is widely recognized that the appropriate sequence to correlate the value range is to recapitulate the procedures and conclusions of each approach and then reconcile them into a final value estimate. In this instance, adequate data was available to complete two approaches to value. The income approach mirrors the forecasted occupancy pattern and cost associated with the operation of the property. Generally, investors rely upon some form of forecasted (anticipation) income. Therefore a direct capitalization technique was utilized. The market approach was utilized as it reflects more of the interaction of buyers and sellers within the market. This approach takes into account what buyers perceive or intuitively are aware of the income potential as well as distinctive way of living. It also provides support for some of the non-income producing amenities or expansion potential in the case of the subject. Most weight has been given to the income approach. The sales approach is speculative for a period 3 years out. Final reconciled value estimate of the fee simple estate of the real estate only are as follows:

295 Sebago Road Naples, Maine

PROSPECTIVE MARKET VALUE INDICATOR FOR REAL ESTATE ONLY - 5/01/2015 VIA THE INCOME APPROACH $2,430,000 TWO MILLION FOUR HUNDRED THIRTY THOUSAND DOLLARS

-67-

Extraordinary Assumptions and/or Hypothetical Conditions: 1.) The subject is completed in a professional workman like manner per plans and specifications; 2.) The subject receives approvals from all regulatory agencies; and 3.) There is no significant change in the economy prior to the completion of proposed improvements. The user of this appraisal is cautioned, as with any extraordinary assumption or hypothetical condition, if the conditions to the appraisal are not met or they change, it could have a direct impact on the values reported herein AS COMPLETED MARKET VALUE INDICATOR FOR REAL ESTATE ONLY - 5/01/14 VIA THE INCOME APPROACH $2,335,000 TWO MILLION THREE HUNDRED THIRTY-FIVE THOUSAND DOLLARS Extraordinary Assumptions and/or Hypothetical Conditions: 1.) The subject is completed in a professional workman like manner per plans and specifications; 2.) The subject receives approvals from all regulatory agencies; and 3.) There is no significant change in the economy prior to the completion of proposed improvements. The user of this appraisal is cautioned, as with any extraordinary assumption or hypothetical condition, if the conditions to the appraisal are not met or they change, it could have a direct impact on the values reported herein AS IS MARKET VALUE INDICATOR FOR REAL ESTATE ONLY - 11/9/2012 VIA THE INCOME APPROACH $1,505,000 ONE MILLION FIVE HUNDRED FIVE THOUSAND DOLLARS

295 Sebago Road Naples, Maine

-69-

APPENDIX SECTION

The following items are appended to the body of this report:

LEGAL DESCRIPTION ZONING EXCERPTS PROPERTY EXHIBITS FF&E INCOME & EXPENSE DATA COMPARABLE SALES DATA SHEETS CLIENT ENGAGEMENT LETTER APPRAISER QUALIFICATIONS

LEGAL DESCRIPTION (5 pages to follow)

ZONING EXCERPTS (3 pages to follow)

PROPERTY EXHIBITS (6 pages to follow)

Entrance

Entrance Sign

Interior Office/Store/Owner’s Quarters

Kitchen

Office/Store/Owner’s Quarters

Swimming Pool

Recreation Hall

Interior Recreation Hall

Bath House

Bath House

Dump Station

Typical Interior Bath House

Water System

Typical Meter Post / Site

Interior Road

Interior Road

Playground

Interior Road / Camp Sites

INCOME & EXPENSE DATA (11 pages to follow)

OCCUPANCY REPORT (1 page to follow)

COMPARABLE SALES DATA SHEETS (9 pages to follow)

Improved Sale No. 1

Property Identification Record ID Property Type Property Name Address Tax ID Sale Data Property Rights Conditions of Sale Financing Sale History Verification

2164 Campground, Seasonal campground Camp N' Canoe Route 160, Brownfield, Oxford County, Maine 04010 Map R3 Lots 3B, 4 &5

Fee simple Assumed Arms length Assumed conventional No sales prior 3 years Greg Macleod, broker; Other sources: MAC Files, Town of Brownfield, Confirmed by Brian Diskin

Sale Price Cash Equivalent Downward Adjustment Adjusted Price

$1,800,000 $1,800,000 $150,000 FF&E, goodwill $1,650,000

Land Data Land Size Front Footage Zoning Topography Utilities

48.500 Acres or 2,112,660 SF 180 ft Total Frontage: 180 ft Route 160 None Level to sloping E, P

Improved Sale No. 1 (Cont.) Shape Landscaping Flood Info

Irregular Fields, wooded Portion of site located in flood hazard zone

Indicators Sale Price/Gross SF

$15,789.47 Actual or $14,473.68 Adjusted

Remarks Site has a total of ±48.5 acres with frontage on both the Saco River and Shepard Brook. Access is via a right of way across a State of Maine property (launching site) and a newly added 1.5-acre site that fronts on Route 160. The improved portion of the site is situated above the flood hazard zone. There is additional land, allowing group events, located in the flood zone. The property is mostly wooded, except the improved portion with an area (an overgrown field) adjacent along the Shepard Brook. The subject has a right of way for access to the Saco River on the property northerly and adjacent. The frontage on the Saco River is steep, but there is a deeded easement on the adjacent land up-river for access. The overall utility is good with adequate soils to support development with areas of flood hazard that does not severally impact the subject. A second access point from Route 160 contains 1.5 acres with 180' of road frontage and has a manufactured home. The subject is improved with 114 camping sites that are a mix of full service (i.e., water, electric, sewer) to no hook-ups. The campground is considered a full service campground that includes such services as a store, recreation hall, laundry, baths with showers, playground, living quarters and maintenance building. There are riverfront camping sites, standard sites, near river sites and group camping sites. The campground offers rental canoes with a full service shuttle service that will provide drop-offs and pick-ups for 1 to 2 ½ day trips starting in Conway, NH and ending in Hiram, ME. The newest sites have water, sewer and electric hook-ups along with a bath house. These will accommodate the larger RV's. The new access point provides direct access to the campground as well as providing a more highly visible retail area for canoe rentals.

Improved Sale No. 2

Property Identification Record ID Property Type Property Name Address Tax ID Sale Data Grantor Grantee Sale Date Deed Book/Page Property Rights Conditions of Sale Financing Sale History Verification

Sale Price Cash Equivalent Adjusted Price

2163 Campground, Campground Crooked River Campground State Park Rd, Casco, Cumberland County, Maine Map 3 Lot 7

Catherine Griffen ABD, LLC July 20, 2011 B 28837 P 285 Fee simple Arms length Seller -$325,000 No sales prior 3 years Richard Lord, appraiser; Other sources: Town of Casco, CCRD, Confirmed by Brian Diskin $650,000 $650,000 $650,000

Improved Sale No. 2 (Cont.) Land Data Land Size Zoning Topography Utilities Shape Landscaping Flood Info

59.620 Acres or 2,597,048 SF Residential Level WSEPC Irregular Fields, wooded Flood zone along Crooked River

Remarks Located off the Sebago Lake Road. Site contains 59.62 acres with 2,182' frontage on Crooked River the runs to Sebago Lake. Section of site within flood hazard zone. Campground is comprised of 41 sites with a mix of services: water, sewer, electric, cable. Small owner's quarters with ±1,000 sf., recreation hall, small camp store, restrooms, laundry, 2 wood frame cabins and bathhouse. Interior roads gravel. Buyer intends to expand to 100 sites.

Improved Sale No. 3

Property Identification Record ID Property Type Property Name Address Tax ID Sale Data Grantor Grantee Sale Date Property Rights Conditions of Sale Financing Sale History Verification

2100 Campground, Campground Harbor Hill Campground 189 Whittier Road, Meredith, Belknap County, New Hampshire 03253 Map S13 Lot 45

LBC, Inc MRJ, Inc February 24, 2011 Fee simple Arms length Conventional, grantor No sales prior three years Dick Lord, appraiser; May 10, 2010; Don Dutton, broker, Other sources: Town of Meredith, Confirmed by Brian Diskin

Sale Price Cash Equivalent Adjusted Price

$1,795,000 $1,795,000 $1,795,000

Land Data Land Size

54.910 Acres or 2,391,880 SF

Improved Sale No. 3 (Cont.) Front Footage Zoning Topography Utilities Shape Landscaping Flood Info

701 ft Total Frontage: 701 ft Residential Level to sloping WEP Rectangular Wooded, fields No flood hazard

Income Analysis Effective Gross Income Net Operating Income

$369,178 $143,959

Indicators Eff. Gross Income Multiplier Overall or Cap Rate

4.86 8.02%

Remarks This campground is located less than one mile from Lake Winnipesaukee, the second largest lake in New England (45,000± acres). The town of Meredith is one of the most popular tourist destination communities in the Lakes Region, with numerous restaurants, upscale retail shops and a large lake front park. The campground is located 12 miles east of I-93, the major limited access highway that bisects New Hampshire in a north-south direction. The campground contains 55± acres of land, much of which is undeveloped and consists mostly of dense woodlands. There is room for expansion, although zoning restrictions in Meredith will likely keep further expansion quite limited. The parcel contains a variety of slopes, which also may limit further development. Campsites vary in size, from small rustic tent sites to large sites that can accommodate the largest pullthrough campers and RVs. Septic hookups are available at 75 sites, and electricity (30-50 amps) and water service is available at all but a few rustic tent sites. Wi-Fi service and cable TV are available at the largest sites. Except for the entrance, the roadway system consists of a good quality gravel surface. Amenities include a heated in-ground swimming pool, a large recreation building that contains guest registration, camp store, hall for gatherings and entertainment, laundry facilities and restrooms. Three bath houses are located in the campground. Propane-fired heaters provide hot water for these facilities. Owners’ quarters consists of a free-standing single family home built new in 1990. The two-story house contains four bedrooms, 1 & ½ bathrooms, eat-in kitchen, living/recreation room and small office. The house is in very good condition. The campground was in very good condition at the time of this sale. The sellers displayed strong pride of ownership which showed in the high level of maintenance throughout the campground. This campground has produced a strong income stream for many years. It benefits from a high level of repeat business. The sellers exercised good expense control which contributed to the significant bottom line. 157 campsites.

Improved Sale No. 4

Property Identification Record ID Property Type Property Name Address Tax ID Sale Data Grantor Grantee Sale Date Deed Book/Page Property Rights Conditions of Sale Financing Sale History Verification

2101 Campground, Campground Vacationland Campground 233 Vacationland Road, Harrison, Cumberland County, Maine 04040 Map 56 Lot 1

Vacationland Campground, LLC RMO Holdings July 07, 2010 B 27896 P 89 Fee simple Arms length Conventional No sales prior three years Gretchen Osgood, grantee; May 10, 2012; Other sources: Town of Harrison, MAC files, Confirmed by Brian Diskin

Sale Price Cash Equivalent Downward Adjustment Adjusted Price

$910,000 $910,000 $120,000 FF&E, Goodwill $790,000

Land Data Land Size Front Footage Zoning Topography Utilities Shape Landscaping Flood Info

16.500 Acres or 718,740 SF 50 ft Total Frontage: 50 ft Right of way Shoreland Level to sloping WEP Rectangular Wooded, fields Along shore frontage

Improved Sale No. 4 (Cont.) Income Analysis Effective Gross Income Expenses Net Operating Income

$257,097 $153,120 $103,977

Indicators Eff. Gross Income Multiplier Overall or Cap Rate

3.07 13.16%

Remarks SITE DESCRIPTION Per assessment records the subject has 16.5 acres with 1,250’ of frontage on Crystal Lake. It is irregular in shape that is accessed from Vacationland Road, a private association road that is loosely maintained by abutting property owners but mostly falls to two: campground and Sealers Excavation. The site is a mix of mature softwood and hardwood with a small understory, open field, gravel campsites and gravel camp roads. The topography is level to sloping with a varied waterfront embankment. The campground has a central access road with 6 circular campsite access roads on both sides: first roadway services the open field with sites 1 to 7; second circular road services the “B” block; third and fourth service sites 163 to 199 and the “200” block respectively; the fifth and six circular campground roads services the water front sites and beach area. The campsites have a mix of services from primitive to full service electric, water and 30-amp electric. The sites are level with compact gravel surface for tents, campers, trailers and RVs. The water front sites are typically elevated above the water on an embankment with views down the length of lake. The beach area has a sandy beach with a gradually sloping bottom. A dock extends out ±75’ with “ells” that are rented or for camper use when renting canoes or kayaks. Building Descriptions Owner’s Quarters The owner’s quarters is a double wide manufactured home on slab. It is 7/3/2.5 with 1,796 sf. It is a wood frame with steel under carriage. The exterior is horizontal vinyl and a vinyl skirting. The roof is gabled and covered with asphalt shingles. The windows are vinyl double hung thermopane, doors are steel with storms. The interior is typically sheetrock walls and ceilings, carpeted or vinyl flooring. The kitchen area has center island, hardwood cabinets, stainless sink (2 bowl), electric range with hood and dishwasher. The living room has a heatilator insert wood stove. Bathrooms typically have fiberglass showers, vanities and a flush. The master bedroom has both a whirlpool tub and a shower. The rear entry (of kitchen) has a washer/dryer hook and 0.5 bathroom. Overall the condition is average. Camp Office-Store The camp office-store is located at the entrance to the campground. It is a wood frame with 688 sf. constructed on post. The exterior is a mix of vertical pine board and batten. The roof is gabled and shed roof covered either with asphalt shingles or rolled asphalt. There is an open porch along the front entrance with log supports and built-in split log benches. Windows are single glazed double hung. The interior is of mixed construction but typically wood walls (shingle, wood panel), floor and ceiling. There is an attached shed to the rear of the office-store. It was noted that there are areas of spongy flooring on the interior. The layout is functional with a store area and separate office for reservations and computer work station. The store area has a glass display case, shelving, and coolers. Laundry-Shed

The laundry-shed is located between the camp office and owner’s quarters. It is a wood frame with 578 sf. constructed on post. The exterior is a mix of painted plywood and vertical pine. The roof is gabled and covered with either rolled or shingled asphalt and translucent panels. This building is best described as three connected sheds. The laundry room has a wood floors, walls and ceiling. It is equipped with two coin operated washer and dryers each. The sheds are open stud with wood or earthen floors. Overall the condition is fair with uneven floors and rotting exterior siding at the ground level. Lower Bathhouse The lower bathhouse is located south of the owner’s quarters. It is a wood frame constructed on a slab foundation with 422 sf. There is an attached ell with electric hot water heaters. The exterior vertical pine board and batten. The roof is gabled and covered with metal sheeting. The windows are fixed with screens and board shutters. There are 2 uni-sex showers accessed from the exterior that have fiberglass showers. There are separate men and women’s bathrooms. The men’s is equipped with 3 sinks and 3 toilets. The women’s is similarly fit up with 2 sinks and 3 toilets. The interior finish is a mix of wood walls, marlite panels, open stud and concrete floors. Overall condition is fair to average with some rotting exterior boards.

CLIENT ENGAGEMENT LETTER (3 pages to follow)

APPRAISER QUALIFICATIONS (6 pages to follow)

EDUCATION

BRIAN P. DISKIN STATE OF MAINE CERTIFIED GENERAL REAL ESTATE APPRAISER #CG585 LICENSE EXPIRATION DATE: 12/31/2012 Seminar: ARates, Ratios & Reasonableness@ Appraisal Institute Workshop: Forestland Valuation & Conservation Easements; Real Estate Law Workshop: Technical Writing of Appraisal Reports USM, Center of Real Estate Education New England College Henniker, NH 1974 BA Natural Science (Eng/Geo.) 101 Society of R.E.A. Introduction to Appraising Real Property Standard & Ethics USM Center Real Estate Education Residential Certification Review USM, Center for Real Estate Education 520: Highest & Best Use and Market Analysis Appraisal Institute Capitalization Theory & Techniques, Part "A" Appraisal Institute University of New Hampshire School for Continuing Education 1. Boundary Law 2. Mathematics of Surveying State of New Hampshire Subsurface Disposal Designer License #219 Seminar - Appraising Troubled Properties Fundamentals of Separating Real Property, Personal Property and Intangible Business Assets Appraisal Institute -

EXPERIENCE Present

Maineland Consultants 30 Exchange Street Portland, Maine 04101 Fee Appraiser

1986-1990

Land Acquisitions Sugarbush Inc. Dover, NH

1985-1986

New Project Manager Concept Construction Gilford, NH

1976-1985

Land Surveyor Thaddeus Thorne Surveys, Inc. Center Conway, NH

PROFESSIONAL QUALIFICATIONS State of Maine Real Estate Appraiser General Certification #585 Environmental Assessment Consultant, (EAC) A professional designation of the National Society of Environmental Consultants, Member 1995 RESIDENTIAL Focus has been primarily commercial properties. Residential properties have ranged from $75,000 farmhouses to $1.3 million estates. MULTI-FAMILY Assignments range from 4 units to 19 units. Both form and narrative reports have been completed. Values ranged from $65,000 to $350,000. RETAIL Assignments include retail strip malls, outlet stores, mixed-use and single user structures. Extensive lease and highest and best use analysis. Values ranged from $130,000 to $1.750 million. MIXED USE BUILDINGS Cross section of mixed-use buildings consisting of any two of the following: apartments, medical offices, retail, offices, industrial, banks, restaurants. Values ranged from $130,000 to $250,000.

LAND Extensive land analysis for subdivisions and raw land. Developments included 40 plus lot subdivisions with capitol cost estimating, absorption studies, retail and wholesale values. Background in geology, surveying and development of subdivision allows expert analysis of the same. PARTIAL LIST OF CLIENTS SERVED BankBoston, Boston, MA Norway Savings Bank, Portland, ME Bank of America, Portland, ME & Providence, RI Fleet Boston Financial Group, Boston, MA Key Bank, Portland & Canton, OH Peoples United Bank, Portland, ME and Bridgeport, CT TD Bank, Portland, ME Bangor Savings Bank, Portland, ME Saco & Biddeford Savings Institute, Saco, South Portland & Scarborough, ME University Credit Union, Portland, ME

DAVID J. HARRIGAN – PRESIDENT STATE CERTIFIED GENERAL APPRAISER #CG124 LICENSE EXPIRATION DATE: 12/31/2012 David J. Harrigan has been appraising real estate since 1984. Over the past 20 years he has established himself as a true professional in the appraisal industry. During this time Mr. Harrigan has performed countless appraisals and appraisal reviews for Maineland Consultants. Mr. Harrigan also provides strict state regulated training to staff appraisers entering the industry. As the President of Maineland Consultants, he also provides direct supervision and guidance to all of the company appraisers. A candidate member of the Appraisal Institute since 1985, former Board of Director for Avesta Housing and the Mortgage Bankers Association, Approved FHA (#2066) Appraiser since 1985, and Realtor Member since 2005. Mr. Harrigan holds an Associate’s Degree from the University of Maine. EDUCATION February 2012: Appraisal Institute - Fundamentals of Separating Real Property, Personal Property and Intangible Business Assets March 2003:

IPED (101) - Low Income Housing Tax Credits (LIHTC)

February 2002: Appraisal Institute (620) - Sale Comparison, Small Mixed-Use October 1998: Appraisal Institute (430) - Professional Practices May 1995:

National Society of Environmental Consultants - Residential & Commercial Screening/Phase I Assessments

November 1990: Society of Real Estate Appraisers - Applied Income Report, Valuation (202) February 1988: Society of Real Estate Appraisers (201) - Principles of Income Property Appraising March 1985:

Society of Real Estate Appraisers (102) - Applied Residential Property Valuation

March 1984:

University of Southern Maine (101) - An Introduction to Appraising Real Property,

Degree and Graduate University Of Maine at Orono, Associate’s Degree Criminal Law - June 1977 Graduate: Chelmsford High School, Chelmsford, MA - 1975 APPRAISAL SEMINARS Bi-annual 1988 to 2012

USPAPBProfessional Practice - A.I. & S.R.E.A.

2011

Income Valuation of Small Mixed-Use Properties

2010

Appraisal Curriculum Overview

2007/09

Evaluating Commercial Construction Quality Assurance/Residential Appraisal

2005/06

Subdivision Valuation - A.I. Prof. Guide to URAR 2005 - A.I.

2003/04

Supporting Capitalization Rates - A.I. Partial Interest Valuation - A.I. Avoiding Liability as an Appraiser - A.I.

2001/02

Review Appraising - A.I. Market Analysis, Trends & Techniques - A.I.

1985 thru 2000

Detrimental Conditions - A.I. Automated Valuation Models - A.I. Hotel/Motel Valuation - A.I. Appraising Conservation Easements - A.I. 2-4 Family/Condo Report Changes - A.I. Development & Reporting of Limited Appraisal (General & Residential) - A.I. The New URAR Seminar - A.I. Appraising Troubled Properties - A.I. Appraisal Review - A.I. Government Regulations - A.I. Rates, Ratios & Reasonableness - A.I. Financial Calculator Seminar - S.R.E.A. Residential Cost Handbook Seminar - M&S Commercial Square Foot Method Seminar - M&S Uniform Residential Appraisal Report Seminar - S.R.E.A. Pre Purchase Home Inspection Seminar - S.R.E.A.

A.I. S.R.E.A. M&S

Appraisal Institute Society of Real Estate Appraisers Marshall & Swift Publications

EXPERIENCE 1986 – Present

May 1984 - Sept. 1986

Maineland Consultants Senior Staff Appraiser/Principal 30 Exchange Street Portland, ME Property Financial Services Portland, ME Fee Appraiser

PROFESSIONAL AFFILIATIONS F.H.A., Norris Cotton Federal Building 275 Chestnut Street Manchester, NH F.H.A./HUD Appraiser #2066 State of Maine Certified General Appraiser #CG124 Environmental Assessment Consultant (EAC) National Society of Environmental Consultants, 1995 – Inactive ASSOCIATION MEMBERSHIP

Candidate Member, Appraisal Institute State of Maine, Chapter #202 Board of Directors: York Cumberland Housing – Avesta (Former) Mortgage Banker Association – ME (Former)

PARTIAL LIST OF CLIENTS SERVED Bank of America, ME & MA Bath Savings Bank, ME Bangor Savings Bank, ME BankBoston, Boston, MA Camden National Bank, ME Norway Savings Bank, Portland, ME Gorham Savings Bank, Gorham, ME Key Bank, Portland, ME & Canton, OH Maine State Housing Authority Paul Thelin, Attorney at Law, South Portland, ME Peoples United, Portland, ME & Bridgeport, CT TD Bank, N.A., Portland, ME Saco Biddeford Savings Bank, Saco, ME For the past 20 years, Mr. Harrigan has completed appraisals and acted as Maineland Consultants Internal “Supervisory” Review Appraiser. Assignments include complex Going Concern Analysis, Leased Fee Estates, Small multi-family and single-family properties, Low Income Housing Tax Credit projects, Luxury Homes, Subdivisions, and Master Condominium Projects.