CC_Agenda_06-18-2025_Item_12 — Calexico City Council, June 18, 2025

12 ATTACHMENT NO. 1
CESAR CHAVEZ BLVD. EMERSON AVENUE
6TH STREET
5TH STREET
7TH STREET
Southern California Railroad
058-431-002
058-411-010 058-411-009
058-431-001
El Centro, California 92243

ENGINEERING PLANNING SURVEYING
The Holt Group, Inc.
1601 N. Imperial Ave. (760)337-3883
DATE : 9/20/2023 NOT TO SCALE PROJECT No. 176.037
LEGEND:

CITY OF CALEXICO VICINITY MAP

APPLICANTS PROPERTY PORTION PROPOSED FOR VACATION
ATTACHMENT NO. 2
Proposed Abandoned Roadway
No Situs Address
Calexico, California 92231
Real Estate Appraisal Report as of November 2, 2024
Issued: January 24, 2025

PRIVILEGED AND CONFIDENTIAL

Contact Information
For more information, please contact one of the following members of the engagement team:

Drew Hoskins, MAI
Managing Director
949.335.3943
[email protected]
Aaron Estrada
Vice President
858.925.8585
[email protected]
Letter of Transmittal

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - i - PRIVILEGED AND CONFIDENTIAL
January 24, 2025
Ralph Cordova Jr., Esq.

Cordova Law & Consulting
750 W Main Street
El Centro, CA 92243
RE: Real Estate Appraisal of a Proposed Abandoned Roadway in Calexico, California 92231 Stout Risius Ross, LLC Project #: 4073116
Dear Mr. Cordova:

In accordance with your request, this letter and accompanying appraisal report present our opinion of the market value of the fee simple interest in the real property located along W 6th Street in Calexico, California 92231 (the “subject”). The date of value is November 2, 2024 (the “valuation date”). The intended use of the appraisal is for internal decision-making purposes by Cordova Law & Consulting (the “Client”). The Client is the intended user of this report.

The subject represents a public roadway that is located along W 6th Street, east of the Union Pacific Railroad and west of Emerson Avenue, in the City of Calexico within the El Centro submarket of the El Centro, CA MSA. The roadway is currently owned by the City of Calexico, who is planning to abandon the roadway and convert the property to a legal parcel. Per information provided, the roadway has not been maintained by the City of Calexico in several years, thus prompting the abandonment. Once the abandonment is complete, the subject is anticipated to comprise approximately 0.50 acres, or 21,712 square feet of land area. Additionally, the subject is anticipated to feature a rectangular shape, a level topography, and it will be zoned IND Industrial. As of the effective date of value, the subject was occupied by the owner of the adjacent properties who is currently utilizing the site to support their existing industrial/outdoor storage use.

A more detailed description of the site is provided in the accompanying report.

This appraisal conforms with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation, as well as the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

Based on the analysis presented in this report, the market value of the fee simple interest in the subject is concluded to be:

Letter of Transmittal

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - ii - PRIVILEGED AND CONFIDENTIAL • As of the effective date of value, given its status as a public roadway the subject was not zoned by the City of Calexico. Per information provided by the client, the subject property is anticipated to be zoned to IND Industrial once the public roadway abandonment and conversion to a legal parcel available for private ownership is complete. This appraisal is completed under the hypothetical condition that following the public roadway abandonment and conversion to a legal parcel available for private ownership, the subject land is zoned IND Industrial by the City of Calexico.

This letter is invalid as an opinion of value if detached from the appraisal report and exhibits. The report contains a description of the procedures, methodologies, and conclusions. This letter and the accompanying report are solely intended for the client for the purpose stated herein, and are not to be referred to or distributed, in whole or in part, without our prior written consent. The reported value opinions are applicable for the stated date and purpose only, and may not be appropriate for any other date or purpose. The reported value opinions are qualified by certain assumptions, limiting conditions, definitions, and a certification included in the accompanying report.

Yours very truly,

STOUT RISIUS ROSS, LLC
__________________________________ __________________________________ Drew Hoskins, MAI Aaron Estrada
Managing Director Vice President
California Certified General Appraiser California Certified General Appraiser License #: 3000509 License #: 3008281
Expiration Date: December 3, 2026 Expiration Date: November 21, 2026 949.335.3943 858.925.8585
[email protected] [email protected]
Table of Contents

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - iii - PRIVILEGED AND CONFIDENTIAL I. Summary of Salient Data ................................................................................................ 1 II. Assignment Overview ..................................................................................................... 4 III. National Economic Outlook............................................................................................. 8 IV. Regional Overview........................................................................................................ 16 V. Neighborhood Overview ............................................................................................... 23 VI. Market Overview........................................................................................................... 26 VII. Legal and Physical Description..................................................................................... 35 VIII. Real Estate Taxes......................................................................................................... 39 IX. Highest and Best Use ................................................................................................... 41 X. Land Valuation.............................................................................................................. 44 XI. Reconciliation of Value ................................................................................................. 51 XII. Certification................................................................................................................... 53 Table of Exhibits

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - iv - PRIVILEGED AND CONFIDENTIAL Exhibit A...........................................................................Assumptions and Limiting Conditions Exhibit B.....................................................................................................Appraisal Definitions Exhibit C.................................................................................................... Subject Photographs Exhibit D.............................................................................. Comparable Property Photographs Exhibit E ..........................................................................................................Legal Description Exhibit F ........................................................................................................Appraisal Licenses Exhibit G...........................................................................................Statement of Qualifications

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 1 - PRIVILEGED AND CONFIDENTIAL
Section I
Summary of Salient Data
Summary of Salient Data

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 2 - PRIVILEGED AND CONFIDENTIAL
Summary of Salient Data

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 3 - PRIVILEGED AND CONFIDENTIAL
This appraisal is completed under the following hypothetical conditions:
• As of the effective date of value, the subject represented a public roadway that was owned by the City of Calexico. Per information provided by the client, the subject property is anticipated to be abandoned as a public roadway, and subsequently converted to be a legal parcel, comprising 21,712 square feet (0.50 acres), that is available for private ownership once the abandonment is complete. As of the date of this report, the timeline of the public roadway abandonment and conversion to a legal parcel available for private ownership is unknown. This appraisal is completed under the hypothetical condition that the abandonment of the subject property as a public roadway was complete, and the subject property represents a legal parcel, comprising 21,712 square feet (0.50 acres), that is available for private ownership and use. • As of the effective date of value, given its status as a public roadway the subject was not zoned by the City of Calexico. Per information provided by the client, the subject property is anticipated to be zoned to IND Industrial once the public roadway abandonment and conversion to a legal parcel available for private ownership is complete. This appraisal is completed under the hypothetical condition that following the public roadway abandonment and conversion to a legal parcel available for private ownership, the subject land is zoned IND Industrial by the City of Calexico.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 4 - PRIVILEGED AND CONFIDENTIAL
Section II
Assignment Overview
Assignment Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 5 - PRIVILEGED AND CONFIDENTIAL
Subject Overview
The subject represents a public roadway that is located along W 6th Street, east of the Union Pacific Railroad and west of Emerson Avenue, in the El Centro submarket of the El Centro, CA MSA. The subject does not have a physical address, but it is located in Calexico, California 92231. The roadway is currently owned by the City of Calexico, who is planning to abandon the roadway and convert the property to a legal parcel. Per information provided, the roadway has not been maintained by the City of Calexico in several years, which is prompting the abandonment. The subject is anticipated to feature a rectangular shape, a level topography, and it will be zoned IND Industrial.

Legal Description
As of the effective date of value, the subject property did not contain an assessor parcel number. A proposed legal description is presented as an exhibit of this report. The subject is more fully described, legally and physically, within this report.

Current Occupancy
As of the effective date of value, the subject was occupied by the owner of the adjacent properties who is currently utilizing the roadway to support their existing industrial/outdoor storage use. Per information provided, there is currently no lease in place between the owner and the occupant.

Relevant Dates
Our opinion of the market value of the fee simple interest in the subject is determined as of November 2, 2024. The subject was inspected on November 2, 2024 by Aaron Estrada.

Ownership History
Title to the subject is currently vested in the name of the City of Calexico. To the best of our knowledge, there have not been any recorded arm’s length transfers of the subject within the past three years. Furthermore, to the best of our knowledge, the property is not currently being marketed for sale.

It is of note that the owner of the adjacent properties, Marco Antonio Camarena Madrigal, Jr., plans to purchase the subject property from the current owner once the abandonment is complete the property has been converted to a legal parcel. According to the client, a purchase price has yet to be negotiated.

Purpose of the Appraisal and Property Rights Appraised
The purpose of this appraisal is to provide an opinion of the market value of the fee simple interest in the subject.

Intended Use and Users of the Appraisal
The intended use of the appraisal is for internal decision-making purposes by Cordova Law & Consulting (the “Client”). The Client is the intended user of this report.

Competency of the Appraiser
We certify that we are competent and have the knowledge and experience required to perform this specific appraisal assignment.

Scope of Work
The scope of work associated with the completion of this assignment includes the following:
 Contacting representatives of property ownership and/or management to obtain physical data on the property valued in this appraisal.
 Inspection of the subject property and the surrounding market.

Assignment Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 6 - PRIVILEGED AND CONFIDENTIAL
 Analysis of location, demographics, and market conditions.  Collection and analysis of current zoning data.
 Estimation of the highest and best use of the subject.  Investigation of market data available from public records and commercial sources of data. Search parameters for comparable market data began in the subject’s immediate neighborhood and were expanded geographically until sufficient data was found to be able to provide a supportable opinion of fair market value. The sales data used in this appraisal was either verified with a person or persons directly involved in the transaction, third-party market participants, applicable commercial real estate data services, and/or with public records.
 Analysis of the market data found and our opinion of market value, as defined in this report, of the subject as of the indicated valuation date using the appropriate valuation approaches. In this case, the sales comparison approach was performed to value the subject. The income capitalization approach and cost approach are not applicable given the subject’s status as a proposed abandoned roadway.  Preparation of this appraisal report, which presents sufficient information to enable the client and other intended users, as identified, to understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches to value. The report includes photographs of the subject; a description of the subject’s neighborhood, the site, and any improvements on the site; a description of the proposed zoning; a highest and best use analysis, a map of the comparable market data used; and a reconciliation of the data and approaches to value. All other data and analyses found and/or used in the course of this appraisal assignment is retained in the appraisal file.

Exposure Time and Marketing Period
Exposure Time
According to the Statement on Appraisal Standards Number Six of the Uniform Standards of Professional Appraisal Practice, 1997, published by the Appraisal Standards Board, reasonable exposure time is one of a series of conditions in most market value definitions. Exposure time is always presumed to precede the effective date of the appraisal.

Exposure time is defined as the estimated length of time 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; a retrospective estimate based upon an analysis of past events assuming a competitive and open market.

Exposure time is different for various types of real estate and under various market conditions. It is noted that the overall concept of reasonable exposure time encompasses not only adequate, sufficient, and reasonable time but also adequate, sufficient, and reasonable effort. This statement focuses on the time component.

The fact that exposure time is always presumed to occur prior to the effective date of the appraisal is substantiated by related facts in the appraisal process: supply and demand conditions as of the effective date of the appraisal; the use of current cost information; the analysis of historical sales information (sold after exposure and after completion of negotiations between the seller and the buyer); and the analysis of future income expectancy estimated from the effective date of the appraisal.

Based upon an analysis of time on market for the sales of similar properties, published investor surveys, and discussions with market participants, the estimated exposure time is 6 to 12 months.

Marketing Period
According to Advisory Opinion Seven of the Uniform Standards of Professional Appraisal Practice, 1997, published by the Appraisal Standards Board, reasonable marketing period is an estimate of the amount of time it might take to sell a property interest in real estate at the estimated market value level during the period immediately after the effective date of an appraisal.

In contrast to exposure time, which is presumed to precede the effective date of an appraisal, marketing period is presumed to occur after the effective date of value.

Assignment Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 7 - PRIVILEGED AND CONFIDENTIAL
The estimate of marketing period uses some of the same data analyzed in the process of estimating exposure time, and is not intended to be a prediction of a date of sale or a one-line statement. It is an integral part of the analyses conducted during the appraisal assignment. The estimate may be expressed as a range and can be based on one or more of the following items.
 Statistical information about days on the market.
 Information gathered through sales verification.
 Interviews of market participants.
 Anticipated changes in market conditions.

Related information obtained through this process includes other market conditions that may affect marketing time, such as the identification of typical buyers and sellers for the type of real estate involved, and typical equity investment levels and/or financing terms. The reasonable marketing period is a function of price, time, use, and anticipated market conditions such as changes in the cost and availability of funds; not an isolated estimate of time alone. The estimated marketing period is 6 to 12 months, based on the same information.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 8 - PRIVILEGED AND CONFIDENTIAL
Section III
National Economic Outlook
National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 9 - PRIVILEGED AND CONFIDENTIAL
Economic Overview
The performance of the macro economy,
specific industries, and individual firms is often
related. Moreover, in the valuation of a
company, the general economic outlook should
be considered since such information
influences how investors perceive alternative
investment opportunities. The following pages
provide a brief overview of the U.S. economy,
as well as a near-term outlook, focusing on
certain key economic indicators.

Gross Domestic Product
The most widely used indicator of economic
activity in the United States is the U.S. gross
domestic product (“GDP”). GDP measures total
production and consumption of goods and
services in the United States and is used to
define phases of the business cycle. Real (i.e.,
inflation adjusted) GDP growth of 2.0% to 2.5%
is generally considered optimal when the
economy is operating at full employment
(approximately 5.0% unemployment rate).1 The
annual percentage change in GDP over select time periods is presented in the adjacent tables.  From 1950 to 2023, real GDP grew at an average rate of 3.2% per year, while the average from 1990 to 2023 was 2.5%.
 GDP increased at an annual rate of 2.8% in the second quarter of 2024, following a 1.4% increase in the first quarter of 2024. Compared with the first quarter of 2024, consumer spending, investment, and inventories were positive factors influencing GDP.2
 GDP is forecasted to increase at an annual rate of 1.7% in the second half of 2024 and 2.0% in the first half of 2025.
3 1 Moody’s Analytics: Indicator Definition - U.S. GDP, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>. 2 Hoyt, Scott, Moody’s Analytics: U.S. GDP, 25 July 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
3 Federal Reserve Bank of Philadelphia, The Livingston Survey, 14 June 2024, Economic Research, 5 September 2024, <https://www.philadelphiafed.org/surveys-and-data/real-time-data-research/livingston-2024-06>.

Long-Term Historical U.S. GDP
Annual Percentage Change
Low High Average
1950 to 2023
Nominal -2.0% 15.7% 6.5%
Real -2.6% 8.7% 3.2%
1990 to 2023
Nominal -2.0% 10.7% 4.8%
Real -2.6% 5.8% 2.5%
Source: Bureau of Economic Analysis, U.S. Department of Commerce Current and Forecasted U.S. Real GDP
Annualized % Change From Prior Quarter
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia

2.7%

7.0%
-2.0%
-0.6%

2.7% 2.6% 2.2% 2.1%

4.9%

3.4%

1.4%

2.8%

1.7% 2.0%
-2.5%

7.5%
Q3:21 Q4:21 Q1:22 Q2:22 Q3:22 Q4:22 Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 2H:24 E
1H:25
E
National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 10 - PRIVILEGED AND CONFIDENTIAL Interest Rates
Interest rates reflect the cost of borrowed
capital. Since Treasury securities are backed
by the U.S. government, yields on U.S.

Treasuries are widely deemed to represent
risk-free interest rates and are used as
reference points for the yields of other
securities. Over the past 20 years, the 10-year
U.S. Treasury constant maturity yield
averaged 2.9%.
 The 10-year U.S. Treasury constant
maturity yield decreased to 4.3% in
July.
4  The rate is forecasted to reach 3.9% by June 2025.
5 Consumer Price Index
The Consumer Price Index (“CPI”) is a
measure of the weighted average change in
prices paid by urban consumers for a fixed set
of basic goods and services over time. The
CPI has increased at an average rate of 2.6%
over the past 20 years.6
 The CPI increased 0.2% in July and has
increased 2.9% over the past 12
months.
 The core index, excluding food and
energy prices, increased 0.2% in July
and has increased 3.2% over the past
12 months.7
 Based on data obtained from the Survey of Professional Forecasters, the CPI is expected to increase 3.1% in 2024 and 2.4% in 2025.
8 4
The Federal Reserve Board, Federal Reserve Statistical Release – Economic Research & Data, 1 August 2024, Federal Reserve, 5 September 2024, <https://www.federalreserve.gov/datadownload/Choose.aspx?rel=H15>. 5 Federal Reserve Bank of Philadelphia, The Livingston Survey. 6 U.S. Bureau of Labor Statistics.
7 Colyar, Matt, Moody’s Analytics: Consumer Price Index, 14 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
8 Federal Reserve Bank of Philadelphia, Survey of Professional Forecasters, 10 May 2024, Economic Research, 5 September 2024, <https://www.philadelphiafed.org/-/media/frbp/assets/surveys-and-data/survey-of-professional-forecasters/2024/spfq224>. 10-Year U.S. Treasury Note Yields
% Annual Yield
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia

4.2% 4.4%

4.8%

4.5%

4.0% 4.1% 4.2% 4.2%

4.5% 4.5% 4.3% 4.3% 4.1% 3.9%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Dec
24 E
Jun
25 E
U.S. Consumer Price Index
% Change From One Year Ago - All Urban Consumers
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia

3.7% 3.7%

3.2% 3.1%

3.4%

3.1% 3.2%

3.5% 3.4% 3.3%

3.0% 2.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Historical 2024 Est. 2025 Est.

National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 11 - PRIVILEGED AND CONFIDENTIAL Employment Situation
Payroll employment is a measure of the net
jobs created or lost in the economy
(excluding farming). Payroll employment is
the most closely watched economic statistic
because of its timeliness, accuracy, and
importance as an indicator of overall
economic activity. Additionally, the
unemployment rate measures the
percentage of the total labor force that is
unemployed and actively seeking
employment. Typically, economists
consider the economy to be operating at full employment when the unemployment rate is approximately 5.0%.9  Nonfarm payrolls increased by 114,000 in July, which was below the consensus estimate of 175,000 net jobs added.
 The unemployment rate increased to 4.3% in July.
10  The unemployment rate is forecasted to reach 4.0% in December 2024 and 4.1% in June 2025. 11 Consumer Sentiment
The Index of Consumer Sentiment,
normalized at a value of 100 in the first
quarter of 1966, is constructed by the
Survey Research Center at the University of
Michigan based on a survey of consumers
regarding personal finances, business
conditions, and anticipated spending. This
metric is an important barometer of the
strength of the economy since consumer
spending represents two-thirds of GDP.
 Consumer sentiment decreased by

1.8 points in July to 66.4.
 Gasoline prices, high interest rates, and a softening job market were negative factors influencing consumer sentiment.
12 9 Moody’s Analytics: Indicator Definition - U.S. GDP. 10 DeAntonio, Dante, Moody’s Analytics: Employment Situation, 2 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
11 Federal Reserve Bank of Philadelphia, The Livingston Survey. 12 Hoyt, Scott, Moody’s Analytics: University of Michigan Consumer Sentiment Survey, 26 July 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.

U.S. Unemployment Rate
% Unemployment Rate
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia

3.8% 3.8% 3.8% 3.7% 3.7% 3.7% 3.9% 3.8% 3.9% 4.0% 4.1% 4.3%

4.0% 4.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Dec
24 E
Jun
25 E
Consumer Sentiment
Q1:1966 = 100
Source: Moody's Analytics

69.4 67.9

63.8 61.3

69.7 79.0

76.9 79.4

77.2 69.1 68.2 66.4

45.0 50.0

55.0 60.0

65.0 70.0

75.0 80.0

85.0 Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 12 - PRIVILEGED AND CONFIDENTIAL Industrial Production
The Industrial Production Index measures the
change in real production output in U.S.
manufacturing, mining, and electric and gas
utilities. Together with construction, the
industrial sector accounts for a large portion of
the variation in national output. Over the past
20 years, industrial production has increased
at an average annual rate of 0.7%, or 0.06%
on a monthly basis.13
 Industrial production decreased 0.6% in
July, which follows an increase of 0.3%
in June.
14  Industrial production is projected to increase at an annual rate of 1.4% in the second half of 2024 and 1.8% in the first half of 2025, respectively.
15 (The forecasted annual rates are shown on a monthly basis in the adjacent chart.)
Purchasing Managers’ Index
The Purchasing Managers’ Index (“PMI”) is
a monthly composite index based on
surveys of purchasing managers conducted
by the Institute for Supply Management
regarding manufacturing activity. Index
values above 50 indicate an expanding
manufacturing sector, while values below
50 indicate a contracting manufacturing
sector.
 The PMI decreased by 1.7 points in
July to 46.8.
 New orders, production, and employment indices were negative factors influencing manufacturing activity in the U.S.16

13 The Federal Reserve Board.
14 Colyar, Matt, Moody’s Analytics: Industrial Production, 15 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
15 Federal Reserve Bank of Philadelphia, The Livingston Survey. 16 Burton, Elise, Moody’s Analytics: ISM Manufacturing Index, 1 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.

Industrial Production
One-Month % Change - Seasonally Adjusted Basis
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia -0.1%

0.2%
-0.7%

0.4%
-0.2%
-1.1%

1.2%
-0.2%

0.0%

0.8%

0.3%
-0.6%

0.1% 0.1%
-1.5%
-1.0%
-0.5%

0.0%

0.5%

1.0%

1.5%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 2H:24
E
1H:25
E
Purchasing Managers' Index
Seasonally Adjusted Basis
Source: Moody's Analytics

47.6 48.6

46.9 46.6 47.1

49.1 47.8

50.3 49.2 48.7 48.5

46.8 30.0

35.0 40.0

45.0 50.0

55.0 Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 13 - PRIVILEGED AND CONFIDENTIAL Sales of Existing and New
Homes
Sales of both existing and new homes act
as a leading indicator of consumer
spending, construction spending, and
employment. Since 2000, existing home
sales averaged 5.4 million units annually,
while 698,000 new homes were sold
each year, on average.17
 Existing home sales increased

1.3% in July to an annualized level
of 3.95 million units. The inventory
of existing homes decreased to 4.0 months.18
 In July, 739,000 new residential units were sold on an annualized basis, 10.6% above sales in June.

Inventories decreased to 7.5 months.19
New Residential Construction
New residential construction provides
data regarding the construction of new
privately-owned residential structures
in the U.S. Housing starts are an
indication of current residential
construction activity and construction
employment. New home construction
has averaged 1.3 million units per year
since 2000.20
 Housing starts decreased 6.8%
to 1.24 million units in July on an
annualized basis. Housing
permits decreased 3.0% in July.
21  Housing starts are projected to reach 1.46 million annualized units by June 2025. 22 17 U.S. Census Bureau and the National Association of Realtors. 18 Whitcher, Shandor, Moody’s Analytics: Existing-Home Sales, 22 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
19 Walsh, Matthew, Moody’s Analytics: New-Home Sales, 23 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
20 U.S. Census Bureau.
21 Walsh, Matthew, Moody’s Analytics: New Residential Construction (C20), 16 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
22 Federal Reserve Bank of Philadelphia, The Livingston Survey.

Sales of Existing and New Homes
Source: Moody's Analytics

0.0 0.1

0.2 0.3

0.4 0.5

0.6 0.7

0.8 0.9

1.0 0.0

1.0 2.0

3.0 4.0

5.0 6.0
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Existing-Home Sales,
Seasonally Adjusted Annualized
Existing Home Sales (In Millions)
New Home Sales,
Seasonally Adjusted Annualized
New Home Sales (In Millions)
New Residential Construction
Seasonally Adjusted Annualized Units (In Millions)
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia

1.31 1.36 1.37

1.51 1.57

1.38 1.55

1.30 1.38 1.32 1.33 1.24

1.43 1.46

0.0 0.25

0.50 0.75

1.00 1.25

1.50 1.75

2.00 Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Dec
24 E
Jun
25 E
National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 14 - PRIVILEGED AND CONFIDENTIAL Equity Markets
The Standard and Poor’s (“S&P”) 500 is an
index of 500 stocks meant to reflect the risk
and return characteristics of large
capitalization equities. Similarly, the Russell
2000 Index measures the performance of
the small capitalization segment of U.S.
equities. As of December 31, 2023, the S&P
500 and Russell 2000 have returned 7.6%
and 6.7% per annum over the past 20 years,
respectively.23
 In July, the S&P 500 increased 1.1% and the Russell 2000 increased 10.1%.  Through the end of July, the S&P 500 increased 20.3%, and the Russell 2000 increased 12.5%, from one year ago.24
Euro-U.S. Dollar Exchange Rate
The Euro (“EUR”) to U.S. Dollar (“USD”)
exchange rate relates the relative value of
the EUR in USD. As this exchange rate
increases, the EUR increases in value
relative to the USD. Therefore, USDdenominated assets will be less expensive in terms of EUR, and conversely, EURdenominated assets will be more expensive in terms of USD. As a result,
companies with significant foreign
operations will benefit in periods of appreciating foreign currency, and vice versa.  The USD increased by 1.8% against the EUR on a year-over-year basis. In July, the USD decreased by

1.0% compared to the EUR, with the EUR equal to $1.08.
25 23 Bloomberg L.P.
24 S&P Capital IQ, Inc. 25 Ibid.

One-Year Stock Index Performance
Source: S&P Capital IQ, Inc.
-25.0%
-15.0%
-5.0%

5.0%

15.0%

25.0%

35.0%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 S&P 500 Index Russell 2000 Index
% Change
EUR-USD Exchange Rate
Source: S&P Capital IQ, Inc.
$1.00
$1.05
$1.10
$1.15
$1.20
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 In USD
National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 15 - PRIVILEGED AND CONFIDENTIAL Market Volatility
The Chicago Board Options Exchange
(“CBOE”) Volatility Index (the “VIX”)
represents the annualized implied volatility
of S&P 500 Index options with 30-day
maturities utilizing a wide range of strike
prices. Over the past twenty years, the VIX,
which measures the market’s expectation
of 30-day volatility, has averaged
approximately 19.29%.
 The VIX averaged 14.6% during the
past 12 months. Volatility was highest during the month of October 2023, reaching a high of 21.7%.  Most recently, the VIX averaged 14.5% and reached a high of 18.5% during July 2024. 26 26 Ibid.

S&P 500 Index and CBOE Volatility Index ("VIX")
Source: S&P Capital IQ, Inc.
0 5.0

10.0 15.0

20.0 25.0

30.0 2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 S&P 500 Index
($ Value)
VIX
(%)

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 16 - PRIVILEGED AND CONFIDENTIAL Section IV
Regional Overview
Regional Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 17 - PRIVILEGED AND CONFIDENTIAL Regional Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 18 - PRIVILEGED AND CONFIDENTIAL El Centro Metropolitan Regional Analysis
The subject is located in Imperial County within the City of Calexico. Imperial County is also referred to as the El Centro Metropolitan Statistical Area (El Centro MSA). Imperial County is located in the southeast corner of California and was originally established in 1907. Imperial County is bordered by Arizona to the east, Mexico to the south, San Diego County to the west, and Riverside County is to the North. The region is approximately 4,177 square miles and most of which is below sea level. It is best described as a desert region with high temperatures and low average rainfall. The region’s economy is heavily based on agriculture with irrigation provided by the Colorado River. Imperial County is home to the Naval Air Facility El Centro, as well as several other county and municipal owned airports. It is notable that Imperial County historically has had one of the nation’s highest unemployment rates.

The subject is located in City of Calexico in the south of Imperial County. Calexico is a border city situated along the US-Mexico border and is generally bordered by Heber to the north, Mexicali to the south, and rural Imperial County to the east and west. It is located about 112 miles east of San Diego, 118 miles southeast of Palm Springs, and 240 miles southwest of Phoenix, AZ. Calexico spans approximately 8.62 square miles and contains a population of approximately 39,000 residents.

The following sections detail demographic, income, and employment information for the El Centro, CA MSA, Imperial County, and Calexico.

Population Characteristics
Based on information compiled by Esri Business Analyst Online (Esri BAO), the population and income characteristics for the El Centro, CA MSA, Imperial County, and Calexico are analyzed. The population and household trends for each area are displayed in the following charts.

As displayed, population has followed a generally increasing trend since 2010 for the El Centro, CA MSA and Imperial County, while population figures have trended downwards for the City of Calexico. This most recent trend in population for the El Centro, CA MSA, Imperial County, and the City of Calexico is expected to moderate moving forward.

Regional Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 19 - PRIVILEGED AND CONFIDENTIAL As displayed, households have followed a generally increasing trend since 2010 for the El Centro, CA MSA, Imperial County, and the City of Calexico. The most recent trend in households for the City of Calexico is expected to reverse course moving towards 2027, while the trends in households evidenced between 2010 and 2022 within the El Centro, CA MSA and Imperial County are expected to moderate through 2027.

Housing Characteristics
As displayed, owner-occupied housing has followed a generally increasing trend since 2010 for the El Centro, CA MSA and Imperial County, while owner-occupied housing figures have trended downwards for the City of Calexico.

The most recent trend in owner-occupied housing for the City of Calexico is expected to reverse course moving towards 2027, while the trends in owner-occupied housing evidenced between 2010 and 2022 within the El Centro, CA MSA and Imperial County are expected to escalate through 2027.

As displayed, renter-occupied housing has followed a generally increasing trend since 2010 for the El Centro, CA MSA, Imperial County, and the City of Calexico. The most recent trends in renter-occupied housing for the El Centro, CA MSA, Imperial County, and the City of Calexico are expected to reverse course moving towards 2027.

Income Characteristics
Regional Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 20 - PRIVILEGED AND CONFIDENTIAL Median household income levels are highest in the El Centro, CA MSA, followed by the El Centro, CA MSA and the El Centro, CA MSA. As displayed, median household income levels are expected to follow a generally increasing trend through 2027 for the El Centro, CA MSA, Imperial County, and the City of Calexico.

Median home values are highest in the City of Calexico, followed by the El Centro, CA MSA and the El Centro, CA MSA. As displayed, median home values have followed a generally increasing trend since 2010 for the El Centro, CA MSA, Imperial County, and the City of Calexico.

Economic and Employment Profile
The economic profiles of the El Centro, CA MSA, Imperial County, and Calexico are similar. According to Esri BAO, each area has large concentrations of employment in the services, public administration, and retail trade sectors.

Regional Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 21 - PRIVILEGED AND CONFIDENTIAL White-collar occupations include executive and managerial, professional specialty, technical support, sales, and administrative support occupations. Blue-collar occupations include precision, production, craft and repair, machine operator, transportation and material moving, and laborers. As displayed, white-collar occupations account for the highest percentage of employment, followed by services and blue-collar professions.Unemployment The unemployment situation in the United States continued to improve through 2023. The nation ended the year with a jobless rate of 3.6%, currently 4.5% off its ten-year high, which occurred in 2020. As of October 2024, the non-seasonally adjusted monthly unemployment rate is 3.5%.

The following table indicates the trend of annual unemployment rates from 2014 through 2023, and October 2024 for the El Centro, CA MSA, Imperial County, and Calexico. The figures presented are non-seasonally adjusted rates reported by the BLS.

With the onset of the national recession, unemployment rates began to increase in 2008. Prior to the COVID-19 pandemic in March of 2020, the United States had seen dramatic improvements year-over-year since 2010, marking the longest period of economic growth in the country’s history. Over the last eleven years, the United States recorded its highest unemployment rate in 2020 measuring 8.1%, or approximately 3.3% above the eleven-year national average of 4.8%. The nation’s lowest unemployment figures were achieved in 2024, measuring 3.5%, approximately 1.3% below the eleven-year national average. As of October 2024, the national unemployment rate is 3.5%, which measures 4.6% below the eleven-year high.

The highest unemployment rate for Imperial County was recorded in 2015 measuring 24.6%, or approximately 4.5% above the eleven-year average of 20.1%. The lowest unemployment figures for the county were achieved in 2022, amounting to 14.9%, which was 5.2% below the eleven-year average. The local unemployment rate is 16.1% as of October 2024, falling approximately 8.5% from the eleven-year high. The most recent unemployment data for Imperial County is 12.6% above the national unemployment rate for that same period.

For the El Centro, CA MSA, unemployment rates reached their highest level in 2015 totaling 24.6%, nearly 4.5% above the eleven-year average of 20.1%. Unemployment figures for the El Centro, CA MSA hit their lowest levels in 2022, measuring 14.9%, or approximately 5.2% below the region’s eleven-year average. The regional unemployment rate is 16.1% as of October 2024, which amounts to a 8.5% variance from the eleven-year high.

The most recent unemployment data for the El Centro, CA MSA is 12.6% above the national unemployment rate for that same period.

Unemployment rates for the state of California reached their highest levels in 2020 rising to 10.1%, approximately

4.3% above the state’s eleven-year average of 5.8%. The state of California’s unemployment figures achieved their lowest rates in 2019, measuring 4.1%, or approximately 1.7% below the state’s eleven-year average. The state Regional Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 22 - PRIVILEGED AND CONFIDENTIAL unemployment rate is 5.3% as of October 2024, outperforming the eleven-year average by approximately 4.8%.

The most recent unemployment data for California is 1.8% above the national unemployment rate for that same period.

Shelter Expenditures
Total Shelter Expenditures within the El Centro, CA MSA, Imperial County, and Calexico are displayed in the following table. Items associated with these figures include mortgages, rent, utilities, household supplies, household textiles, furniture, appliances, and other household furnishings and equipment.

Total Shelter Expenditures are greatest within Calexico measuring $21,020 annually, followed by the El Centro, CA MSA at $20,610. The Spending Potential Index represents the amount spent in an area relative to the national average of 100. As displayed, shelter expenditures within the El Centro, CA MSA, Imperial County, and the City of Calexico are below the national average.

Transportation Infrastructure
The El Centro metro area is served by a network of highways and freeways, including Interstate 8, which runs east to west, connecting the region to San Diego and Arizona. This interstate highway is a major corridor for goods and passenger transportation. Other important roadways include State Routes 7, 78, 86, 98, and 111, which enable connections to various cities and towns within the county and beyond. These routes also provide crucial links to Mexico and the rest of California, supporting both local and international trade.

Public transportation in Imperial County is primarily managed by Imperial Valley Transit (IVT), which operates a comprehensive network of bus routes. In addition, the county's public transportation system includes Greyhound bus services and Amtrak thruway bus services. Imperial County is served by two airports, the Imperial County Airport and the Naval Air Facility El Centro. The rail services in the county play a key role in freight transportation.

The primary rail service is provided by Union Pacific Railroad, which operates a line running east to west through the county. This line is a part of a major transcontinental route, facilitating the movement of agricultural and industrial goods from the county to national and international markets.

Summary
Population levels in the El Centro metro region have increased over the past decade and are generally projected to increase slightly going forward. Similarly, income levels have increased over the past 10 years, and should continue growing going forward. This being, the near-term for the subject’s region is expected to be one of measured growth.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 23 - PRIVILEGED AND CONFIDENTIAL Section V
Neighborhood Overview
Neighborhood Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 24 - PRIVILEGED AND CONFIDENTIAL Neighborhood Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 25 - PRIVILEGED AND CONFIDENTIAL Neighborhood Overview
The subject is located in City of Calexico in south Imperial County. Calexico is situated along the US-Mexico border and is generally bordered by Heber to the north, Mexicali to the south, and rural Imperial County to the east and west. It is located about 112 miles east of San Diego, 118 miles southeast of Palm Springs, and 240 miles southwest of Phoenix, AZ. Calexico spans approximately 8.62 square miles and contains a population of approximately 39,000 residents.

Calexico’s economy is primarily driven by sectors such as agriculture, government services, retail, and healthcare.

Agriculture plays a significant role in the local economy, with the region having a long history of producing a variety of crops due to its fertile soils and favorable climate. The area contains thousands of acres of prime farmland that has transformed the area into one of the most productive farming regions in California with an annual crop production of over $3 billion and accounts for nearly 50% of all employment. Government services, including federal, county, city, and state operations, are another major employer in the area. In the retail sector, the presence of numerous shopping centers and retail outlets contributes significantly to the local economy.

The housing market in Calexico is characterized by a mix of single-family homes, condominiums, and apartment complexes. The city offers a range of housing options, with properties to suit various income levels. The cost of living in Calexico is relatively lower compared to other cities in California, making it an attractive location for families and individuals seeking affordable housing options.

Community amenities in Calexico include a variety of retail stores, restaurants, and service-oriented businesses.

There are several grocery stores and markets that provide essential goods, often featuring products from both the U.S. and Mexico due to the city's border location. Healthcare facilities, including clinics and a hospital, cater to the medical needs of the residents. Additionally, the city hosts several community centers that offer programs and activities for all age groups. Calexico's park system features multiple parks and recreational facilities that serve the community. Notable parks include Rockwood Park and Heber Park, which offer amenities such as playgrounds, sports fields, and picnic areas. The parks are maintained by the city's Parks and Recreation Department, which also organizes seasonal sports leagues and recreational programs.

The Calexico Unified School District is responsible for the public education system within the city, operating several elementary, middle, and high schools. The district focuses on providing comprehensive education and extracurricular activities to its students. Additionally, there are private school options available, including religious and secular institutions, which offer alternative educational environments. Higher education opportunities are accessible in the region, with proximity to institutions like Imperial Valley College.

Calexico is well-connected through a network of local and regional transportation routes. The primary thoroughfare is State Route 111, which connects Calexico to other parts of the Imperial Valley and to Interstate 8, facilitating travel to San Diego and other major cities. Public transportation is available through Imperial Valley Transit, which operates bus routes that connect Calexico with neighboring communities. The city's proximity to the border also means significant pedestrian and vehicle traffic through the Calexico West and East Ports of Entry, impacting daily commuting patterns.

The subject neighborhood is an established mixed-use neighborhood and is determined to be in the stability stage of its life cycle. Therefore, there should not be any significant changes in the neighborhood in the near future. With its robust local economy and central location, Calexico is located in the one of the most populated areas of Imperial County and the demand for housing should continue to be moderate. The demand for housing will result in continued population growth in the foreseeable future.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 26 - PRIVILEGED AND CONFIDENTIAL Section VI
Market Overview
Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 27 - PRIVILEGED AND CONFIDENTIAL Industrial Market Overview
The subject market is analyzed using CoStar Analytics. According to CoStar, the subject is located in the El Centro industrial market. The following commentary regarding the El Centro industrial market is excerpted:

The El Centro industrial market has a vacancy rate of 12.8% as of the fourth quarter of 2024. This time last year, the market had a vacancy rate of 7.5%. The year over year change in the El Centro vacancy rate was a result of 380,000 SF of net delivered space and 52,000 SF of net absorption over the past year.

El Centro's vacancy rate of 12.8% compares to the market's five-year average of 9.6% and the 10-year average of 11.2%.

The El Centro industrial market has roughly 770,000 SF of space listed as available, for an availability rate of 12.6%. As of the fourth quarter of 2024, there is 42,000 SF of industrial space under construction in El Centro. In comparison, the market has averaged 120,000 SF of under construction inventory over the past 10 years.

The El Centro industrial market contains roughly 6.0 million SF of inventory. The market has approximately

5.0 million SF of logistics inventory, 90,000 SF of flex inventory, and 880,000 SF of specialized inventory.

Market rents in El Centro are $10.40/SF. Rents average around $9.90/SF for logistics buildings, $13.40/SF for flex properties, and $12.80/SF for specialized assets. Rents have changed by 0.2% year over year in El Centro, compared to a change of 2.9% nationally. Market rents have changed by 0.5% in logistics buildings year over year, -2.5% in flex buildings, and -0.6% in specialized buildings. Annual rent growth of 0.2% in El Centro compares to the market's five-year average of 4.8% and its 10-year average of 5.0%.

The following chart presents key indicators for the El Centro industrial market.

There was positive net absorption of 44,635 square feet in the El Centro market in third quarter 2024.

Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 28 - PRIVILEGED AND CONFIDENTIAL El Centro Industrial Market Historical Vacancy
Source: CoStar Analytics
According to information from CoStar, the third quarter 2024 industrial vacancy rate in the El Centro market was

13.0%. The 13.0% vacancy rate represents an increase from the third quarter 2023 rate of 7.5%.

El Centro Industrial Market Historical Market Rental Rates Source: CoStar Analytics
Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 29 - PRIVILEGED AND CONFIDENTIAL According to CoStar data, the El Centro average market rent was $0.87 per square foot per month on a triple-net basis (NNN) in third quarter 2024, representing an increase of approximately 1.2% year-over-year when compared to the third quarter 2023 rate of $0.86 per square foot per month.

El Centro Industrial Market Historical Data
Source: CoStar Analytics
Summary
The El Centro industrial market had shown strength through the COVID-19 pandemic, with rental growth, low vacancy, and sale price growth, but the market has been impacted by the higher interest rate environment beginning in 2022, with increasing vacancy. The subject’s market is considered to have a stable economic base overall.

Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 30 - PRIVILEGED AND CONFIDENTIAL Market Overview – Current Events
In mid-March 2022, the Federal Reserve approved the first interest rate hike in more than three years, after keeping its benchmark interest rate anchored near zero since the beginning of the COVID-19 pandemic in March of 2020.

At the time, members indicated an aggressive path ahead, with rate rises coming at each of the remaining six meetings in 2022, while at the same time paring expectations for economic growth through 2022 and sharply raising their outlook for inflation. The Federal Reserve subsequently raised the Federal Funds Rate another ten times between May 2022 and July 2023 to combat rising inflation, with the Federal Funds Rate increasing from 0.25% to

5.25%.

These actions began to stop the compression of capitalization rates and corresponding upward trajectory of sale prices that has taken place in the commercial real estate market over the preceding years. At the time, discussions with local commercial real estate brokers and published data indicated a significant portion of the buyer pool being sidelined, longer than previous “days on market”, and downward shifts in asking prices as many buyers were no longer able to justify the previously all-time high sale prices. In conversations throughout the summer of 2022, local commercial real estate brokers noted that the higher cost of capital caused many deals to no longer “pencil out” in underwriting, as both investors and lenders didn’t want negative leverage, which is an interest rate on the debt being greater than the overall capitalization rate being generated by the asset. Subsequent to the Federal Reserve’s actions, several leading commercial real estate brokerage and market intelligence firms published articles and market reports, espousing similar sentiment and commentary surrounding rising inflation, the interest rate environment, and the corresponding effects, both current and projected, on the U.S. commercial real estate market.

In an article titled A fascinating time: The global impact of rising interest rates on commercial real estate, published in late-July 2022 on AvisonYoung.com, Avison Young’s Chief Economist Dr. Nick Axford identifies the ways in which changing economic and financial market conditions will be seen in the real estate market as well as the correlation between higher rates and pricing on commercial real estate. The following is excerpted from the article:

On July 27, the Federal Open Markets Committee (FOMC) raised its key policy interest rate by 75 bps for the second consecutive month. “This confirms to real estate investors around the world that we are now in a new phase of the market cycle,” says Dr. Nick Axford, Chief Economist at global real estate services firm Avison Young.

The Fed is leading the global charge by central banks to tackle rates of inflation that are at their highest for four decades. Even as Gross Domestic Product (GDP) has now contracted for two consecutive quarters – signifying that the economy is in technical recession – the U.S. central bank is determined to prevent a return to the high inflation era of the 1970s and early 80s characterised by a “wage-price spiral.” Having started the year with a target rate of 0-0.25%, the Fed Funds Target Rate has been increased four times, now standing 225 bps higher at 2.25-2.50%.

Real estate has been a key beneficiary of the low inflation, low interest rate environment that has characterised recent decades. The yield on commercial real estate has tracked the downward trend in 10 Year U.K. Government Bonds (Gilts) and U.S. Treasury Bonds, known as the “risk free rate”, pushing up values and encouraging record levels of capital into the sector. “That supportive economic and financial market environment is now changing, which is impacting commercial real estate in several ways,” Axford notes.

There are four key factors confronting real estate investors: First, Axford highlights that real estate pricing is impacted by the rise in government bond yields and is particularly highly correlated with the price of BBB corporate bonds. The yield on those bonds in the U.S. has increased from around 2.9% at the start of this year to 5.0% today (4.6% for Canada). This increase of 210 bps is broadly the same as the 225 bps increase in the policy rate, suggesting that investors are not particularly concerned that we will see an increase in corporate failure – but highlighting that higher interest rates have a material impact on pricing across the spectrum of investment assets." These are the benchmarks against which real estate investments are priced, which will put upward pressure on yields (and downward pressure on values) in the property sector," comments Axford.

Second, higher rates are explicitly designed to slow the economy – which will impact occupier demand for real estate at a time when the market is already having to adapt to changing occupational dynamics. "The Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 31 - PRIVILEGED AND CONFIDENTIAL shift from in-store to online retail and higher levels of remote office working following the pandemic creates lots of interesting opportunities for investors," Axford notes. "But short term, the weaker economic outlook reduces the prospects for rental growth in some areas of the market, which also hits investor sentiment and pricing.”
Third, the costs of finance have gone up in line with higher interest rates. "Many real estate investors use debt to finance their activities and enhance returns," Axford points out. "Just as with homeowners, higher commercial borrowing costs make it harder for leveraged investors to justify current prices, and forces some buyers out of the market altogether," he says.

Finally, higher costs of materials and the very tight labour market have dramatically increased the cost of construction and refurbishment – with far greater uncertainty over what those costs will be. Construction companies are being forced to charge more for projects than they were six months ago - and prices are changing so rapidly that they will only guarantee their quotes for a week or two. "This makes it really hard to run the numbers on investments requiring refurbishment or repositioning to enhance their attractiveness to occupiers, which is a key strategy for value-add investors," says Axford.

Taken together, these four key factors are confronting real estate investors with a very different environment from the one they have become accustomed to in recent years. "Overall, there is no question we will see upward pressure on real estate yields, which means downward pressure on pricing for commercial property,” Axford states.

After roughly 14 months of holding the federal funds rate flat, the Federal Reserve cut the federal funds rate by 50 basis points in mid-September 2024. Shortly afterwards, in a Financial Markets & Consumer Spending Research Brief published in September 2024, Marcus & Millichap discussed how the long-awaited cut has positive implications for commercial real estate and consumers. The following commentary and charts are excerpted from the article:

The Federal Open Market Committee (FOMC) slashed the federal funds rate by 50 basis points during its September meeting, setting the lower bound at 4.75 percent. The first cut since March 2020, this decision reflects the Fed's confidence that inflation is moving sustainably toward 2 percent and its intent to prevent further labor market softness. In August, headline CPI was up 2.5 percent annually, with unemployment sitting at 4.2 percent. With two meetings remaining in 2024, the Fed could lower interest rates further, which would aid investor demand for commercial real estate.

The reduction to the overnight lending rate and less upward pressure on the 10-Year Treasury — which fell to the 3.6 percent band in mid-September — will contribute to modestly lower borrowing costs for investors.

This dynamic may help re-open the yield spread relative to cap rates. As such, additional sales activity could materialize, as elevated levels of dry powder capital await deployment. Encouraging tenant demand across most sectors should enhance the appeal of commercial real estate investment. In the first half, the apartment, retail, industrial, medical office and self-storage sectors all recorded positive net absorption.

September's FOMC decision launches what will likely be an interest rate lowering cycle that extends through next year. As these reductions take place, the cumulative effect for consumers will be more meaningful. Downward pressure on mortgage rates, auto loans and credit card fees will give households an opportunity to save an impactful amount of money. Entering July, total household debt was at a record $17.8 trillion, with the U.S. personal saving rate at its lowest reading since late 2022. A cycle of cuts would also provide relief for those in the market for a home, automobile or other big-ticket item.

Consumer resiliency translated to a 3.3 percent year-over-year rise in core retail spending during August, with sales up in real terms even after factoring in core CPI inflation. This marks the fourth consecutive monthly record for core retail sales. The miscellaneous retail and non-store categories, however, claimed the most pronounced gains, indicating consumers are gravitating to used merchandise stores and online avenues in search of discounts. Although overall sales have been resilient, future rate cuts would lift momentum. Nevertheless, tenant demand for space has been steadfast, with retail vacancy having hovered in the 4.4 to 4.5 percent range for seven-straight quarters.

Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 32 - PRIVILEGED AND CONFIDENTIAL Source: Marcus & Millichap Financial Markets & Consumer Spending Research Brief – September 2024 The following chart illustrating the aforementioned interest rate hikes from March 2022 through July 2023, as well as the interest rate cut in September 2024, is excerpted from Forbes.com:
2022-2024 Fed Rate Hikes: Taming Inflation
Source: Federal Funds Rate History 1990 to 2022; Forbes.com, accessed September 2024 Industrial Property Value Trends – Green Street
Green Street’s Commercial Property Price Index (“CPPI”) is a time series of unleveraged U.S. commercial property values that captures the prices at which commercial real estate transactions are currently being negotiated and contracted. According to Green Street, the Green Street Commercial Property Price Index increased 1.6% in August 2024, with an increase of 3.3% year to date. The all-property index – a measure of pricing for institutional-quality commercial real estate – is 19% below its March ’22 peak. The following commentary from Green Street, referencing August 2024, regarding the CPPI is excerpted:

Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 33 - PRIVILEGED AND CONFIDENTIAL “Commercial property prices have increased over the past few months as bond yields have declined,” said Peter Rothemund, Co-Head of Strategic Research at Green Street. “There’s a good chance the momentum in pricing continues. Property prices have not risen as fast as bond yields have fallen, and share prices of many listed REITs are now higher than the underlying value of their properties.” Source: Green Street, Commercial Property Price Index, August 2024 As of August 2024, the all-property index is down 3% over the past twelve months, and down 19% from the recent peak, though pricing varies significantly across property sectors. Specifically values in the industrial property sector were up 1.8% in August 2024; with values down 9% over the past twelve months, and down 16% from the recent peak. This outperforms the 3% decrease experienced across the core sector property type (comprised of equal parts apartment, industrial, office, and retail) over the past twelve months, and represents one of the weakest performances of the 11 individual property sectors being tracked by Green Street.

Market Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 34 - PRIVILEGED AND CONFIDENTIAL Green Street CPPI: Sector-Level Indexes – August 2024
Source: Green Street, Commercial Property Price Index, August 2024 Conclusion
As the effective valuation date, the recent actions of the Federal Reserve and the rising interest rate environment has impacted real property market conditions. However, the recent interest rate cut implemented by the Federal Reserve in mid-September 2024 has resulted in a positive sentiment for investors and consumers alike. The recovery timeline for the regional and national economies from the higher interest rate environment, and the timeline surrounding future actions of the Federal Reserve, accordingly, is unclear. Moving forward, pricing power in the subject’s El Centro industrial market will likely continue to be restrained as buyers and lenders maintain caution during this new economic period. With restrained credit conditions and reduced volume, capitalization rates faced some upward pressures, and pricing faced downward pressure accordingly, in the latter half of 2022, throughout 2023, and into the first half of 2024.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 35 - PRIVILEGED AND CONFIDENTIAL Section VII
Legal and Physical Description
Legal and Physical Description

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 36 - PRIVILEGED AND CONFIDENTIAL Legal and Physical Description of the Land
Once the abandonment of the subject property is complete and it converts to a legal parcel, the site will be considered functionally adequate and generally suited for industrial related development. The proposed site characteristics are summarized in the following chart.

As of the effective date of value, the subject was improved with partial perimeter wrought iron and chain link fencing.

Vehicle access to the subject is provided via W 6th Street.

The subject is not located within an Alquist-Priolo Earthquake Fault Zone, or liquefaction zone. We were not provided with a Phase I Environmental Site Assessment report. This appraisal assumes that there are no adverse environmental conditions or toxic materials that might adversely impact the value of the subject property. Since we are not trained in environmental sciences, we must make this a specific assumption of this report.

Legal and Physical Description

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 37 - PRIVILEGED AND CONFIDENTIAL Aerial Imagery
Legal and Physical Description

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 38 - PRIVILEGED AND CONFIDENTIAL Proposed Parcel Map
Zoning
Per information provided, the subject property is anticipated to adopt the neighboring zoning, which is IND, Industrial. The purpose of the Industrial zone is intended as an area for modern industrial, research, and administrative facilities that can meet high performance and development standards. Retail commercial uses in conjunction with a permitted or conditional use are permitted to occupy up to twenty‐five percent of the gross floor area. The zoning map, and appropriate zoning ordinance are contained in our internal work files.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 39 - PRIVILEGED AND CONFIDENTIAL Section VIII
Real Estate Taxes
Real Estate Taxes

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 40 - PRIVILEGED AND CONFIDENTIAL Real Estate Tax Overview
In California, real property is assessed by the individual counties. With the passing of Proposition 13 in 1978, property taxes are limited in California to 1% of the assessed value plus local voter-approved bonded indebtedness and special assessments. Proposition 13 also provides for a maximum taxable assessment increase of 2% per year unless ownership of the property has been transferred or significant new construction occurs. When real property is sold, it becomes uncapped and the taxable assessed value is set at the sale price, and the 2% yearly cap becomes applicable for future years.

Subject Tax Data
Since the abandonment of the subject property has not been complete, there is currently no information available relating to its real estate taxes. Further, the subject does not yet contain its own assessor parcel number.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 41 - PRIVILEGED AND CONFIDENTIAL Section IX
Highest and Best Use
Highest and Best Use

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 42 - PRIVILEGED AND CONFIDENTIAL Highest and Best Use Analysis
The highest and best use may be defined as: The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.

In the analysis of pertinent data, four criteria are applied in the following order to develop adequate support for the appraiser’s highest and best use determination:

1. Legally permissible

2. Physically possible

3. Financially feasible

4. Maximally productive
These criteria are generally considered sequentially; however, the tests of physical possibility and legal permissibility can be applied in either order, but they both must be applied before the tests of financial feasibility and maximum productivity. The process for determining the highest and best use of a property has four main steps.

The first two are applied in the analysis of highest and best use of the land or site as though vacant; the third and fourth steps are applied in the analysis of the highest and best use of the property as improved.

1. Determine the highest and best use as of the site as though vacant.

2. Determine the ideal improvement for development of the site.

3. Compare the ideal improvement and the existing improvement.

4. Conclude whether the improvements should be maintained as is or be renovated, converted, or demolished.

Highest and Best Use as Though Vacant
Criterion 1 - Legally Permissible
According to the client, the subject is anticipated to be zoned IND, Industrial once the abandonment is complete and the subject converts to a legal parcel. The Industrial zone is intended as an area for modern industrial, research, and administrative facilities that can meet high performance and development standards. Retail commercial uses in conjunction with a permitted or conditional use are permitted to occupy up to twenty‐five percent of the gross floor area.

Criterion 2 - Physically Possible
Once the abandonment is complete and the subject converts to a private legal parcel, the subject property is anticipated to have adequate utility access, it will be generally level, and it will have a rectangular shape.

Additionally, the subject is not located in a hazardous flood zone. The subject property is anticipated to comprise approximately 0.50 acres and will contain adequate frontage. The subject will be capable for industrial development.

Criterion 3 - Financially Feasible
The subject is in the El Centro market in the El Centro, CA MSA. The majority of the surrounding uses are industrial in nature.

A development is considered financially feasible if a potential use generates positive income (for an incomeproducing property) or if the potential use is likely to create a value equal to or greater than the amount needed to develop and market the property (for non-income-producing properties). The subject is located within a mixed-use market where demand is stable. As a result, industrial development is considered financially feasible.

Highest and Best Use

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 43 - PRIVILEGED AND CONFIDENTIAL Criterion 4 - Maximally Productive
The analysis indicates that the most productive use of the subject site, once the abandonment is complete and the subject converts to a private legal parcel, is for the industrial development. This use is legally permissible, physically possible, and financially feasible.

Conclusion – Highest and Best Use as Though Vacant
The highest and best use of the subject site as though vacant is concluded to be for industrial development.

Highest and Best Use as Improved
The subject property is partially improved with partial perimeter wrought iron and chain link fencing. Given the high concentration and moderate demand of industrial product in the local market, the highest and best use of the subject property as improved is for an industrial related use.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 44 - PRIVILEGED AND CONFIDENTIAL Section X
Land Valuation
Land Valuation

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 45 - PRIVILEGED AND CONFIDENTIAL Land Valuation Analysis
In the analysis to follow, we have based the subject’s compatibility to the sales as if the abandonment of the subject has been complete and it has been converted to a legal parcel. The comparable sales utilized in the land valuation analysis were compiled from our research of sales and listings of comparable industrial land in the subject’s market.

The comparables were chosen based upon date of transfer, size, location and highest and best use. A map of the sales, as well as detailed information regarding these sales is presented on the following pages.

Land Valuation

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 46 - PRIVILEGED AND CONFIDENTIAL Land Valuation

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 47 - PRIVILEGED AND CONFIDENTIAL Description of Adjustments
Listed below is a description of the comparisons made between the subject and the comparable sales with respect to each of these elements of comparison.

Real Property Rights Conveyed
Property rights adjustments account for differences in the property rights conveyed in the transaction. Some transactions convey more rights to the use of the property than other transactions.

All of the comparable land sales conveyed the full bundle of rights. As such, no adjustments are necessary.

Financing Terms
Some transactions may include a premium or discount for attractive or unfavorable financing, respectively.

Adjustments to the transaction price must be made to remove this difference. Typically, the comparable properties are adjusted to a cash or cash-equivalent basis.

The financing terms of all of the comparable land sales are at market terms and no adjustments are applied.

Conditions of Sale
A condition of sale adjustment is made to properties that are sold in non-arm’s-length transactions. Adjustments should be made to those transactions that are conducted at prices considered to be below or above the price at which the property would exchange between willing buyers and willing sellers.

Comparable land sales 1 and 2 represent current listings and not closed transactions. Typically, properties tend to sell for an amount less than the list price. As such, downward adjustments are applied to comparable land sales 1 and 2. The remaining comparable land sales all sold in arm’s-length transactions, so no adjustments are necessary.

Expenditures Immediately After Purchase
Some properties require the purchaser to make expenditures immediately after the acquisition of the property. For example, the local government may require safety problems to be corrected within a short period of time following the sale. Market participants consider these expenditures when buying and selling property.

No adjustments are required for the comparable land sales for this factor.

Market Conditions
The next adjustment is made to reflect both changes in the market since the sale of the comparable property and the purchasing power of money over time. In appreciating markets, positive adjustments must be made to the comparable properties to reflect the improving market conditions since the sale of the property. In depreciating markets, negative adjustments must be made.

The economy has seen a dramatic contraction due in part to the rise in base interest rates set by the Federal Reserve, beginning in March 2022. Values in the subject’s market have decreased since the Federal Reserve started raising rates. The impact of higher rates in the market has largely presented in the drop in the number of transactions since March 2022, with vacancy rates and available inventory rapidly increasing and net absorption declining.

Prior to the increase in interest rates, the value of industrial assets was growing in the subject’s market. Based on interviews with market participants, market-oriented data, and published research, market conditions for industrial product in the subject’s market and submarket have seen a 5.0% annualized decline since the Federal Reserve’s rate hikes in March 2022.

With all considered, downward adjustments are given to comparable land sales 3, 4, 5, 6, and 7 since they transacted during periods of superior market conditions. Comparable land sales 1 and 2 are considered current and do not require adjustments.

Land Valuation

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 48 - PRIVILEGED AND CONFIDENTIAL Applying adjustments for the aforementioned elements of comparison yields an adjusted price subtotal for each comparable from which remaining adjustments can be made. These adjustments are described below.

Location
Adjustments for location consider factors such as setbacks, access to highways, and accessibility. For example, a site within close proximity to a highway interchange is typically superior to a comparable site on a secondary road within the neighborhood with more limited access.

Comparable land sales 3, 4, 5, 6, and 7 are located in superior areas of Calexico with superior street frontage and/or highway access. As such, downward adjustments are applied to comparable land sales 3, 4, 5, 6, and 7. All of the remaining comparable land sales exhibit similar locational characteristics as the subject, so no adjustments are required.

Size
Generally, smaller sites sell for higher per square foot rates than larger sites, all other factors being equal. This relationship is true for the subject’s market as well.

Comparable land sales 3, 5, and 6 featured a meaningfully larger overall size, and upward adjustments are applied accordingly. All of the remaining comparable land sales featured a similar overall size relative to the subject property, with no adjustments required.

Configuration
The subject’s proposed configuration will consist of one parcel that will be generally rectangular in shape. It is of note that the subject property will have a relatively narrow configuration. Comparable land sales 3, 4, 5, 6, and 7 have superior configuration characteristics compared to the subject, thus requiring downward adjustments. All of the remaining comparable land sales have a similar configuration as the subject which does not require adjustments.

Topography
All of the comparable land sales have similar topography as the subject and adjustments are not necessary.

Zoning
The subject is zoned IND, Industrial. All of the comparable land sales have similar zoning, with no adjustments required.

Highest and Best Use
All of the comparable land sales have the same highest and best use as the subject, and no adjustments are necessary.

Utilities
All of the comparable land sales have similar available utilities as the subject and no adjustments are necessary.

Other Factors
The comparable land sales did not require adjustments for other factors.

Land Valuation

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 49 - PRIVILEGED AND CONFIDENTIAL Market Participant Interviews
Opinions from market participants were considered in our analysis. Our participants included active land brokers who are familiar with the subject property and the state of the local and regional industrial land markets at the valuation date. The consensus among our market participants was that a reasonable market value for the subject is between $4.00 and $5.00 per square foot, with the majority of our participants concluding near the middle portion of the range.

Land Valuation

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 50 - PRIVILEGED AND CONFIDENTIAL Conclusion of Land Value
The adjustment grid illustrates the thought process for making adjustments for dissimilarities between the comparable sales and the subject. The comparable transactions required relatively few adjustments, exhibited a fairly tight range of adjusted values on a per square foot basis, and are each considered a reliable indication of value in the subject’s greater market area. As a result, fairly equal emphasis was placed on each of the comparable transactions.

Based upon each comparable sale being given an appropriate weight, the value of the land is concluded to be:

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 51 - PRIVILEGED AND CONFIDENTIAL Section XI
Reconciliation of Value
Reconciliation of Value

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 52 - PRIVILEGED AND CONFIDENTIAL Reconciliation and Value Conclusion
Reconciliation is utilized to support a reliable and defensible value opinion. The three primary criteria considered in the reconciliation of value are appropriateness, accuracy, and quantity of evidence. The value conclusion for each applicable approach is presented in the following table.

Conclusion of Market Value
Based on the analysis presented in this report, the market value of the fee simple interest in the subject is concluded to be:

This appraisal is completed under the following hypothetical conditions:
• As of the effective date of value, the subject represented a public roadway that was owned by the City of Calexico. Per information provided by the client, the subject property is anticipated to be abandoned as a public roadway, and subsequently converted to be a legal parcel, comprising 21,712 square feet (0.50 acres), that is available for private ownership once the abandonment is complete. As of the date of this report, the timeline of the public roadway abandonment and conversion to a legal parcel available for private ownership is unknown. This appraisal is completed under the hypothetical condition that the abandonment of the subject property as a public roadway was complete, and the subject property represents a legal parcel, comprising 21,712 square feet (0.50 acres), that is available for private ownership and use. • As of the effective date of value, given its status as a public roadway the subject was not zoned by the City of Calexico. Per information provided by the client, the subject property is anticipated to be zoned to IND Industrial once the public roadway abandonment and conversion to a legal parcel available for private ownership is complete. This appraisal is completed under the hypothetical condition that following the public roadway abandonment and conversion to a legal parcel available for private ownership, the subject land is zoned IND Industrial by the City of Calexico.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 53 - PRIVILEGED AND CONFIDENTIAL Section XII
Certification
Certification

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 54 - PRIVILEGED AND CONFIDENTIAL I certify, except as otherwise noted in this appraisal report, that to the best of my knowledge and belief:
 The statements of fact contained in this report are true and correct.  The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, conclusions, and recommendations.
 I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.  I have no bias with respect to the property that is the subject of this report, or the parties involved with this assignment.
 My engagement in this assignment was not contingent upon developing or reporting predetermined results.  My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
 My analyses, opinions, and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation.  Stout Risius Ross, LLC has not provided services related to the subject property of this report within the last three years.
 Appraisers are required to be licensed in accordance with their respective state licensing laws and regulations. Drew Hoskins, MAI and Aaron Estrada are State Certified General Real Estate Appraisers in the State of California.
 Aaron Estrada has made a personal inspection of the subject. Drew Hoskins, MAI has not made a personal inspection of the subject.
 No one provided significant professional assistance to the people signing this report.  The reported analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
 The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
 This appraisal is not based on a requested minimum valuation, a specific valuation, or the approval of a loan.
 As of the date of this report, Drew Hoskins, MAI has completed the continuing education program for Designated Members of the Appraisal Institute.
 As of the date of this report, Aaron Estrada has completed the Standards and Ethics Education Requirements for Practicing Affiliates of the Appraisal Institute. __________________________________ __________________________________ Drew Hoskins, MAI Aaron Estrada
California Certified General Appraiser California Certified General Appraiser License #: 3000509 License #: 3008281
Expiration Date: December 3, 2026 Expiration Date: November 21, 2026

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 55 - PRIVILEGED AND CONFIDENTIAL Exhibit A
Assumptions and Limiting
Conditions
Assumptions and Limiting Conditions

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 56 - PRIVILEGED AND CONFIDENTIAL This appraisal report is based on the following general assumptions:
 This report is for the client to which it is addressed and is to be used by said client only for the purpose stated in the report. No reliance is to be placed on this report for any other purpose, nor shall it be published, distributed, or shown to other parties except to the party to whom the report is addressed.  No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the subject is assumed to be good and marketable unless otherwise stated.  The subject is appraised free and clear of all liens and encumbrances unless otherwise stated.  Responsible ownership and competent property management are assumed.  The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.

We reserve the right to make appropriate revisions in the event of discovery of additional data.  All engineering studies are assumed to be correct. The plot plans and illustrative material in this report are included only to help the reader visualize the subject.  It is assumed that there are no hidden or unapparent conditions of the subject, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them.  It is assumed that the subject is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the report.  It is assumed that the subject conforms to all applicable zoning and use regulations and restrictions unless a nonconformity has been identified, described, and considered in the appraisal report.  It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value opinion contained in this report is based.
 It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the subject described and that there is no encroachment or trespass unless noted in this report.  Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the subject, was not observed. We have no knowledge of the existence of such materials on or in the subject. However, we are not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation, and other potentially hazardous materials may affect the value of the subject. The opinion of value is predicated on the assumption that there is no such material on or in the subject that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.
 The Americans with Disabilities Act (“ADA”) became effective January 26, 1992. We have not made a specific compliance survey and analysis of the property to determine whether or not it conforms to the various detailed requirements of the ADA. It is possible that a compliance survey of the subject, together with a detailed analysis of the requirements of the ADA, could reveal that the subject is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the subject. Since we have no direct evidence relating to this issue, possible non-compliance with the requirements of the ADA is not considered in our value opinion of the subject.  This report covers only the real property described herein. Unless specifically stated to the contrary, it does not include consideration of mineral rights or related right of entry, nor personal property or the removal thereof. Values reported herein are not intended to be valid in any other context, nor are any conclusions as to unit values applicable to any other property or utilization that are specifically identified herein.

Assumptions and Limiting Conditions

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 57 - PRIVILEGED AND CONFIDENTIAL  The conclusions stated herein, including values that are expressed in terms of the U.S. Dollar, apply only as of the valuation date and are based on prevailing physical and economic conditions and available information at that time. No representation is made as to the effect of subsequent events.

This appraisal report is based on the following general limiting conditions:
 Date(s) and definitions of value, together with other definitions and assumptions on which the analyses are based, are set forth in the appropriate sections of this report. These are to be considered part of the limiting conditions as if included here in their entirety.
 Any allocation of the total value presented in this report between the land and improvements applies only under the stated program of utilization. The separate values allocated to the land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.  Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any other person than the party to whom it is addressed without our prior written consent, and then only with proper written qualification and only in its entirety.  We, by reason of this report, are not required to give further consultation or testimony or to be in attendance in court with reference to the subject unless arrangements have been previously made.  This report has not been prepared for syndication purposes nor is it to be used for syndication purposes without our consent and then only with proper qualifications.  Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser.
 Any value opinions provided in this report apply to the entire property and any proration or division of the total into fractional interests will invalidate the value opinions, unless such proration or division of interests has been set forth in the report, or is otherwise expressly authorized by Stout in writing.  If the subject is proposed, only preliminary plans and specifications were available for use in the preparation of this appraisal. If the plans and specifications change, we reserve the right to amend this appraisal.  Any proposed improvements are assumed to have been completed unless otherwise stipulated; any construction is assumed to conform to the building plans referenced in the report.  We assume that the reader or user of this report has been provided with copies of available building plans and all leases and amendments, if any, that encumber the subject.  If no legal description or survey was furnished, we used other methods as described in the report to ascertain the physical dimensions and acreage of the subject. Should a survey prove this information to be inaccurate, it may be necessary for this appraisal to be adjusted.  The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changing future economic conditions.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 58 - PRIVILEGED AND CONFIDENTIAL Exhibit B
Appraisal Definitions
Appraisal Definitions

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 59 - PRIVILEGED AND CONFIDENTIAL The following definition is taken from Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”) Regulations, per final rule, 12 CFR Part 34, (Docket No. 90-16), Federal Register, Volume 56 Number 165, March 31, 1994, effective June 7, 1994, Rules & Regulations.
 Market Value: 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 is the consummation of a sale as of a specified date and passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

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

3. A reasonable time is allowed for exposure in the open market;

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

5. 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.

The following definition is taken from Treas. Regs. §20.2031-1(b) and §25.2512-1; Rev. Rul. 59-60, 1959-1 C.B. 237:
 Fair Market Value: The price at which a property would exchange between a willing buyer and a willing seller, when the former is not under any compulsion to buy, and the latter is not under any compulsion to sell, both having reasonable knowledge of the relevant facts.

The following definitions are taken from The Dictionary of Real Property Appraisal, Seventh Edition (2022), published by the Appraisal Institute.
 Cash-Equivalent Price: The sale price of a property that is equivalent to what a cash buyer would pay.  Contract Rent: The actual rental income specified in a lease.  Cost Approach: A set of procedures through which a value indication is derived for the fee simple estate by estimating the cost new as of the effective date of the appraisal to construct a reproduction of (or replacement for) the existing structure, including an entrepreneurial incentive; deducting depreciation from the total cost; and adding the estimated land value. The contributory value of any site improvements that have not already been considered in the total cost can be added on a depreciated-cost basis. Adjustments may then be made to the indicated value of the fee simple estate in the subject property to reflect the value of the property rights being appraised.
 Deferred Maintenance: Items of wear and tear on a property that should be fixed now to protect the value or income-producing ability of the property, such as a broken window, a dead tree, a leak in the roof, or a faulty roof that must be completely replaced. These items are almost always curable.  Direct Capitalization: A method used to convert an estimate of a single year’s income expectancy into an indication of value in one direct step, either by dividing the net income estimate by an appropriate capitalization rate or by multiplying the income estimate by an appropriate factor. Direct capitalization employs capitalization rates and multipliers extracted or developed from market data. Only one year’s income is used. Yield and value changes are implied, but not explicitly identified.  Discounted Cash Flow (DCF) Analysis: The procedure in which a discount rate is applied to a set of projected income streams and a reversion. The analyst specifies the quantity, variability, timing, and duration of the income streams and the quantity and timing of the reversion, and discounts each to its present value at a specified yield rate.
 Disposition Value: The most probable price that a specified interest in property should bring under the following conditions:

Appraisal Definitions

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 60 - PRIVILEGED AND CONFIDENTIAL

1. Consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market.

2. The property is subjected to market conditions prevailing as of the date of valuation.

3. Both the buyer and seller are acting prudently and knowledgeably.

4. The seller is under compulsion to sell.

5. The buyer is typically motivated.

6. Both parties are acting in what they consider to be their best interests.

7. An adequate marketing effort will be made during the exposure time.

8. Payment will be made in cash in US dollars (or the local currency) or in terms of financial arrangements comparable thereto.

9. 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. This definition can also be modified to provide for valuation with specified financing terms.  Distress Sale: A sale involving a seller acting under undue duress.  External Obsolescence: A type of depreciation; a diminution in value caused by negative external influences and generally incurable on the part of the owner, landlord, or tenant. The external influence may be either temporary or permanent. There are two forms of external obsolescence: economic and locational.  Extraordinary Assumption: An assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions. Comment: Uncertain information might include physical, legal, or economic characteristics of the subject property, or conditions external to the property, such as market conditions or trends, or about the integrity of data used in an analysis. (USPAP, 2020-2021 ed.)  Fee Simple Estate: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.  Functional Obsolescence: The impairment of functional capacity of improvements according to market tastes and standards.
 Going-Concern Value: An outdated label for the market value of all the tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern or market value of the total assets of the business.  Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses; also called full-service lease.  Highest and Best Use: 1. The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.

2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (IVS)

3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions).

4. [For fair value determination] The use of a nonfinancial asset by market participants that would maximize the value of the asset or the group of assets and liabilities (for example, a business) within which the asset would be used. (FASB Glossary) The highest and best use of a nonfinancial asset takes into account the use that is physically possible, legally permissible, and financially feasible. (FASB 820-10-35-10B). The highest and best use of a nonfinancial asset establishes the valuation premise used to measure the fair value of the asset, as follows: (a) The highest and best use of a nonfinancial asset might provide maximum Appraisal Definitions

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 61 - PRIVILEGED AND CONFIDENTIAL value to market participants through its use in combination with other assets as a group (as installed or otherwise configured for use) or in combination with other assets and liabilities (for example, a business). (b) The highest and best use of the asset might provide maximum value to market participants on a standalone basis. (FASB 820-10-35-10E)
 Hypothetical Condition: 1. A condition that is presumed to be true when it is known to be false. (SVP)

2. A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Comment:

Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. (USPAP, 2020-2021 ed.)  Income Capitalization Approach: Specific appraisal techniques applied to develop a value indication for a property based on its earning capability and calculated by the capitalization of property income.  Insurable Value: A type of value for insurance purposes.  Leased Fee Interest: The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.  Leasehold Interest: The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease.
 Liquidation Value: The most probable price that a specified interest in property should bring under the following conditions:

1. Consummation of a sale within a short time period.

2. The property is subjected to market conditions prevailing as of the date of valuation.

3. Both the buyer and seller are acting prudently and knowledgeably.

4. The seller is under extreme compulsion to sell.

5. The buyer is typically motivated.

6. Both parties are acting in what they consider to be their best interests.

7. A normal marketing effort is not possible due to the brief exposure time.

8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto.

9. 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.

This definition can be modified to provide for valuation with specified financing terms.  Market Rent: The most probable rent that a property should bring in a competitive and open market under all conditions requisite to a fair lease transaction, the lessee and lessor each acting prudently and knowledgeably, and assuming the rent is not affected by undue stimulus. Implicit in this definition is the execution market support 117 of a lease as of a specified date under conditions whereby • Lessee and lessor are typically motivated;
• Both parties are well informed or well advised, and acting in what they consider their best interests; • Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and • The rent reflects specified terms and conditions typically found in that market, such as permitted uses, use restrictions, expense obligations, duration, concessions, rental adjustments and revaluations, renewal and purchase options, frequency of payments (annual, monthly, etc.), and tenant improvements (TIs).  Personal Property: 1. Tangible or intangible objects that are considered personal, as opposed to real property. Examples of tangible personal property include furniture, vehicles, jewelry, collectibles, machinery Appraisal Definitions

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 62 - PRIVILEGED AND CONFIDENTIAL and equipment, and computer hardware. Examples of intangible personal property include contracts, patents, licenses, computer software, and intellectual property.

2. Any tangible or intangible article that is subject to ownership and classified as real property, including identifiable tangible objects that are considered by the general public as being “personal,” such as furnishings, artwork, antiques, gems and jewelry, collectibles, machinery and equipment, and intangible property that is created and stored electronically such as plans for installation art, choreography, emails, or designs for digital tokens. (USPAP, 2020-2021 ed.)
 Physical Deterioration: The wear and tear that begins when a building is completed and placed into service.  Real Property: 1. An interest or interests in real estate.

2. The interests, benefits, and rights inherent in the ownership of real estate. (USPAP, 2020-2021 ed.)  Real Property (as listed in the IVS Glossary): All rights, interests, and benefits related to the ownership of real estate.
 Sales Comparison Approach: The process of deriving a value indication for the subject property by comparing sales of similar properties to the property being appraised, identifying appropriate units of comparison, and making adjustments to the sale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market-derived elements of comparison. The sales comparison approach may be used to value improved properties, vacant land, or land being considered as though vacant when an adequate supply of comparable sales is available.
 Triple Net Lease (listed in dictionary as net net net lease): An alternative term for a type of net lease. In some markets, a net net net lease is defined as a lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management; also called NNN lease, triple net lease, or fully net lease.  Vacancy and Collection Loss: A deduction from potential gross income (PGI) made to reflect income reductions due to vacancies, tenant turnover, and nonpayment of rent; also called vacancy and credit loss or vacancy and contingency loss.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 63 - PRIVILEGED AND CONFIDENTIAL Exhibit C
Subject Photographs
Subject Photographs

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 64 - PRIVILEGED AND CONFIDENTIAL

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 65 - PRIVILEGED AND CONFIDENTIAL Exhibit D
Comparable Property Photographs
Comparable Property Photographs

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 66 - PRIVILEGED AND CONFIDENTIAL Comparable Property Photographs

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 67 - PRIVILEGED AND CONFIDENTIAL

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 68 - PRIVILEGED AND CONFIDENTIAL Exhibit E
Legal Description
Legal Description

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 69 - PRIVILEGED AND CONFIDENTIAL Legal Description

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 70 - PRIVILEGED AND CONFIDENTIAL Exhibit F
Appraisal Licenses
Appraisal Licenses

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 71 - PRIVILEGED AND CONFIDENTIAL

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 72 - PRIVILEGED AND CONFIDENTIAL Exhibit G
Statement of Qualifications
Statement of Qualifications

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 73 - PRIVILEGED AND CONFIDENTIAL Irvine, CA USA
Office: +1.949.335.3943
Mobile: +1.310.486.5650
[email protected]
Education
B.S., Business Administration - Finance
University of Southern California
Designations
MAI, Appraisal Institute
Certified General Real Estate Appraiser
– Various States
Practice Areas
Real Estate
Financial Reporting
Trust & Estate
Portfolio Valuation
Industry Focus
Real Estate, Lodging & Leisure
Drew Hoskins, MAI
Managing Director
Drew Hoskins is a Managing Director in the Real Estate practice within the Valuation Advisory group. He has more than 15 years of property valuation and consulting experience, with a concentration on valuations for financial reporting, portfolio valuation, and estate and gift tax reporting.

Mr. Hoskins’ experience encompasses a wide range of commercial real estate engagements covering numerous property types from core properties to special purpose properties. His valuation experience includes assignments across the United States, Europe, Australia and the United Kingdom.

Mr. Hoskins has consulted on many engagements requiring valuations for financial reporting in connection with ASC 805, ASC 820, ASC 350, and ASC 840 related to purchase price allocations, fair value measurements, positive assurance, goodwill impairment testing, fresh start accounting, and lease accounting. In addition, he has significant portfolio valuation experience as well as net asset valuation (NAV) experience for real estate investment trusts (REITs). Furthermore, Drew has experience with fairness opinions involving real estate company/portfolio transactions.

Prior to joining Stout, Mr. Hoskins was a Director with the Real Estate Advisory Group at Duff & Phelps.

Professional Memberships
• National Association of Real Estate Investment Trusts • Southern California Chapter of the Appraisal Institute Statement of Qualifications

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 74 - PRIVILEGED AND CONFIDENTIAL San Diego, CA USA
Office: +1.858.925.8585
Mobile: +1.858.925.4253
[email protected]
Education
B.S., Business Administration - Finance
San Diego State University
Practice Areas
Real Estate Valuation
Trust & Estate
Portfolio Valuation
Financial Reporting
Licenses & Designations
Certified General Real Estate Appraiser
– California
Aaron Estrada
Vice President
Aaron Estrada has over five years of real property valuation and consulting experience, with a concentration on valuations for estate and gift taxation, financial reporting, portfolio valuation, and financing purposes.

Mr. Estrada’s professional experience includes the analysis and valuation of a multitude of property types, including complex industrial, office, retail, multifamily, and special-purpose properties. He also has extensive experience in the valuation of land, including agricultural and development land. He has performed work across the United States as well as Mexico and Europe.

Prior to joining Stout, Mr. Estrada was a Vice President with Kidder Mathews.

Professional Memberships
• Appraisal Institute
• American Society of Farm Managers and Rural Appraisers (ASFMRA) ATTACHMENT NO. 3
Proposed Abandoned Roadway
No Situs Address
Calexico, California 92231
Real Estate Appraisal Report as of November 2, 2024
Issued: June 6, 2025

PRIVILEGED AND CONFIDENTIAL

Contact Information
For more information, please contact one of the following members of the engagement team:

Drew Hoskins, MAI
Managing Director
949.335.3943
[email protected]
Aaron Estrada
Vice President
858.925.8585
[email protected]
Letter of Transmittal

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - i - PRIVILEGED AND CONFIDENTIAL
June 6, 2025
Ralph Cordova Jr., Esq.

Our scope of work in this appraisal is to determine the market value of the subject property as of November 2, 2024.

As will be noted in the appraisal, there is a pending agreement between the owner of the subject property, the City of Calexico, and a prospective buyer, Marco Antonio Camarena Madrigal, Jr. According to the client, there is a separate agreement in place to which the purchase price of the subject property will be reduced by a figure that is equal to the capital spent by the prospective buyer on offsite street improvements to the adjacent property that is not the subject of this report. According to the client and information provided, the prospective buyer made several contributions to improving the adjacent property on W 6th Street between June 2019 to April 2021. The capital spent by the prospective buyer included hard costs and soft costs for consulting, surveying, grading, engineering, and constructing a roadway and sidewalks which amounted to a total of $90,319.85. It is important to note that the agreement between the owner and the prospective buyer is considered informational and it does not affect the market value of the subject property.

Letter of Transmittal

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - ii - PRIVILEGED AND CONFIDENTIAL Based on the analysis presented in this report, the market value of the fee simple interest in the subject is concluded to be:

Capital spent on offsite street improvements (client provided): $90,319.85 This appraisal is completed under the following hypothetical conditions:

As of the effective date of value, the subject represented a public roadway that was owned by the City of Calexico. Per information provided by the client, the subject property is anticipated to be abandoned as a public roadway, and subsequently converted to be a legal parcel, comprising 21,712 square feet (0.50 acres), that is available for private ownership once the abandonment is complete. As of the date of this report, the timeline of the public roadway abandonment and conversion to a legal parcel available for private ownership is unknown. This appraisal is completed under the hypothetical condition that the abandonment of the subject property as a public roadway was complete, and the subject property represents a legal parcel, comprising 21,712 square feet (0.50 acres), that is available for private ownership and use.

As of the effective date of value, given its status as a public roadway the subject was not zoned by the City of Calexico. Per information provided by the client, the subject property is anticipated to be zoned to IND Industrial once the public roadway abandonment and conversion to a legal parcel available for private ownership is complete. This appraisal is completed under the hypothetical condition that following the public roadway abandonment and conversion to a legal parcel available for private ownership, the subject land is zoned IND Industrial by the City of Calexico.

Yours very truly,

STOUT RISIUS ROSS, LLC

__________________________________ __________________________________ Drew Hoskins, MAI Aaron Estrada
Managing Director Vice President
California Certified General Appraiser California Certified General Appraiser License #: 3000509 License #: 3008281
Expiration Date: December 3, 2026 Expiration Date: November 21, 2026 949.335.3943 858.925.8585
[email protected] [email protected]
Table of Contents

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - iii - PRIVILEGED AND CONFIDENTIAL I. Summary of Salient Data ................................................................................................ 1 II. Assignment Overview ..................................................................................................... 4 III. National Economic Outlook ............................................................................................. 8 IV. Regional Overview ........................................................................................................ 16 V. Neighborhood Overview ............................................................................................... 23 VI. Market Overview........................................................................................................... 26 VII. Legal and Physical Description..................................................................................... 35 VIII. Real Estate Taxes......................................................................................................... 39 IX. Highest and Best Use ................................................................................................... 41 X. Land Valuation .............................................................................................................. 44 XI. Reconciliation of Value ................................................................................................. 51 XII. Certification................................................................................................................... 53 Table of Exhibits

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - iv - PRIVILEGED AND CONFIDENTIAL Exhibit A........................................................................... Assumptions and Limiting Conditions Exhibit B ..................................................................................................... Appraisal Definitions Exhibit C .................................................................................................... Subject Photographs Exhibit D .............................................................................. Comparable Property Photographs Exhibit E .......................................................................................................... Legal Description Exhibit F ........................................................................................................ Appraisal Licenses Exhibit G ........................................................................................... Statement of Qualifications

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 1 - PRIVILEGED AND CONFIDENTIAL
Section I
Summary of Salient Data

Summary of Salient Data

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 2 - PRIVILEGED AND CONFIDENTIAL

Summary of Salient Data

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 3 - PRIVILEGED AND CONFIDENTIAL
This appraisal is completed under the following hypothetical conditions:

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 4 - PRIVILEGED AND CONFIDENTIAL
Section II
Assignment Overview
Assignment Overview

Relevant Dates
Our opinion of the market value of the fee simple interest in the subject is determined as of November 2, 2024. The subject was inspected on November 2, 2024 by Aaron Estrada.

Our scope of work in this appraisal is to determine the market value of the subject property as of November 2, 2024.

As will be noted in the appraisal, there is a pending agreement between the owner of the subject property, the City of Calexico, and a prospective buyer, Marco Antonio Camarena Madrigal, Jr. According to the client, there is a separate agreement in place to which the purchase price of the subject property will be reduced by a figure that is equal to the capital spent by the prospective buyer on offsite improvements to the adjacent property that is not the subject of this report. According to the client and information provided, the prospective buyer made several contributions to improving the adjacent property on W 6th Street between June 2019 to April 2021. The capital spent by the prospective buyer included hard costs and soft costs for consulting, surveying, grading, engineering, and constructing a roadway and sidewalks which amounted to a total of $90,319.85. It is important to note that the agreement between the owner and the prospective buyer is considered informational and it does not affect the market value of the subject property.

Purpose of the Appraisal and Property Rights Appraised
The purpose of this appraisal is to provide an opinion of the market value of the fee simple interest in the subject.

Assignment Overview

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 6 - PRIVILEGED AND CONFIDENTIAL
Competency of the Appraiser
We certify that we are competent and have the knowledge and experience required to perform this specific appraisal assignment.

Scope of Work
The scope of work associated with the completion of this assignment includes the following:

Contacting representatives of property ownership and/or management to obtain physical data on the property valued in this appraisal.

Inspection of the subject property and the surrounding market.

Analysis of location, demographics, and market conditions.

Collection and analysis of current zoning data.

Estimation of the highest and best use of the subject.

Investigation of market data available from public records and commercial sources of data. Search parameters for comparable market data began in the subject’s immediate neighborhood and were expanded geographically until sufficient data was found to be able to provide a supportable opinion of fair market value. The sales data used in this appraisal was either verified with a person or persons directly involved in the transaction, third-party market participants, applicable commercial real estate data services, and/or with public records.

Analysis of the market data found and our opinion of market value, as defined in this report, of the subject as of the indicated valuation date using the appropriate valuation approaches. In this case, the sales comparison approach was performed to value the subject. The income capitalization approach and cost approach are not applicable given the subject’s status as a proposed abandoned roadway.

Preparation of this appraisal report, which presents sufficient information to enable the client and other intended users, as identified, to understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches to value. The report includes photographs of the subject; a description of the subject’s neighborhood, the site, and any improvements on the site; a description of the proposed zoning; a highest and best use analysis, a map of the comparable market data used; and a reconciliation of the data and approaches to value. All other data and analyses found and/or used in the course of this appraisal assignment is retained in the appraisal file.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 7 - PRIVILEGED AND CONFIDENTIAL
completion of negotiations between the seller and the buyer); and the analysis of future income expectancy estimated from the effective date of the appraisal.

Based upon an analysis of time on market for the sales of similar properties, published investor surveys, and discussions with market participants, the estimated exposure time is 6 to 12 months.

In contrast to exposure time, which is presumed to precede the effective date of an appraisal, marketing period is presumed to occur after the effective date of value.

The estimate of marketing period uses some of the same data analyzed in the process of estimating exposure time, and is not intended to be a prediction of a date of sale or a one-line statement. It is an integral part of the analyses conducted during the appraisal assignment. The estimate may be expressed as a range and can be based on one or more of the following items.

Statistical information about days on the market.

Information gathered through sales verification.

Interviews of market participants.

Anticipated changes in market conditions.

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 8 - PRIVILEGED AND CONFIDENTIAL
Section III
National Economic Outlook

National Economic Outlook

From 1950 to 2023, real GDP grew at an average rate of 3.2% per year, while the average from 1990 to 2023 was 2.5%.

GDP increased at an annual rate of 2.8% in the second quarter of 2024, following a 1.4% increase in the first quarter of 2024. Compared with the first quarter of 2024, consumer spending, investment, and inventories were positive factors influencing GDP.2

GDP is forecasted to increase at an annual rate of 1.7% in the second half of 2024 and 2.0% in the first half of 2025.3

1 Moody’s Analytics: Indicator Definition - U.S. GDP, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>. 2 Hoyt, Scott, Moody’s Analytics: U.S. GDP, 25 July 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
3 Federal Reserve Bank of Philadelphia, The Livingston Survey, 14 June 2024, Economic Research, 5 September 2024, <https://www.philadelphiafed.org/surveys-and-data/real-time-data-research/livingston-2024-06>.

2.7%

7.0%
-2.0%
-0.6%

2.7% 2.6% 2.2% 2.1%

4.9%

3.4%

1.4%

2.8%

1.7% 2.0%
-2.5%

7.5%
Q3:21 Q4:21 Q1:22 Q2:22 Q3:22 Q4:22 Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 2H:24 E
1H:25
E
National Economic Outlook

The 10-year U.S. Treasury constant
maturity yield decreased to 4.3% in
July.4
The rate is forecasted to reach 3.9% by June 2025.5
Consumer Price Index
The Consumer Price Index (“CPI”) is a
measure of the weighted average change in
prices paid by urban consumers for a fixed set
of basic goods and services over time. The
CPI has increased at an average rate of 2.6%
over the past 20 years.6
The CPI increased 0.2% in July and has
increased 2.9% over the past 12
months.

The core index, excluding food and
energy prices, increased 0.2% in July
and has increased 3.2% over the past
12 months.7
Based on data obtained from the Survey of Professional Forecasters, the CPI is expected to increase 3.1% in 2024 and 2.4% in 2025.8

4 The Federal Reserve Board, Federal Reserve Statistical Release – Economic Research & Data, 1 August 2024, Federal Reserve, 5 September 2024, <https://www.federalreserve.gov/datadownload/Choose.aspx?rel=H15>. 5 Federal Reserve Bank of Philadelphia, The Livingston Survey. 6 U.S. Bureau of Labor Statistics.
7 Colyar, Matt, Moody’s Analytics: Consumer Price Index, 14 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
8 Federal Reserve Bank of Philadelphia, Survey of Professional Forecasters, 10 May 2024, Economic Research, 5 September 2024, <https://www.philadelphiafed.org/-/media/frbp/assets/surveys-and-data/survey-of-professional-forecasters/2024/spfq224>. 10-Year U.S. Treasury Note Yields
% Annual Yield
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia

4.2%

4.4%

4.8%

4.5%

4.0% 4.1% 4.2% 4.2%

4.5% 4.5% 4.3% 4.3% 4.1% 3.9%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

3.7% 3.7%

3.2% 3.1%

3.4%

3.1% 3.2%

3.5% 3.4% 3.3%

3.0% 2.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Historical 2024 Est. 2025 Est.

National Economic Outlook

The unemployment rate increased to 4.3% in July.10
The unemployment rate is forecasted to reach 4.0% in December 2024 and 4.1% in June 2025.11 Consumer Sentiment
The Index of Consumer Sentiment,
normalized at a value of 100 in the first
quarter of 1966, is constructed by the
Survey Research Center at the University of
Michigan based on a survey of consumers
regarding personal finances, business
conditions, and anticipated spending. This
metric is an important barometer of the
strength of the economy since consumer
spending represents two-thirds of GDP.

Consumer sentiment decreased by

1.8 points in July to 66.4.

Gasoline prices, high interest rates, and a softening job market were negative factors influencing consumer sentiment.12

9 Moody’s Analytics: Indicator Definition - U.S. GDP.
10 DeAntonio, Dante, Moody’s Analytics: Employment Situation, 2 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
11 Federal Reserve Bank of Philadelphia, The Livingston Survey. 12 Hoyt, Scott, Moody’s Analytics: University of Michigan Consumer Sentiment Survey, 26 July 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.

U.S. Unemployment Rate
% Unemployment Rate
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia

3.8% 3.8% 3.8% 3.7% 3.7% 3.7%

3.9% 3.8% 3.9% 4.0% 4.1%

4.3%

4.0% 4.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Dec
24 E
Jun
25 E
Consumer Sentiment
Q1:1966 = 100
Source: Moody's Analytics

69.4 67.9

63.8 61.3

69.7 79.0

76.9 79.4

77.2 69.1 68.2

66.4 45.0

50.0 55.0

60.0 65.0

70.0 75.0

80.0 85.0
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 National Economic Outlook

NO SITUS ADDRESS
CALEXICO, CALIFORNIA - 12 - PRIVILEGED AND CONFIDENTIAL Industrial Production
The Industrial Production Index measures the
change in real production output in U.S.
manufacturing, mining, and electric and gas
utilities. Together with construction, the
industrial sector accounts for a large portion of
the variation in national output. Over the past
20 years, industrial production has increased
at an average annual rate of 0.7%, or 0.06%
on a monthly basis.13
Industrial production decreased 0.6% in
July, which follows an increase of 0.3%
in June.14
Industrial production is projected to increase at an annual rate of 1.4% in the second half of 2024 and 1.8% in the first half of 2025, respectively.15 (The forecasted annual rates are shown on a monthly basis in the adjacent chart.)
Purchasing Managers’ Index
The Purchasing Managers’ Index (“PMI”) is
a monthly composite index based on
surveys of purchasing managers conducted
by the Institute for Supply Management
regarding manufacturing activity. Index
values above 50 indicate an expanding
manufacturing sector, while values below
50 indicate a contracting manufacturing
sector.

The PMI decreased by 1.7 points in
July to 46.8.

New orders, production, and employment indices were negative factors influencing manufacturing activity in the U.S.16

Industrial Production
One-Month % Change - Seasonally Adjusted Basis
Sources: Moody's Analytics and Federal Reserve Bank of Philadelphia -0.1%

0.2%
-0.7%

0.4%
-0.2%
-1.1%

1.2%
-0.2%

0.0%

0.8%

0.3%
-0.6%

0.1% 0.1%
-1.5%
-1.0%
-0.5%

0.0%

0.5%

1.0%

1.5%
Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 2H:24
E
1H:25
E
Purchasing Managers' Index
Seasonally Adjusted Basis
Source: Moody's Analytics

47.6 48.6

46.9 46.6 47.1

49.1 47.8

50.3 49.2 48.7 48.5

46.8 30.0

35.0 40.0

45.0 50.0

55.0 Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 National Economic Outlook

1.3% in July to an annualized level
of 3.95 million units. The inventory
of existing homes decreased to 4.0 months.18
In July, 739,000 new residential units were sold on an annualized basis, 10.6% above sales in June.

17 U.S. Census Bureau and the National Association of Realtors. 18 Whitcher, Shandor, Moody’s Analytics: Existing-Home Sales, 22 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
19 Walsh, Matthew, Moody’s Analytics: New-Home Sales, 23 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
20 U.S. Census Bureau.
21 Walsh, Matthew, Moody’s Analytics: New Residential Construction (C20), 16 August 2024, Moody’s Analytics, Inc. Economy.com, 5 September 2024, <http://www.economy.com>.
22 Federal Reserve Bank of Philadelphia, The Livingston Survey.

Sales of Existing and New Homes
Source: Moody's Analytics

0.0 0.1

0.2 0.3

0.4 0.5

0.6 0.7

0.8 0.9

1.0 0.0

1.0 2.0

3.0 4.0

1.31 1.36 1.37

1.51 1.57

1.38 1.55

1.30 1.38 1.32 1.33

1.24 1.43 1.46

0.0 0.25

0.50 0.75

1.00 1.25

1.50 1.75

2.00 Aug
23 Sep
23 Oct
23 Nov
23 Dec
23 Jan
24 Feb
24 Mar
24 Apr
24 May
24 Jun
24 Jul
24 Dec
24 E
Jun
25 E
National Economic Outlook

Through the end of July, the S&P 500 increased 20.3%, and the Russell 2000 increased 12.5%, from one year ago.24
Euro-U.S. Dollar Exchange Rate
The Euro (“EUR”) to U.S. Dollar (“USD”)
exchange rate relates the relative value of
the EUR in USD. As this exchange rate
increases, the EUR increases in value
relative to the USD. Therefore, USDdenominated assets will be less expensive in terms of EUR, and conversely, EURdenominated assets will be more expensive in terms of USD. As a result,
companies with significant foreign
operations will benefit in periods of appreciating foreign currency, and vice versa.

The USD increased by 1.8% against the EUR on a year-over-year basis. In July, the USD decreased by

1.0% compared to the EUR, with the EUR equal to $1.08.25

23 Bloomberg L.P.
24 S&P Capital IQ, Inc.
25 Ibid.

One-Year Stock Index Performance
Source: S&P Capital IQ, Inc.
-25.0%
-15.0%
-5.0%

5.0%

15.0%

25.0%

The VIX averaged 14.6% during the
past 12 months. Volatility was highest during the month of October 2023, reaching a high of 21.7%.

Most recently, the VIX averaged 14.5% and reached a high of 18.5% during July 2024.26 26 Ibid.