Exhibit C.pdf

APPRAISAL REPORT ON

MARSHFIELD CLINIC LADYSMITH CENTER PROPERTY

906 COLLEGE AVENUE WEST

LADYSMITH, WISCONSIN

GARY J. HOLT, MAI, SRA

J.C. NORBY & ASSOCIATES, INC.

1107 REGIS COURT

SUITE 200

EAU CLAIRE, WISCONSIN

J. C. Norby & Associates, Inc.

Real Estate Valuation & Consultation.

1107 Regis Court, Suite 200

Eau Claire, WI 54701

Phone: 715-834-3953 Fax: 715-834-5101

Email: info@jcnorby.com Website: www.jcnorby.com

January 19, 2023

Marshfield Clinic, Inc.

Attn: Mr. James Lynn, Vice President – Facilities Services

1000 North Oak Avenue

Marshfield, WI 54449

RE: Marshfield Clinic Ladysmith Center Property Appraisal

906 College Avenue West

Ladysmith, Wisconsin

Dear Mr. Lynn:

At your request, I have completed an appraisal intended to comply with Standard 1 of the Uniform

Standards of Professional Appraisal Practice (USPAP). This appraisal report is prepared under

Standards Rule 2-2(a). The legal description of the property is included in the enclosed report.

I have observed the property, researched data, and considered matters pertinent to its value. The

Market Value of the property as of the date of observation (January 5, 2023) is stated at $1,970,000.

ONE MILLION NINE HUNDRED SEVENTY THOUSAND DOLLARS

This appraisal includes the land and improvements. It does not include any furniture, fixtures, or equipment. It also does not include any personal property or inventory located on the premises.

Finally, this appraisal does not include the market value of the going concern (if any) of the property.

There are no hypothetical conditions associated with this appraisal assignment.

The property is valued based on its current As Is condition as of the date of observation.

The only extraordinary assumption included in this report is there are no adverse environmental conditions on or around the property that would have a negative impact on the overall utility, and hence value. Any deviation from this extraordinary assumption may have a significant effect on the market value opinion stated in this report.

http://www.jcnorby.com/

Marshfield Clinic, Inc.

RE: Marshfield Clinic Ladysmith Center Property Appraisal

January 19, 2023

As a result of the recent COVID-19 virus, the market’s reaction to this pandemic has been evaluated. After discussions with local and regional market participants in this type of property, there is insufficient data available to support a conclusion as to the effect on market value at this point. As of yet, there have been no rent concessions advertised or increase in vacancies for this type of real estate in the local market. Also, to my knowledge, there have been no proposed medical clinic properties put on hold or postponed as a result of the virus.

This appraisal report presents brief discussions of the data, reasoning and analyses that are used in the appraisal process to develop the opinion of value. Supporting documentation concerning the data, reasoning and analyses is retained in the appraisal file. The depth of discussion is specific to the needs of the client and for the intended use stated in this report. I am not responsible for unauthorized use of this report.

Respectfully submitted, Gary J. Holt, MAI, SRA

WI Certified General Appraiser #1028

Expiration Date: December 14, 2023

J. C. NORBY & ASSOCIATES, INC.

GJH/asr/mm

Enclosure

F:\DATA\NARRATIVES\2023\22186CI 906 COLLEGE AVE W LADYSMITH MARSHFIELD CLINIC

Copyright © 2023 by J. C. Norby & Associates, Inc. All rights reserved.

Real Estate Valuation & Consultation ~ i ~

TABLE OF CONTENTS

PAGE

PURPOSE OF APPRAISAL

DEFINITION OF AS IS MARKET VALUE

DEFINITION OF HYPOTHETICAL CONDITION

DEFINITION OF EXTRAORDINARY ASSUMPTION

FUNCTION OF THE APPRAISAL

INTENDED USE OF REPORT

INTEREST VALUED

EFFECTIVE DATE OF REPORT

DATE OF REPORT

SCOPE OF WORK

STATE MAP

CITY MAP

AERIAL PHOTOGRAPH

SUBJECT PHOTOGRAPHS

TYPE AND CLASS OF PROPERTY

DATE OF OBSERVATION

LEGAL DESCRIPTION

MARKET AREA DATA

SITE DATA

ENVIRONMENTAL CONDITIONS

SALES HISTORY

ASSESSED VALUATION AND TAXES

ZONING

FLOOD PLAIN

HIGHEST AND BEST USE

IMPROVEMENT ANALYSIS

LAND VALUATION

VALUATION BY COST APPROACH

VALUATION BY SALES COMPARISON APPROACH

VALUATION BY INCOME CAPITALIZATION APPROACH

CORRELATION OF VALUE OPINIONS

FINAL OPINION OF VALUE

VALUE OF PROPERTY AS GENERAL OFFICE SPACE

VALUATION BY SALES COMPARISON APPROACH

VALUATION BY INCOME CAPITALIZATION APPROACH

CORRELATION OF VALUE OPINIONS

FINAL OPINION OF VALUE

ASSUMPTIONS AND LIMITING CONDITIONS

CERTIFICATION

QUALIFICATIONS

ADDENDUM

ZONING CODE

APPRAISAL CONTRACT

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APPRAISAL REPORT ON

MARSHFIELD CLINIC LADYSMITH CENTER PROPERTY

906 COLLEGE AVENUE WEST

LADYSMITH, WISCONSIN

CLIENT: Marshfield Clinic, Inc.

1000 North Oak Avenue

Marshfield, WI 54449

APPRAISER: Gary J. Holt, MAI, SRA

J.C. NORBY & ASSOCIATES, INC.

1107 Regis Court, Suite 200

Eau Claire, WI 54701

SUBJECT: Marshfield Clinic Ladysmith Center Property

906 College Avenue West

Ladysmith, WI 54848

PURPOSE OF THE APPRAISAL:

The purpose of this appraisal is to provide the appraiser's best estimate of the market value of the subject real property as of the effective date. Market value is defined by the federal financial institutions regulatory agencies as follows:

Market value means the most probable price which a property should bring in a competitive and open market under all condition’s 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 the 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.

(Source: Office of the Comptroller of the Currency under 12 CFR, Part 34, Subpart C-Appraisals, 34.42 Definitions [f].)

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DEFINITION OF AS IS MARKET VALUE:

As is market value is defined as follows:

The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date.

(Source: The Dictionary of Real Estate Appraisal, 7th Edition, Appraisal Institute)

DEFINITION OF HYPOTHETICAL CONDITION:

A hypothetical condition is defined as follows:

A condition that is presumed to be true when it is known to be false. 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.

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.

DEFINITION OF EXTRAORDINARY ASSUMPTION:

An extraordinary assumption is defined as follows:

An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions.

Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.

FUNCTION OF APPRAISAL:

The function of this report is to present the data and reasoning employed to form a professional opinion of the nature, quality, value, or utility of specified interests in, or aspects of, identified real estate to facilitate a decision. The objective of this report is to communicate the conclusions to the client.

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INTENDED USE OF REPORT:

This appraisal is intended to assist the client, Marshfield Clinic, Health Systems Inc., in establishing a market value of the property. The intended user of this report includes the client only. This report is not intended for any other use or users.

DEFINITION OF FEE SIMPLE INTEREST:

Fee simple estate is defined as follows:

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.

EFFECTIVE DATE OF VALUE: January 5, 2023

DATE OF REPORT: January 19, 2023

SCOPE OF WORK:

The scope of work includes a number of independent investigations and analysis including an observation of the property on January 5, 2023. This appraisal includes the real estate only. It does not include any furniture, fixtures, or equipment. It also does not include any inventory or personal property located on the premises. Finally, this appraisal does not include the market value of the going concern (if any) of the property.

Site size and dimensions are obtained from the certified survey map and other public records outlining the property. Building size and dimensions are obtained from my measurements of the building exterior walls as taken during my onsite visit to the property.

Research sources utilized to gather data regarding the subject include the Rusk County

Register of Deeds and Treasurer Offices; the city of Ladysmith Zoning and Assessor

Offices; other public records; representatives of the property owner; and from my personal observation as part of this appraisal assignment.

Research sources utilized to gather general market data include the Northwest Wisconsin and Northstar Multiple Listing Service agencies (MLS), Marshall Valuation Service, Price

Waterhouse Coopers Real Estate Investor Survey, CoStar sales database, the Wisconsin

Department of Revenue sales database, RealtyRates.com, other real estate professionals located throughout the area, and the internal records database of this appraisal office.

The research sources used are sufficient for the discovery of comparable market data to provide a reliable value opinion for the property being appraised.

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Appraisal Process:

According to the Appraisal Institute, an appraisal is defined as “an act or process of developing an opinion of value.” The intent of an appraisal is to assist in decision making purposes regarding a specific property.

The appraisal process is a systematic method of developing an opinion of value.

Depending on the nature of the property and purpose of the assignment, three valuation approaches are considered:

▪ Cost Approach

▪ Sales Comparison Approach

▪ Income Capitalization Approach

Each approach applies data derived from the market.

In the Cost Approach, the component parts of the subject property are analyzed and an estimate of what it would cost in the market to replace them with property of like utility and value is made. Land is broken into use classes, each evaluated on its value in the market. The value of the improvements are estimated based on cost new, less depreciation. Depreciation is defined as loss in value from any cause and may be physical wear, functional and/or external obsolescence.

The Sales Comparison Approach involves market analysis of properties which have sold. Each property is compared to the property being appraised on numerous factors; some being time of sale, size, location, quality of improvements. The concept of comparative analysis is the process by which a value indication is derived. This analysis may employ quantitative adjustment techniques or qualitative analysis, either separately or in combination. This comparative analysis is based on the appraisal principal of substitution, which states “when several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution.”

(Source: Dictionary of Real Estate Appraisal 7th Edition, Appraisal Institute)

The Income Approach typically involves the capitalization of net income. Annual income under typical use and management is outlined using market derived income and expenses. The capitalization rate is derived from the market, using actual data from similar properties and similar investment criteria.

The final process is correlation of the approaches and selection of the approach or approaches that most accurately represent market value.

The Cost Approach is considered, however, is not utilized in this appraisal assignment due to the subject’s age and the subjective nature of estimating depreciation from all causes. This valuation method is most applicable with newer

~ 5 ~ improvements. The subject building is an older structure that likely does suffer from the various forms of recognized depreciation, which are extremely difficult to accurately measure in buildings of this vintage. Therefore, the Cost Approach is given no further consideration in this assignment. The omission of the Cost

Approach does not prohibit credible valuation results for the property.

To adequately complete the Sales Comparison Approach, sales of other medical clinic buildings in the area are researched and analyzed. Of all the sales researched, those considered most representative of the subject are included in this analysis.

Adjustments are made to the comparable properties to reflect differences between them and the subject. For this analysis, sales of other similar types of property that have occurred within the past few years and located in the region are considered.

The property is currently owner occupied. To estimate a reasonable market rent for this subject, an analysis of other medical related clinic buildings which are being leased is required. This is the first step in necessary in completing the Income

Capitalization Approach, which also requires research and analysis of typical operating expenses and capitalization rates for similar types of properties that are being leased.

The final step in the reconciliation process is to correlate the various valuation approaches utilized into Fee Simple market value opinion for the property being appraised.

The property is valued based on its current As Is condition as of the date of observation.

The only extraordinary assumption included in this report is there are no adverse environmental conditions on or around the property that would have a negative impact on the overall utility, and hence value. Any deviation from this extraordinary assumption may have a significant effect on the market value opinion stated in this report.

As a result of the recent COVID-19 virus, the market’s reaction to this pandemic has been evaluated. After discussions with local and regional market participants in this type of property, there is insufficient data available to support a conclusion as to the effect on market value at this point. As of yet, there have been no rent concessions advertised or increase in vacancies for this type of real estate in the local market. Also, to my knowledge, there have been no proposed medical clinic properties put on hold or postponed as a result of the virus.

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STATE MAP

SUBJECT

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CITY MAP

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AERIAL PHOTOGRAPH

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SUBJECT PHOTOGRAPHS

Front Facing Southwest

Front Facing Northwest

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Rear Facing Northeast

Rear Facing Southeast

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Rear Employee Parking Lot Facing North

College Avenue West Facing East Property on Right

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College Avenue West Facing West Property on Left

Vestibule Entry

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Waiting Area Interior Finish

Waiting Area Reception Desk

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Reception Desk

Office next to Reception Desk

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Typical Private Office Interior Finish

Typical Private Office Interior Finish

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Typical Exam Room Interior Finish

Typical Exam Room Interior Finish

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Typical Procedure Room Interior Finish

Typical Procedure Room Interior Finish

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Nurses Station

Lab

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Staff Restroom Finish

Typical Restroom Interior Finish

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Pharmacy Interior Finish

Fire Sprinkler System

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New Water Heater Unit

Electric Service to Building

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TYPE AND CLASS OF PROPERTY:

The subject is improved with a one story, wood frame constructed building designed as a medical clinic facility. The property contains a total of approximately 19,508 square feet of gross building area. The building was constructed in approximately 1991 and has an actual age estimate of 32 years. The property has been utilized for a medical clinic since its construction.

DATE OF OBSERVATION:

The property was observed on January 5, 2023, in the presence of Mr. Doug Vandoorn, building services manager for the property owner. This is also the date of valuation.

LEGAL DESCRIPTION:

The subject includes a single real estate tax parcel which is described as follows:

Parcel No. 246-03596-0000:

Part of Government Lot 4 of S3, T34N, R6W, city of Ladysmith, Rusk

County, Wisconsin, further describe as follows: Lot 1 of Certified Survey

Map #314 recorded in Volume 2 of Certified Survey Maps on Page 158 as

Document #226753.

The above described parcel contains a total of approximately 47,209 square feet, which is equivalent to about 1.084 acres.

MARKET AREA DATA:

The subject is located on the southwest side of the city of Ladysmith. It is located just west of the State Highway 27 corridor, which is primarily commercial oriented and the primary north/south traffic route through the city. The immediate vicinity surrounding the subject is best characterized as being within the stabilized neighborhood life cycle stage.

The city of Ladysmith is located in the central part of Rusk County in Northwestern

Wisconsin and is the County Seat. As of the 2010 Census, the city population was at 3,414, which represents a 13.2% decrease from the 2000 Census. In 2019, the population is estimated at 3,126, which is equivalent to an 8.4% decrease from the 2010 Census. The recent trend in a declining population in Ladysmith began with the 2000 Census.

The city encompasses a total of 4.59 square miles, of which 4.22 square miles is land and

0.38 square miles is water. The Flambeau River does meander through the city of

Ladysmith.

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As of the 2010 Census, the population density was 743 people per square feet mile. There were 1,527 households and 806 families residing in the city. There were also 1,667 housing units at an average density of 396 per square mile. The median age in the city was 43.8 years and the average household size was 2.14 and the average family size 2.86.

As of 2019, the estimated median household income in the city of Ladysmith was $48,786, somewhat below the state average of $64,168. The estimated per capital income in 2019 was $22,595.

The estimated median house or condo value in 2019 was $88,008. The median gross rent paid was $667. As of March, 2019, the Cost of Living Index in Ladysmith was 75.8, which is low and considerably below the U.S. average of 100. Approximately 11.5% of the city population was residing at or below the poverty level as of 2019.

The three most common employment industries in the city are Wood Products (13.3%), accommodation and food services (10.7%), and educational services (10.5%).

As of August, 2022, the unemployment rate in the city was at 3.6%, slightly higher than the state average of 3.3% and lower than the national average of 3.7%.

College Avenue West is located adjacent to the north of the subject. Just north of this residential street is vacant land owned by the county that is utilized as paved parking for nearby commercial properties, including the subject. In fact, it is my understanding that the owners of the subject have two separate 99 year lease agreements with the county originating in 1999 to utilize this area as off-street parking facilities. This lease agreement is also assignable to any potential buyer of the subject property. Also just north of the subject, improved commercial properties include and O’Reilly Auto Parts retail store, a

Walmart retail outlet, the Cobblestone Hotel & Suites lodging facility, and the Rusk County

Highway Department shop buildings. Area further to the north is developed with commercial property along the State Highway 27 corridor. U.S. Highway 8 is also located just north of the subject. Area north of U.S. Highway 8 is also an established commercial corridor along State Highway 27.

A paved parking lot associated with the Marshfield Medical Center – Ladysmith Hospital complex is located adjacent to the east of the subject. Also just east of this parking lot is

State Highway 27. Improved properties east of Highway 27 include the Fairbridge Inn

Express motel complex and the Flambeau Village apartment complex. Area further to the east, along secondary neighborhood streets is an established residential neighborhood. Just to the northeast of the subject, across from State Highway 27, is the St. John’s Lutheran

Church property. Area further to the northeast is also residential oriented.

O J Falge Park and Corbett Lake are also just to the northeast of the subject. The downtown central business district of Ladysmith is also to the northeast of the subject along the U.S.

Highway 8 corridor.

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The Marshfield Clinic Ladysmith Center Hospital complex is located adjacent to the south of the subject. Just south of this building structure is the Flambeau River. Area further to the south within the city limits of Ladysmith is residential oriented. The Ladysmith

Industrial Park is also located just to the south of the subject.

The Indianhead Community Action Agency office building structure is located adjacent to the west of the subject. The Servants of Mary Convent residential property is also located just west of the subject. Area further to the west includes a small commercial building that could be utilized for either retail of office purposes. There is also a public park located just to the west of the subject as is the North Cedar Academy private school facility. Area further to the west turns more rural in nature.

Just to the northwest of the subject, behind the Walmart property, is undeveloped wooded acreage.

The trend for this area will most likely continue as its current use, consisting primarily of commercial development located along both sides of State Highway 27 and U.S. Highway

8, with residential development being predominant to the east and northeast of the subject along secondary neighborhood streets.

State Highway 27 is a heavily traveled north/south traffic route while U.S. Highway 8 is a heavily traveled east/west route. Both highways provide convenient access to employment and other services available throughout not only the city of Ladysmith, but the entire region in general.

According to the Wisconsin Department of Transportation, as of June, 2021, there were approximately 5,500 vehicles per day that travel past the subject along State Highway 27.

The daily traffic volume along this stretch of State Highway 27 has remained fairly consistent over the past decade. There are no locational factors noted that would negatively impact the marketability of the subject neighborhood.

SITE DATA:

As previously noted, the subject includes a single real estate tax parcel that contains of total of approximately 47,209 square feet, or 1.084 acres. The parcel is an interior site that has a rectangular shape and level topography. The site is developed at grade with the adjacent streets and surrounding improvements.

The parcel has about 362 feet of frontage along the south side of College Avenue West.

The east property line has a depth of about 110 feet and the west property line a depth of about 148 feet. The rear (south) lot line has a width of approximately 390 feet.

A parcel map, Certified Survey Map, and two aerial photographs outlining the property are included on the following pages:

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PARCEL MAP

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CERTIFIED SURVEY MAP

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College Avenue West is a bituminous paved, two-way city street with a single lane of traffic in each direction. It is noted that College Avenue West does not cross State Highway 27.

There is no concrete curb, gutter, or public sidewalk located along either side of College

Avenue West. There are two separate driveway access points to the property, one to the east of the building and one to the west of the building. Access to the subject is common and typical for the local market. The property is developed at grade with the adjacent street and surrounding improvements.

Municipal water and sewer service is available to the subject parcel. Other public utilities available include natural gas, electricity, and telephone. The bearing qualities of the soil appear adequate, as there are no significant signs of settlement noted in the existing building or site improvements.

There are easements of record for public utilities. There also appears to be an ingress/egress easement that allows access to the hospital facility to the south of the subject from College Avenue West. This apparent ingress/egress easement does not have a significant impact on the overall utility or value of the subject parcel. There were no other apparent easements, encroachments, or conditions noted that would impact the utility of the subject sight. However, a title search was not reviewed as part of this appraisal assignment. It is possible a title search could reveal certain easements, encroachments, or other encumbrances that may have a negative impact on the overall utility, and hence value of the property. If the client has concerns, a title search outlining the history of the property should be obtained.

As previously noted, it is also my understanding that the two paved parking lots located just north of the subject across from College Avenue West are leased by the clinic and are available for use by visitors to the subject property. This lease agreement with the county also transfers to any new owner of the subject building. The value of these two parking lot parcels is not included in this appraisal assignment.

ENVIRONMENTAL CONDITIONS:

The value estimated in this report is based upon the assumption that the property is not negatively affected by the existence of hazardous substances or detrimental environmental conditions. I am not an expert in the identification of hazardous substances or detrimental environmental conditions. My routine inspection around the property did not develop any information that indicated the existence of any apparent significant substances or detrimental conditions which would affect the property negatively. It is possible that tests and inspections made by a qualified hazardous substance and environmental expert would reveal the existence of hazardous materials and environmental conditions on or around the property that would negatively affect its value. If the client has a concern, a qualified expert should be consulted to determine if environmental hazards do exist.

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SALES HISTORY:

The property has been owned by Marshfield Clinic for numerous years. There have been no sale transfers of the subject within the past three years.

To my knowledge, there have been no offerings or purchase agreements involving the property within the past three years nor has the property been listed for sale on the open public market within this time frame.

Since its construction in 1991, the property has been utilized for its current use as a medical clinic facility.

ASSESSED VALUATION AND TAXES:

The 2022 assessed valuation and real estate taxes for the property are as follows:

Land ............................................................................................. $ 116,900

Improvements ..............................................................................$1,479,200

Total Assessed Value ....................................................................$1,596,100

Estimated Fair Market Value .......................................................$1,888,200

Real Estate Taxes .........................................................................$43,356.47

The 2022 assessed value is based on 84.53% of estimated fair market value. The 2022 real estate tax mill rate for the city of Ladysmith is 0.027216704.

As of the date of this report, the 2022 taxes have not yet been paid. All previous year taxes have been paid.

ZONING:

According to the city of Ladysmith Zoning Office, the subject parcel is zoned C-1

(Commercial District). It is noted that all uses permitted in the R-3 (Multifamily

Residential District) are also allowed as a permitted use under the C-1 zoning code.

The current use of the property as a medical clinic is listed as a permitted use under the C-

1 zoning code.

The maximum building height allowed is 35 feet or 3 stories. There is no minimum lot area requirement for a commercial use, nor is there any front, side, or rear yard setback requirements for a commercial use.

A copy of the C-1 zoning Code is included in the addendum to this report.

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FLOOD PLAIN:

According to the Federal Emergency Management Agency (FEMA) approved flood plain map for the city of Ladysmith, Panel #55107C 0503D, effective date of March 17,2014, the entire property is located in zone X, which is not within the 100 year flood hazard area.

HIGHEST AND BEST USE:

For Highest and Best Use of land as though vacant and property as improved, the use must meet four criteria. Those criteria are that the Highest and Best Use must be:

1. Physically Possible

2. Legally Permissible

3. Financially Feasible

4. Maximally Productive

These criteria should usually be considered sequentially, for only when there is a reasonable possibility that one of the prior unacceptable conditions can be changed is it appropriate to proceed with the analysis.

Highest and Best Use is defined as follows:

“The reasonable, probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value.”

(Source: Dictionary of Real Estate Appraisal – 7th Edition, Appraisal Institute)

Implied in this definition is that the determination of Highest and Best Use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to the individual property owner. Therefore, in certain situations, the Highest and Best Use of land may be for parks, undeveloped greenspace, preservation, conservation, or wildlife habitat.

Highest and Best Use Analysis:

Land as Though Vacant:

The four questions about the property must be considered before a Highest and Best Use estimate can be reached. This is done after examining surrounding land uses and coming to a tentative use conclusion.

In the case, the tentative use conclusion appears to conform to the most productive use allowed by the zoning code. It does not appear to be either prudent or profitable, to consider putting this land to an alternative use such as industrial or agricultural.

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Physically Possible:

Discussing the first criteria of Highest and Best Use, Physically

Possible, the subject to be developed for a variety of uses. The soils appear to be satisfactory and the technology does exist to transform the vacant site into a developed use. The parcel has good street frontage, visibility, and access to serve as a developed site.

Legally Permissible:

Regarding the second criteria, Legally Permissible, it appears legally permissible for the property to be developed for either a commercial or multifamily residential use. As noted in the zoning section above, the site is zoned C-1 (Commercial District). There are a number of permitted and conditional commercial and multifamily residential uses allowed under this zoning code.

Financially Feasible:

Regarding the third criteria, Financially Feasible, it appears the use as commercial is more appropriate than multifamily residential. The subject is located in a neighborhood developed with a variety of commercial improvements along the State Highway 27 corridor.

The property has good visibility and acceptable access from State

Highway 27. The site would support various commercial uses and a commercial use would provide for the highest residual value to the land, especially considering the alternative of a multifamily use.

Maximally Productive:

Regarding Maximally Productive, the majority of the site is suitable for development, taking into consideration typical utility easements.

The parcel has a mostly rectangular shape and level topography, making it conducive for development. The parcel is large enough to allow for the necessary building improvement and provide for adequate means of ingress, egress, parking, and green space. The land will achieve the highest return possible if utilized for some type of permitted commercial use.

Summary:

Based on the above discussion, it appears the site as though vacant, is best suited for some type of permitted commercial use.

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Property as Improved:

In this analysis, the same points as previously discussed are considered.

However, the property is now viewed as it is in its current developed state as a commercial medical clinic facility.

Physically Possible:

As in the analysis of Highest and Best Use as vacant land, it is physically possible for the property to be developed for its current medical clinic use. The land area is sufficient for the improvements and soil accommodations appear to be satisfactory.

Legally Permissible:

It appears to be legally permissible for the property to be utilized for its current medical clinic office use. This type of use is allowed as a permitted use under the commercial district zoning code.

Financially Feasible:

The property has been utilized for a medical clinic office since its construction in 1991. The property has stood the test of time. It is my understanding the current owner of the property will be vacating this location in March of 2023 and will be relocating to a new location in Ladysmith.

The overall location for this type of use is good, as it is situated in front of a full service hospital facility. There is also convenient access to major traffic routes that connect the city of Ladysmith to the larger Northwestern Wisconsin region.

Based on the income and expense analysis for the property, as outlined in the Income Capitalization Approach section of this report, the anticipated continued future use of the property as a medical clinic appear financially feasible, as the value contribution of the existing improvements is somewhat higher than the land value available for some type of alternative use. Thus, this meets the definition of financially feasible and the existing improvements are concluded as such.

The building is designed for a medical use with a number of exam rooms, procedure rooms having an extensive plumbing system. It is possible the property could be converted to more of a general office use as well, with moderate renovations required to the property.

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It is also noted there are a few other medical related office buildings located in the city of Ladysmith. One is the Prevea Ladysmith

Health Center facility located to the north of the subject along the

U.S. Highway 8 corridor, just west of the State Highway 27 intersection. This is a newer medical clinic facility located in

Ladysmith.

Maximally Productive:

The building footprint occupies approximately 40% of the entire parcel. The improvements allow for the necessary means of ingress, egress, and greenspace. There is also adequate on-site parking available, as well as, additional off-site parking available to the north. This type of use does appear to provide for an acceptable return to the subject’s land. The property has convenient access to primary traffic routes and other attractions in the city. These are all necessary characteristics of a property to achieve maximum productivity.

There does not appear to be any change in the Highest and Best Use within the foreseeable future regarding the subject or surrounding neighborhood in general.

Summary:

Based on the above analysis of the Highest and Best Use of the property as vacant land, and also as improved, it appears that the Highest and Best Use of the subject parcel is for some type of permitted commercial use, with the current use as a medical clinic office building providing an acceptable return to the land.

Alternative uses for the subject building could be for some other type of general professional office space.

The most likely buyer type of a parcel similar to the subject is either an owner user or a secure income investor.

An owner user is one who wants to actually utilize the property or just control its use. This buyer type does not experience the risk of vacancy, so incurs the least amount of risk in ownership. This type of buyer is also an end user who customarily utilizes the property almost immediately, which may imply financial feasibility.

A secure income investor is one who predominantly seeks an established cash flow secured by leases. This buyer type typically does not change the property in any major way and focuses on medium to long term investment horizons.

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IMPROVEMENT ANALYSIS:

The subject is improved with a one story, wood frame constructed structure utilized as a medical clinic office facility. The property contains a total of approximately 19,508 square feet of gross building area. The building was constructed in approximately 1991. For a detailed description of the improvements, see the building analysis form on the following pages:

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BUILDING ANALYSIS

BUILDING: 906 College Avenue West, Ladysmith, Wisconsin

DATE OF INSPECTION: January 5, 2023

MEASUREMENTS: Various

NO. STORIES OR HEIGHT: 1 Story – typical height

SQUARE FEET: 19,508 SF±

AGE: 1991 – 32 Years

TYPE OF CONSTRUCTION: Wood frame

TYPE OF ROOF: Flat

ROOFING: Rubber membrane

EXTERIOR WALLS: Brick, wood siding

FOUNDATION WALLS: Concrete

BASEMENT: None

BASEMENT FLOOR: N/A

HEATING SYSTEM: Rooftop gas forced air units

AIR CONDITIONING: Rooftop central air units

ELECTRIC SERVICE: Typical for use – 800-1200 Amp panel

WATER HEATER: 75 Gallon electric unit – New

WATER PIPE: Copper/PVC

FLOOR DRAINS: Yes

FLOOR FRAMING: Compacted earth

SUB FLOOR: Concrete slab

FINISH FLOORS: Carpet, resilient tile, clay tile, ceramic tile, vinyl

INTERIOR:

WALLS: Sheetrock, vinyl wallpaper

CEILINGS: Suspended tile

DOORS: Wood

TRIM: Wood, carpet

WINDOWS: Fixed aluminum framing

FLOOR PLAN: See floor plan diagram

PLUMBING: 13 Restrooms; 28 sinks in exam and procedure rooms

INSULATION: Unknown

BUILDING QUALITY: Average

INTERIOR CONDITION: Average

EXTERIOR CONDITION: Average

DESCRIPTION OF ROOMS: See below

PRESENT USE OF BUILDING: Medical Office

COMMENTS:

▪ Has vestibule entry, lobby w/reception area, pharmacy, waiting room, 38 exam rooms, 4 procedure rooms, 27 private offices, 13 restrooms, lab, 2 blood draw rooms, mail room, storage/supply room, nurses’ station, and 2 mechanical rooms.

▪ No recent updates reported other than a new water heater.

▪ No significant signs of deferred maintenance observed. No required repairs reported.

▪ There is a partial wet fire protection sprinkler system covering about 10% to 20% of the building.

▪ Site improvements include some asphalt parking with parking for about 20 vehicles, concrete sidewalks, and some groomed lawn areas.

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BUILDING FLOOR PLAN

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LAND VALUATION:

In this approach, sales of similar unimproved land are analyzed, compared, and adjusted to derive an indication of value for the land being appraised. In applying the sales comparison approach, the appraiser follows a systematic procedure. The appraiser must always compare like properties. That is, the appraiser must adjust each comparable to the subject to impute an indicated value to the property. The steps of the procedure are as follows:

1. Research the market to obtain information about transactions and listings of other properties similar to the subject property.

2. Verify the information by considering whether the data is factually accurate, and the transaction reflects an arm's length market consideration.

3. Determine relevant units of comparison such as acres, square foot and front foot, and develop a comparative analysis for each unit.

4. Compare the subject and comparable sales according to the elements of comparison and adjust the sales price of each comparable as appropriate.

5. Reconcile the multiple value indications that result from the adjustments into a single value indication.

The sales data is as follows:

SALE

LOCATION

SALE

DATE

SALE

PRICE

SIZE

/SF

PRICE

/SF

U.S. Highway 8

Ladysmith, WI 9/2019 $190,000 78,844 $2.41

U.S. Highway 8

Ladysmith, WI 4/2018 $175,000 76,666 $2.28

U.S. Highway 8

Ladysmith, WI 1/2019 $190,000 90,169 $2.11

Sale #5644 is a vacant commercial parcel located along USH 8, just west of the STH 27 intersection in the city of Ladysmith. This parcel sold in September of 2019 for the equivalent of $2.41 per square foot.

Sale #5645 is a vacant commercial parcel also located along USH 8, just west of the STH

27 intersection. This parcel was purchased for the development of a new Prevea Health medical clinic facility. It sold in April of 2018 for the equivalent of $2.28 per square foot.

Sale #5646 is located adjacent to Sale #5645 and is also part of the new Prevea Health medical clinic development. This parcel sold in January of 2019 for the equivalent of $2.11 per square foot.

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The above sales are listed on the following adjustment chart. Adjustments are made to the comparable properties to reflect differences between them and the subject. Sales sheets of the above sales are located in the addendum to this report.

GRID ANALYSIS OF LAND SALES

SALE # SUBJECT 5644 5645 5646

DATE OF SALE Jan-23 Sep-19 Apr-18 Jan-19

PRICE $190,000 $175,000 $190,000

SIZE (SF) 47,209 78,844 76,666 90,169

SALE PRICE/SF $2.41 $2.28 $2.11

FINANCING (%)

:AT MKT RATES YES YES YES

ADJUSTMENTS: %

SALE COND'S 0% 0% 0%

CASH EQUIV'Y 0% 0.0000% 0.0%

NORMAL PRICE: $190,000 $175,000 $190,000

MARKET COND'S 6.67% 9.50% 8.00%

ADJUSTED PRICE: $202,673 $191,625 $205,200

LOCATION City of Ladysmith 0% 0% 0%

SIZE (SF) 47,209 10% 10% 10%

ZONING Commercial 0% 0% 0%

TOPOGRAPHY Level 0% 0% 0%

SHAPE Slightly Irregular 0% 0% 0%

UTILITIES Municipal 0% 0% 0%

SITE ORIENTATION Good 0% 0% 0%

NET ADJUSTMENT 10% 10% 10%

ADJ SALE PRICE: $222,940 $210,788 $225,720

/SF $2.83 $2.75 $2.50

AVERAGE PRICE:

/SF $2.69

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SUBJECT AND LAND SALES LOCATION MAP

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Discussion:

The search for comparable market data includes recent sales of vacant commercial parcels located in the city of Ladysmith. There is no recent market data available.

Therefore, the search for comparable sales is expanded to include older sales in the city. Of all the sales researched, those considered most representative of the subject are included in the analysis. While there is limited data available, the comparable properties are good representations of the subject parcel.

Transactional Adjustments:

Transactional adjustments included differences in financing, cash equivalency, conditions of sale and expenditures made immediately after the purchase.

Each comparable property was sold on a Fee Simple interest basis, similar to the property rights valued for the subject. Also, each property was conveyed by either a Warranty Deed or a Trustee’s Deed and is an arm’s length transaction. Therefore, no financing or cash equivalency adjustments are required.

To my knowledge, there were no unusual condition of sale issues noted in any of the comparable properties. Therefore, no condition of sale adjustments are made.

For Sales #5644 and #5645, there were no expenditures made immediately after the purchase. Sale #5646 did have a previous improvement that was demolished after the sale to make way for the new development of this parcel. Generally, the additional cost of demolition of older improvements should be added back to the sale price to arrive at a true value indication for this property as though vacant and available for a future use. There is no demolition cost data available, thus the actual value per square foot should be something higher than indicated for this property. While no post sale expenditure adjustments are made, the fact this comparable property should have a value indication more in-line with the other two properties is taken into consideration at the end of this section.

Market Conditions:

It is noted Sale #5645 also previously sold in January of 2015. This matched paired sales data comparable supports a market condition change of 5.1% per year between 2015 and 2018. There are no other matched paired sales data available to support any type of adjustment.

According to the Wisconsin Department of Revenue, the equalized value for commercial land in the city of Ladysmith has averaged an increase of 2.2% per year since 2018.

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Based on the above data, it is concluded a reasonable market condition adjustment for each comparable land sale is equivalent to 2% per year, calculated on a monthly basis. Therefore, each comparable property is adjusted upward 2% per year for market conditions.

Location:

The subject is located in the city of Ladysmith along the State Highway 27 corridor. This is a good location for a commercial use.

All three comparable properties are located just north of the subject along the U.S. Highway 8 corridor, just west of the State Highway 27 intersection.

This is also a good location for a commercial use. The daily traffic volume in front of the subject is higher than the daily traffic volume in front of each comparable property. However, the overall location of the three comparable properties included in this analysis is considered similar to the subject’s location overall and no adjustments are made.

Size:

The subject parcel contains a total of 47,209 square feet.

The comparable properties range in size from 90,169 square feet to 76,666 square feet. Each comparable property is somewhat larger than the subject.

Generally, larger parcels tend to sell for less on a per unit basis, with all other factors being equal. Therefore, positive size adjustments are made to reflect this difference.

The subject and comparable properties are similar in terms of other respects such as zoning, topography and shape, available utilities, and overall site orientation.

Therefore, no further adjustment for these physical features are required.

The adjusted comparable properties support a potential value range of $2.83 to $2.50 per square foot. As previously noted, Sale #5646, which represents the low end of the range, does not take into consideration the additional cost of demolition to remove the previous building structure. Therefore, the most weight is given to Sales #5644 and #5645.

The market value of the subject’s land is stated at $2.80 per square foot and calculated as follows:

Size (SF) x Unit Basis = Market Value 47,209/SF x $2.80/SF = $132,185 Round to ....................................................................................$130,000

The market value of the subject’s land is stated at $130,000.

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VALUATION BY COST APPROACH:

Underlying the theory of the Cost Approach to Value is the principle of substitution which suggests that no prudent person will pay more for a property than the amount for which they can obtain, by purchase of a site and construction of improvements without undue delay, a property of equal desirability and utility. Consequently, current reproduction cost, prior to any deduction for accrued depreciation, plus land value, plus entrepreneurial profit, provide a measure against which prices for already improved properties may be judged.

For the Cost Approach to produce a valid indication of market value, it is necessary to consider the accrued depreciation evident in the property being appraised due to all causes;

physical, functional, and external.

The steps taken in deriving an indication of value through application of the Cost Approach are:

1. Estimate the value of the land as though vacant and available to be developed to its highest and best use.

2. Estimate the reproduction or replacement cost of the improvement on the effective appraisal date.

3. Estimate the amount of accrued depreciation in the improvements, categorized by three major types:

a. Physical Deterioration

b. Functional Obsolescence

c. External Obsolescence

4. Deduct the appropriate estimated depreciation from the reproduction or replacement cost of the improvements to derive an estimate of the improvements' contribution to total value.

5. Add the depreciated reproduction or replacement cost of the improvements to value allocation of the site improvements and land to obtain an estimated value by the Cost Approach.

Although considered, the Cost Approach has been omitted from this appraisal assignment.

The Cost Approach is most reliable with newer improvements. The subject is an older building that likely does suffer from the various forms of recognized depreciation which are extremely difficult to accurately measure in buildings of this vintage. Therefore, no further consideration to the Cost Approach is given in this assignment.

The omission of the Cost Approach does not prohibit credible valuation results.

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VALUATION BY SALES COMPARISON APPROACH:

The application of this approach produces an estimate of value of a property by comparing it with similar properties of the same type and class which have been sold recently or are currently offered for sale in the same or competing areas. The comparative processes utilized in determining the degree of comparability between two properties involves judgment as to their similarity with respect to many factors such as location, construction, age, and condition. The sale price of these properties deemed most comparable tends to set the range in which the value of the subject property will fall. Further consideration of the comparative data indicate a figure representing the value of the subject property; that is, the probable price at which it could be sold by a willing seller to a willing buyer as of the date of the appraisal.

In estimating the value of the property by this approach, other medical clinic buildings which have sold are compared to the subject. A summary of these is as follows:

LOCATION

SALE

DATE

SALE

PRICE

BLDG

SIZE (SF)

AGE

SP/

SF

501-503 Doctors Ct

Oshkosh, WI 6/2022 $1,500,000 12,329…