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Scope of Work <br />The subdivision development method is used to value land when subdivision and development <br />represent the highest and best use of the appraised parcel. In this method, an appraiser <br />determines the number and size of lots that can be created from the appraised land physically, <br />legally, and economically. The value of the underlying land is then estimated through a <br />discounted cash flow analysis with revenues based on the achievable sale price of the finished <br />product and expenses based on all costs required to complete and sell the finished product. <br />The ground rent capitalization procedure is predicated upon the assumption that ground rents <br />can be capitalized at an appropriate rate to indicate the market value of a site. Ground rent is <br />paid for the right to use and occupy the land according to the terms of the ground lease; it <br />corresponds to the value of the landowner's interest in the land. Market -derived capitalization <br />rates are used to convert ground rent into market value. This procedure is useful when an <br />analysis of comparable sales of leased land indicates a range of rents and reasonable support <br />for capitalization rates can be obtained. <br />The allocation method is typically used when sales are so rare that the value cannot be estimated by direct <br />comparison. This method is based on the principle of balance and the related concept of contribution, which <br />affirm that there is a normal or typical ratio of land value to property value for specific categories of real <br />estate in specific locations. This ratio is generally more reliable when the subject property includes relatively <br />new improvements. The allocation method does not produce conclusive value indications, but it can be <br />used to establish land value when the number of vacant land sales is inadequate. <br />The extraction method is a variant of the allocation method in which land value is extracted from the sale <br />price of an improved property by deducting the contribution of the improvements, which is estimated from <br />their depreciated costs. The remaining value represents the value of the land. Value indications derived in <br />this way are generally unpersuasive because the assessment ratios may be unreliable and the extraction <br />method does not reflect market considerations. <br />For the purposes of this analysis, we have utilized the sales comparison approach. Since our valuation is <br />limited to the underlying land, the cost and income capitalization approaches are not applicable. <br />CBRE VALUATION & ADVISORY SER/ICES 4 © 2025 CBRE, INC <br />