Street | Sotheby's International Realty Medical is a trusted provider of credible real estate information and a skilled interpreter of that information for those who demand exceptional service. We provide our clients with the information and tools to make the right decision for themselves. Call Tom Dalcolma or Dr. Gerard M Papp to learn more. www.streetmedicalrealty.com

1. What is the current value of your Medical Office Building? www.StreetMedicalRealty.com

2. Medical Office Building-MOB What is your building worth today? Unlike your home which usually increases in value over time commercial property does not follow this trend Commercial income property value is dependent on the value of the leases in place The value of your MOB can be determined by a current appraisal of an owner/user(physician group) OR Investor value based on the net operating income

3. Current Trends in Commercial Real Estate Commercial values have decreased 40% and are expected to decline another 10% in 2011 and 2012 MOBs have been buffered from the real estate slide Perhaps now is the time to determine the value of your medical property based on: Owner/user with resale to another physician group OR Sale/lease back to investors and Real Estate Investment Trusts, REITs

4. Usually based on property appraisals with comparables Based on market demand of owner/users Amount of equity in the building Deferred maintenance items Age and condition of the building Changing demographics Location on or near a hospital campus Will the owner become a landlord to lease out unused space Owner/User Value

5. Investor Value of an MOB Calculated by using the formula below Cap rate = Net operating income Sale Price Cap rate is the rate of return a property will produce on the owner’s investment. Net operating income is the income after deducting losses for vacancy and operating expenses. Sale price isbuilding value based on income stream. The higher the rent, the higher the value created.

6. Average Cap Rates Average annual cap rates 1988 through 2002 were10%. From 2003 through 2008 rates were between 8% and 9%. Currently, cap rates for MOBs are moving toward 10%. This means that doctors who sold their MOBs after 2002 sold for approximately15% more than doctors who sold their MOBs over the previous decade. As of September 2010, investors were paying a premium of 33.6% for medical office buildings.

7. Average Cap Rates For medical office buildings are at an all-time high. Investors are eager to find good MOBs

8. Lease Term The longer the lease term, the more investors/REITs are willing to pay for the MOB. Longer term leases always create higher sale prices or lower cap rates. You can manipulate the cap rate by ensuring you have the longest term lease in place. The value is in the LEASE!

9. Lease Term A 5 year lease term will get you a good market rate (i.e. good price.) A 7 year lease term will get you a slightly higher sales price(i.e. lower cap rate). A 10 year lease term will get an even higher sales price than a seven-year lease term.

10. How do we determine building value? The following documents are required: Rent roll-list of tenants and vacancies Net operating income and expenses for 3 prior calendar years. Copies of all leases. Location on or near hospital campus or outpatient facility

11. Owner/User MOB Goal is: To reduce real estate costs and plan an exit strategy Strong property and lease management in order to tailor lease to fit exit strategy goals Mergers and Acquisitions with physician groups or hospital systems MOB sale/lease back

12. Sale/Lease Back Tool Depends on: Age of members of partnership Partners with and without equity in the building Practice plans for expansion, contraction or mergers/acquisitions Are partners prepared to personally guarantee 5, 7 or 10 year master leases to create a top market sales price

13. For a valuation of your MOB contact: Gerard M. Papp D.O. gerard.papp@sothebysrealty.com O-614-538-8895 EXT 188 C-614-531-8887 TOM DALCOLMA tom.dalcolma@sothebysrealty.com O-614-538-995 EXT 180 C- 614-439-5311 www.StreetMedicalRealty.com