Great Southwest (former Petroleum) Building

1314 Texas Avenue

Houston, Harris County, Texas 77002
CBRE Project No. 11-460TX-0456
Client Project No 11-000289-02-2

Property Condition
Assessment Report

ASSESSMENT & CONSULTING SERVICES

© 2011 CB Richard Ellis, Inc.

 PROPERTY CONDITION ASSESSMENT

Great Southwest (former Petroleum) Building

1314 Texas Avenue
Houston, Harris County, Texas 77002

Prepared For:
MidFirst Bank
Real Estate Technical Services
501 NW Grand Boulevard
Oklahoma City, OK 73118

Prepared By:
CB Richard Ellis, Inc.
2700 Post Oak Boulevard, Suite 250
Houston, TX 77056

CBRE Contact:
Eugene A. Thomas
617-488-7228
[email protected]

CBRE Project No.: 11-460TX-0456

Property Reconnaissance Date: 7/6/2011
Report Date: 7/18/2011

ASSESSMENT & CONSULTING SERVICES

© 2011 CB Richard Ellis, Inc.

 ASSESSMENT & CONSULTING SERVICES

July 18, 2011

Ms. Michelle Taylor

MidFirst Bank
Real Estate Technical Services
501 NW Grand Boulevard
Oklahoma City, OK 73118

RE: Property Condition Assessment of:

Great Southwest (former Petroleum) Building
1314 Texas Avenue
Houston, Harris County, Texas 77002
CBRE Project No. 11-460TX-0456
Client Project No 11-000289-02-2

Dear Ms. Taylor:

CB Richard Ellis, Inc. (CBRE) has completed a Property Condition Assessment (PCA) of the above
referenced property. The PCA was conducted in accordance with the ASTM International (ASTM)
Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process
E 2018-08 (the Standard), CBRE’s Letter of engagement and generally accepted industry standards.

This report was prepared solely for the use of MidFirst Bank (Client) and any party specifically
referenced in Section 2.5 User Reliance. No other party shall use or rely on this report or the findings
herein, without the prior written consent of CBRE.

Sincerely,

CB RICHARD ELLIS, INC.

Prepared By: Reviewed By:

Craig Campbell Eugene A. Thomas

© 2011 CB Richard Ellis, Inc.

 GREAT SOUTHWEST BUILDING
HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

PROPERTY CONDITION ASSESSMENT SUMMARY

GREAT SOUTHWEST BUILDING

1314 TEXAS AVENUE

HOUSTON, TEXAS

CBRE PROJECT NO. 11-460TX-0456

OPINION OF PROBABLE COST TO REMEDY PHYSICAL DEFICIENCIES/DEFERRED MAINTENANCE

IMMEDIATE SHORT-TERM
ITEM
COSTS COSTS
None $0 $0

SUB-TOTAL OF ESTIMATED COSTS: $0 $0

TOTAL ESTIMATED PHYISCAL DEFICIENCIES/DEFERRED MAINTENANCE $0

MODIFIED CAPITAL RESERVES SUMMARY

TOTAL ANNUAL
TOTAL ANNUAL
CAPITAL RESERVES INFLATED INFLATED COST
UNINFLATED UNINFLATED
TERM RESERVES PER SF
RESERVES COST PER SF
(2.5%) (@2.5%)
12-Year $1,033,243 $0.58 $1,119,103 $0.63

Conditions noted in the Property Condition Assessment Summary are representative of the overall conditions of the property.
There may be more detail on specific assessment components in the Report text, therefore the Property Condition Assessment
Summary should not be used as a standalone document.

© 2011 CB Richard Ellis, Inc.

 GREAT SOUTHWEST BUILDING
HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

TABLE OF CONTENTS

1.  SUMMARY........................................................................................................................... 1 
1.1.  General Description .................................................................................................. 1 
1.2.  General Physical Condition ....................................................................................... 1 
1.3.  Opinion of Probable Cost.......................................................................................... 2 
1.4.  Deviations from the ASTM Guidelines ......................................................................... 2 
1.5.  Recommendations .................................................................................................... 3 
2. INTRODUCTION ............................................................................................................... 4
2.1.  Purpose ................................................................................................................... 4 
2.2.  Scope of Work.......................................................................................................... 4 
2.3.  Limitations and Exceptions ......................................................................................... 8 
2.4.  General Property Reconnaissance Information ............................................................. 9 
2.5.  User Reliance ......................................................................................................... 10 
3. GENERAL PROPERTY DESCRIPTION .................................................................................. 11
3.1.  Salient Property Information ..................................................................................... 11 
3.2.  Tenant and Lease Information .................................................................................. 11 
3.3.  Utility and Service Providers ..................................................................................... 12 
4.  DOCUMENT REVIEW AND INTERVIEWS.............................................................................. 13 
4.1.  Property Questionnaire ............................................................................................ 13 
4.2.  Interviews ............................................................................................................... 13 
4.3.  Building and Fire Departments ................................................................................. 14 
4.4.  Zoning Department ................................................................................................. 15 
4.5.  Previous Reports ..................................................................................................... 16 
5.  SITE .................................................................................................................................. 17 
5.1.  Topography and Storm Water Drainage.................................................................... 17 
5.2.  Access and Egress ................................................................................................... 18 
5.3.  Paving, Curbing and Parking ................................................................................... 19 
5.4.  Flatwork ................................................................................................................. 20 
5.5.  Landscaping and Appurtenances .............................................................................. 21 
5.6.  Ancillary Structures .................................................................................................. 23 
6.  STRUCTURAL FRAME AND BUILDING ENVELOPE ................................................................ 24 
6.1.  Foundation ............................................................................................................ 24 
6.2.  Building Frame ....................................................................................................... 25 
6.3.  Façades or Curtain Wall.......................................................................................... 26 
6.4.  Roofing .................................................................................................................. 28 
7.  MECHANICAL, ELECTRICAL AND PLUMBING SYSTEM ......................................................... 31 
7.1.  Heating, Ventilation and Air Conditioning ................................................................. 31 
7.2.  Electrical ................................................................................................................ 32 
7.3.  Plumbing ............................................................................................................... 33 
7.4.  Elevators and Escalators .......................................................................................... 36 
8.  INTERIOR ELEMENTS ......................................................................................................... 38 
8.1.  Common Areas ...................................................................................................... 38 
8.2.  Tenant Spaces ........................................................................................................ 39 

© 2011 CB Richard Ellis, Inc.

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HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

9.  LIFE SAFETY/FIRE PROTECTION ......................................................................................... 41 

9.1.  Sprinklers and Standpipes ........................................................................................ 41 
9.2.  Alarm Systems ........................................................................................................ 42 
9.3.  Other Systems ........................................................................................................ 43 
10. ADDITIONAL CONSIDERATIONS ..................................................................................... 44
10.1.  Natural Hazards ..................................................................................................... 44 
10.2.  Microbial Contamination (Mold) .............................................................................. 45 
10.3.  Americans with Disabilities Act ................................................................................. 45 

APPENDICES

APPENDIX 1 .................................................................... Property Maps, Drawings And Description

APPENDIX 2 ..................................................................................................Property Photographs
APPENDIX 3 ......... Physical Deficiency/Deferred Maintenance and Modified Capital Reserves Schedule
APPENDIX 4 ............................................................................................. Personnel Qualifications
APPENDIX 5 ............................................. Interview/Questionnaire Documentation/Correspondence

© 2011 CB Richard Ellis, Inc.

 GREAT SOUTHWEST BUILDING
HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

1. SUMMARY

1.1. General Description

Property Name: Great Southwest (former Petroleum) Building

Property Address: 1314 Texas Avenue

Houston, Texas 77002

At the request of Client, CBRE has performed a PCA of the property located at 1314 Texas
Avenue, Houston Texas, herein referred to as the Subject Property. The Subject Property consists
of a rectangular-shaped parcel of land totaling 0.8557 acres. It is improved with one 23-story
with a basement and second sub-level basement totaling 147,448 net rentable square feet (SF)
on 21 rentable floors. The building, which was constructed in 1926, is of steel-frame
embedded in concrete construction with masonry exterior walls. In addition, there is an
attached two-story parking garage of the same construction with 9,600 gross SF. Surrounding
grounds consist of asphalt-paved driveways and parking areas and cast-in-place concrete
sidewalks along city streets. There is no landscaping. At the time of the assessment, the Subject
Property operated as an office building called Great Southwest Building.

A site diagram is provided in Appendix 1 of this report. Photographs of the Subject Property are
provided in Appendix 2.

1.2. General Physical Condition

General Condition: Good

Level of Maintenance Good
Estimated Remaining Useful Life: 30 to 35 years
Recent Capital Improvements:  2009 & 2010—the asphalt parking lot was
resurfaced, resealed and re-striped- $33,200.
 2009—the copper roof on the office building,
which was damaged by Hurricane Ike in 2008,
had a $47,000 repair
 2010-the three house water tanks on the 22nd &
23rd levels were relined--$47,000.
 2010-the freight elevator was overhauled to meet
ADA standards—$11,000.
 2010-the 9th floor air handler was overhauled--
$17,000.
Planned Capital Improvements:  Ms. Totten reported she would like to have the
common interior areas painted and repaired, but
a budget has only been tentatively approved.
 No other capital improvements were reported.

© 2011 CB Richard Ellis, Inc.

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HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

1.3. Opinion of Probable Cost

Based on the walk-through of the Subject Property, interviews conducted and information
obtained while conducting this PCA, CBRE’s opinion of the probable cost to address areas of
physical deficiency or deferred maintenance, that would be considered outside the normal on-
going routine maintenance of a property, are provided in the table below and in Table 1 of
Appendix 3.

PHYSICAL DEFICIENCIES/DEFERRED MAINTENANCE

IMMEDIATE SHORT-TERM
ITEM/LOCATION
COSTS COSTS
None $0 $0

SUB-TOTAL OF ESTIMATED COSTS: $0 $0

TOTAL PHYSICAL DEFICIENCIES/DEFERRED MAINTENANCE: $0

Based on the walk-through survey of the Subject Property, interviews conducted and information
obtained while conducting this PCA, CBRE estimates the following minimum capital reserves will
be required for the Subject Property. A detailed Modified Capital Reserves Schedule is provided
in Table 2 of Appendix 3.

MODIFIED CAPITAL RESERVES SUMMARY

UNINFLATED ANNUAL COST INFLATED ANNUAL COST
TERM
RESERVES PER SF RESERVES PER SF
12-Year $1,033,243 $0.58 $1,119,103 $0.63

1.4. Deviations from the ASTM Guidelines

Based on the ASTM Guidelines, deviations from Standard are required to be discussed in the
PCA Report. CBRE’s deviations from the guides are intended to make the PCA more
comprehensive and to meet the requirements of Client. The following is a list of the deviations
from and additions to ASTM E2018-08.

 The condition of the building structures and components evaluated will be broken down
into one of four categories: 1) Poor – Requiring action within 12 months; 2) Fair –
Serviceable, but showing age and wear and requiring maintenance, repair or replacement
within the timeframe addressed in the Modified Capital Reserves Schedule; 3) Good – No
major signs of age or wear, but may be requiring maintenance, repair or replacement
during the evaluation period depending on the estimated remaining useful life (RUL) of the

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component; and 4) Excellent – New or like new and not requiring replacement during the
evaluation period. These are terms not defined or outlined in the Standard.

 This PCA includes a Modified Capital Reserves Schedule which estimates the minimum
capital reserves necessary to maintain the Subject Property for its current usage. The
inclusion of a Modified Capital Reserves Schedule is not included in the Standard.

 This PCA includes a discussion of seismic and Wind Zone and Hurricane Susceptible
Region considerations, mold and compliance with the Americans with Disabilities Act
(ADA), all of which are non-scope considerations under the Standard.

1.5. Recommendations

No building components or systems were identified that would require additional investigation
prior to providing the opinion of probable costs to remedy physical deficiencies/deferred
maintenance concerns at the Subject Property or to prepare the Modified Capital Reserves
Schedule.

© 2011 CB Richard Ellis, Inc.

 GREAT SOUTHWEST BUILDING
HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

2. INTRODUCTION

2.1. Purpose

CBRE was retained to conduct this PCA of the Subject Property to assist in the underwriting of a
proposed mortgage loan. The PCA was designed to provide an objective, professional opinion
of the general condition of the property through the identification of areas of deferred
maintenance and an estimation of the minimum ongoing reserves required to maintain the
current usage of the property. Unless specifically noted in the report, the cost estimates included
in this report do not include costs to reposition the property in any way. In addition, the PCA is
not intended to identify de minimus conditions that generally can be addressed through routine
maintenance.

2.2. Scope of Work

This PCA was conducted in accordance with ASTM Standard Guide for Property Condition
Assessments: Baseline Property Condition Assessment Process E 2018-08 and any additional
requirements of the client. The specific scope included the following:

Documentation Review and Interviews – The objective of the document review and interviews is
to augment the walk-through survey and to assist CBRE in its understanding of the Subject
Property and its identification of physical deficiencies. CBRE will review readily available records
or documents to specifically identify, or assist in the identification of, physical deficiencies, as
well as any preceding or ongoing efforts, or costs to investigate or remediate the physical
deficiencies, or a combination thereof. CBRE will attempt to review information such as
Certificates of Occupancy (COs), outstanding and recorded building and fire code violations,
property-maintained maintenance records, inspection reports and warranties. This assessment,
however, is not to be considered a regulatory or code compliance audit of the facility.

A property questionnaire will be provided to the property owner and/or owner’s representative.
The questionnaire will ask about general property information as well as specific questions
regarding known code violations and the condition of the substructure, superstructure and roofs
of all improvements, interior finishes, mechanical, electrical and plumbing elements (MEP) and
the surrounding grounds.

Accuracy and completeness of information varies among information sources. It is not CBRE’s
obligation to independently verify the information provided or to identify mistakes or
insufficiencies in the information provided. CBRE will, however, make reasonable effort to
compensate for mistakes or insufficiencies of information reviewed that are obvious in light of
other information obtained in the process of conducting the PCA or otherwise known to the
consultant.

© 2011 CB Richard Ellis, Inc.

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Walk-Through Survey – The objective of the walk-through survey is to visually observe the
Subject Property so as to obtain information on material systems and components for the
purposes of providing a brief description, identifying physical deficiencies to the extent that they
are easily visible and readily accessible. A single visit will be made to the Subject Property
during which time CBRE shall make a visual observation of material systems and components
and identify physical deficiencies and any unusual features. An attempt will be made to inspect
the exterior of each major property improvement. On the interior of structures on the property,
accessible common areas, expected to be used by occupants or the public, such as lobbies,
hallways and restrooms, maintenance and repair areas, and a representative sample of
occupant spaces, will be visually and/or physically observed. Observations of interior areas will
generally be limited to 10% of occupiable spaces. The investigation of the building façade will
be conducted from street or balcony level. The riding of scaffolding equipment is not part of the
scope of work.

The walk-through will be conducted by a single assessor with a well rounded knowledge of
pertinent building systems and components. The use of system subspecialists can frequently
provide increased detail in reporting and insight into site conditions. Unless specified in the
proposal, no such specialists will be retained in the performance of this work.

The condition of the building structures and components evaluated will be broken down into
one of four categories: 1) Poor – Requiring action with 12 months; 2) Fair – Serviceable, but
showing age and wear and requiring maintenance, repair or replacement within the timeframe
addressed in the Replacement Reserve Table; 3) Good – No major signs of age or wear, but
may be requiring maintenance, repair or replacement during the evaluation period depending
on the estimated remaining useful life (RUL) of the component; and 4) Excellent – New or like
new and not requiring replacement during the evaluation period.

The walk-through survey will focus on the following areas:

 Property/Site Features – Observations will be made of the type, condition and adequacy
of the general topography, storm water drainage, ingress and egress, paving, curbing and
parking areas, flatwork, landscaping and appurtenances, recreation facilities, amenities
and ancillary structures, and utilities.

 Structural Frame and Building Envelope – Observations will be made of the type,
condition and adequacy of the foundation, building frame, façade and curtain walls, and
the roofing systems. Structural systems are frequently concealed and may be inaccessible
during an assessment. When this occurs, CBRE’s assessment will be limited to the
identification of readily visible indicators of common problems

 Mechanical, Electrical and Plumbing Systems - Observations will be made of the type,
condition and adequacy of the heating, ventilation and air conditioning (HVAC) systems,
electrical systems and plumbing systems.

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 Vertical Transportation – Observations will be made regarding the presence and condition
of any elevators or escalators present on the property.

 Life Safety/Fire Protection - Observations will be made of the type, condition and
adequacy of sprinkler systems, fire alarm systems or any other life safety and fire
protection systems.

 Interior Elements - Observations will be made of the type, condition and adequacy of the
interior finishes, fixtures, appliances and furnishings.

 Accessibility – Depending on the applicability of the regulations, a Tier I Visual Survey will
be conducted to determine if the property is in compliance with the Americans with
Disabilities Act (ADA) or the Fair Housing Act (FHA). The Tier I survey includes a limited
visual assessment of the property to assess if it is accessible and useable by people with
disabilities. No measurements will be collected as part of the screening. This screening is
not to be considered and in-depth survey or audit. As such, it should not be considered a
verification of compliance or a guarantee of the identification of all possible ADA
violations.

Opinions of Probable Costs to Remedy Physical Deficiencies – Based on the documentation

review, interviews and walk-through survey conducted, CBRE will identify areas of physical
deficiency and deferred maintenance.

Physical deficiency is defined as conspicuous defects or significant deferred maintenance of a

Subject Property’s material systems, components, or equipment as observed as a result of the
field observer’s walk-through survey. Included within this definition are material life-
safety/building code violations and material systems, components, or equipment that are
approaching, have reached, or have exceeded their typical EUL or whose RUL should not be
relied upon in view of actual or effective age, abuse, excessive wear and tear, exposure to the
elements, lack of proper or routine maintenance, etc. This definition specifically excludes
deficiencies that may be remedied with routine maintenance, miscellaneous minor repairs,
normal operating maintenance, etc., and excludes de minimis conditions that generally do not
constitute a material physical deficiency of the Subject Property. Deferred maintenance is
defined as physical deficiencies that could have been remedied with routine maintenance,
normal operating maintenance, etc., excluding de minimis conditions that generally do not
present a material physical deficiency to the Subject Property.

CBRE will provide opinions of the probable cost to address the suggested remedies of the
material physical deficiencies and deferred maintenance identified. Opinions of probable costs
will be segregated between immediate and short term costs.

© 2011 CB Richard Ellis, Inc.

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Immediate Costs include (1) material existing or potential unsafe conditions, (2) material
building or fire code violations, or (3) conditions that if left uncorrected, have the potential to
result in or contribute to critical element or system failure within one year or will result most
probably in a significant escalation of its remedial cost. Short-Term Costs will include the
probable costs to remedy physical deficiencies, such as deferred maintenance that may not
warrant immediate attention, but require repairs or replacements that should be undertaken on
a priority basis in addition to routine preventive maintenance. Such opinions of probable costs
may include costs for testing, exploratory probing, and further analysis should this be deemed
warranted by the consultant. The performance of such additional services is beyond the scope of
this PCA. Generally, the time frame for such repairs is within one to two years.

Opinions of probable costs will only be provided for material physical deficiencies and not for
repairs or improvements that could be classified as: (1) cosmetic or decorative; (2) part or
parcel of a building renovation program (3) tenant improvements/finishes; (4) enhancements to
reposition the Subject Property in the marketplace; (5) for warranty transfer purposes; or (6)
routine or normal preventive maintenance, or a combination thereof. Opinions of probable
costs that are either individually or in the aggregate less than a threshold amount of $3,000 for
like items are considered routine maintenance and are not included in this report. If there are
more than four separate like items that are below this threshold requirement, but collectively
total over $10,000, such items may be grouped and included.

These opinions are to assist the user of the report in developing a general understanding of the
physical condition of the Subject Property. Opinions of probable costs should only be construed
as preliminary, order of magnitude budgets. Actual costs will likely vary from the consultant’s
opinions of probable costs depending on such matters as type and design of suggested remedy,
quality of materials and installation, manufacturer and type of equipment or system selected,
field conditions, whether a physical deficiency is repaired or replaced in whole, phasing of the
work (if applicable), quality of contractor, quality of project management exercised, market
conditions, and whether competitive pricing is solicited.

It is not the intent of this assessment for CBRE to prepare or provide exact quantities or identify
the exact locations of items or systems as a basis for preparing the opinions of probable costs.
Extrapolation of representative observations, conditions deemed by CBRE as highly probable,
results from information received, or the commonly encountered expected useful lives (EULs) or
RULs of the components or systems, or a combination thereof. The source of cost information
utilized by CBRE may be from one or more of the following resources: (1) Client provided unit
costs; (2) owner’s historical experience costs; (3) consultant’s cost database or cost files; (4)
commercially available cost information such as published commercial data; (5) third party cost
information from contractors, vendors, or suppliers; or (6) other qualified sources that the
consultant determines appropriate.

CBRE will also generate a Modified Capital Reserves Schedule. Modified capital reserves are
for recurring probable expenditures that are not classified as operation or maintenance

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expenses. The modified capital reserves should be budgeted for in advance on an annual
basis. Capital reserves are reasonably predictable both in terms of frequency and cost.
However, capital reserves may also include components or systems that have an indeterminable
life but nonetheless have a potential liability for failure within an estimated time period.
Modified capital reserves exclude systems or components that are estimated to expire after the
reserve term and that are not considered material to the structural and mechanical integrity of
the Subject Property. Furthermore, systems and components that are not deemed to have a
material effect on the use are also excluded. Costs that are caused by acts of God, accidents,
or other occurrences that are typically covered by insurance, rather than reserved for, are also
excluded. Replacement costs are solicited from ownership/property management, CBRE’s
discussions with service companies, manufacturers' representatives, and previous experience in
preparing such schedules for other similar facilities. Costs for work performed by the
ownership’s or property management’s maintenance staff are also considered. It is understood
that a prudent owner would likely invest more than these minimum amounts.

2.3. Limitations and Exceptions

 The scope of work completed was designed solely to meet the needs of CBRE’s Client.
CBRE’s recommendations and opinions of cost are only as of the date the walk-through
performed, documentation reviewed and interviews conducted. Conditions at a property
and the costs to remedy them can change significantly over a relatively short period of
time due to levels of maintenance, acts of nature and other factors. CBRE shall not be
liable for any unintended usage of this report by another party.

 No PCA can wholly eliminate uncertainty regarding the potential for physical deficiencies
and the performance of a property’s building. There is an inherent subjective nature of
opinions as to such issues as workmanship, quality of original installation, and estimating
the RUL of any given component or system. This PCA was designed to reduce, but not
eliminate the uncertainty regarding the potential for component or system failure, within
reasonable limits of time and cost, and no warranty is implied.

 The PCA is intended to be a non-intrusive investigation. No destructive testing was

completed and concealed areas, such as inside, plenums, behind walls or within
machinery, were not accessed. As such, CBRE makes no warranties regarding exterior
insulation and finishing systems (EIFS), curtain walls or other building skin conditions that
would not be readily observable and, therefore, outside the scope of this assignment.

 This PCA does not constitute a regulatory or code compliance audit of the building
systems of management systems that may be present at the Subject Property. Testing,
measuring, or preparing calculations for any system or component to determine
adequacy, capacity, or compliance with any standard is outside the scope of work.

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 Information in this report, concerning past and current physical concerns, maintenance
and replacement activities, and condition of spaces not observed or viewable, is from
sources deemed to be reliable, including, but not limited to interviews with property
owners, operators and tenants, interviews with municipal agencies and vendors; however,
no representation or warranty is made as to the accuracy thereof. CBRE will have no
ongoing obligation to obtain and include information that was not reasonably
ascertainable, practically reviewable or provided to CBRE in a reasonable timeframe to
formulate an opinion and complete the assessment by the agreed upon due date.

 While the general environmental setting of the property is described, this assessment is not
intended to be a formal flood plain or wetland determination, and no warranty is made
thereof. Any fungi or mold reference included in this report does not constitute a
professional mold inspection and is not based upon any sampling, testing and/or
abatement. CBRE merely notes the visual presence or absence of fungi or mold while in
the course of preparing this report.

2.4. General Property Reconnaissance Information

Date of Inspection: July 6, 2011

Assessor: Craig Campbell
A copy of the assessor’s qualifications is included in Appendix 4.

Property Contact/Escort: Ms. Charlotte Totten/ Property Manager

Mr. Everado Perez/ Building Engineer
Mr. Dan Petrash/ Senior Building Engineer

Areas Accessed: CBRE accessed the upper level utility floors, the management
office, the basement, the sub-level utility rooms, occupied units
100 (Irma’ Southwest Grill-the only non-office tenant), 200, 300,
419, 420, 500, 609, 708, 811, 808, 1012, 1100, 1206, 1212,
1411, 1416, 1515, 1640, 1700, 1800, 1900, 2000 and 2100,
vacant units 530, 612, 710, 905, 903, 1020, 1005, 1110,
1309, 1316, and 1650, the parking garage, the roof of the
parking garage and exterior areas. The roof of the office building
was viewed from a penthouse utility room.

Limitations: CBRE was not denied access to any areas.

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2.5. User Reliance

This investigation was conducted on behalf of and for the exclusive use of MidFirst Bank (Client).
This report, and the findings contained herein, shall not, in whole or part, be disseminated or
conveyed to or used by any other party without the prior written consent of CBRE. CBRE
acknowledges and agrees that the report may be conveyed to and relied upon by the Client,
and the title insurer associated with the financing of mortgage loan backed by the Subject
Property.

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3. GENERAL PROPERTY DESCRIPTION

3.1. Salient Property Information

Property Size: 0.8557 acres

Source: Site Survey

Property Usage: Office

Number of Buildings: 2; Office building and parking garage

Number of Stories: 23 with basement and another sub-level basement for utilities

Date of Construction: 1926

Source: Site Contact/ Questionnaire

Gross Building Size: Office - 178,640 SF

Garage - 9,600 SF
Source: Harris County Appraisal District (HCAD)

Net Rentable Area: 147,448 SF

Source: Rent Roll

Legal Description CBRE was not provided a legal description of the Subject Property;
however, the Subject Property is identified as “LTS 1 THRU 5 & 12
TR 11 BLK 72 SSBB” for tax purposes.

3.2. Tenant and Lease Information

Tenants: The  Subject  Property  is  a  multi‐tenant  facility.    A  rent  roll  is 
provided in Appendix 5.

Lease Information: CBRE was not provided a lease for review. According to the
Property Manager, the tenant is responsible for their interior tenant
spaces and the landlord is responsible for the structure, lobby,
hallways, roofs, fire escapes and parking areas.

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3.3. Utility and Service Providers

Potable Water: City of Houston

Electricity: CenterPoint Energy
Natural Gas: CenterPoint Energy
Storm Water: Harris County Flood Control District
Sanitary Sewer: City of Houston
HVAC Maintenance: Chillers—Letcos
Boilers – In-house
Fire/Security: Firesafe/ HG Fire Systems
Roof Maintenance: Contracted as needed

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4. DOCUMENT REVIEW AND INTERVIEWS

4.1. Property Questionnaire

Completed by: Ms. Charlotte Totten/ Property Manager

Pertinent Information: CBRE requested that a property questionnaire be
completed by someone familiar with the operation and
maintenance of the facility. The questionnaire covered
past and planned capital improvements, typical
replacement costs, information from previous
investigations and the description of any known or
suspected issues of concern. A copy of the property
questionnaire that was completed by Ms. Charlotte Totten
is included in Appendix 5. Based on the questionnaire,
the Subject Property was built in 1926 and has 21
rentable floors. Recent capital improvements were
reported. No major concerns were reported.

Concerns: No major concerns regarding the physical condition of the

Subject Property and improvements were noted in the
property questionnaire.

4.2. Interviews

Interviewee: Ms. Charlotte Totten/ Property Manager

Company: Great Southwest Building
Telephone Number: 713-228-8300
Pertinent Information: Ms. Totten provided the rent roll and the building’s
maintenance history since 1997. She reported interior
hallways and common areas need painting and repair and
have been tentatively budgeted. The building was last
power washed in 2008. A major exterior facade repair
was completed between 1999 and 2004 where older
loose, cracked and damaged bricks were replaced and
new mortar was placed between the bricks. To the best of
her knowledge, this was the first time in the building’s
history that this procedure was completed. The parking lot
was resurfaced, resealed and re-striped in 2009/ 2010.

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Interviewee: Mr. Dan Petrash/ Senior Building Engineer

Company: Great Southwest Building
Telephone Number: 713-228-8300
Pertinent Information: Mr. Petrash, who has been with the building off and on
since 1964, reported the first major overhaul he was
familiar with was in 1975, when the older opening
windows were replaced with the current non-opening
windows, the current boilers were installed and the old
chillers were replaced. The current chillers were installed
in 2002. The commercial water heaters were upgraded in
2002. The four passenger elevators were overhauled for
ADA and fireman’s recall in 2002. The freight elevator
was overhauled in 2010.

Interviewee: Mr. Everado Perez/ Building Engineer

Company: Great Southwest Building
Telephone Number: 713-228-8300
Pertinent Information: Mr. Perez, who has been with the Subject Property for 16
year, accompanied the inspector during the inspection of
the upper utility levels and floors 6 through 21. He
provided technical information on the roof, elevators,
building water system, HVAC systems and common area
maintenance.

Concerns: No major concerns regarding the physical condition of the

Subject Property and improvements were noted during the
interviews conducted. Common area painting and repairs
were reported to be needed and tentatively budgeted. The
costs for this painting and repairs are included in the
immediate needs and modified capital reserve table.

4.3. Building and Fire Departments

Contact/Source: Ms. Demetrius Bryant, Customer Service Representative

Department: City of Houston Building Department
Telephone No./Website: [email protected]
Pertinent Information: CBRE requested information pertaining to Certificates of
Occupancy and any outstanding code violations for the
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property. CBRE has not received a response from the

building department as of the preparation of this report.

Contact/Source: Nekiea Corpening, Customer Service Rep

Department: Houston Fire Department, Records
Telephone No./Website: [email protected]
Pertinent Information: CBRE contacted the fire department for information
regarding code violations and any investigations on the
use, handling, release or discharge of solid or liquid
wastes, hazardous materials or any other circumstance of
environmental concern at the Subject Property. As of the
writing of this report, no response has been received.

Concerns: No response has been received.

Recommendations: CBRE has not received a response to its original inquiry or

to a follow-up inquiry from the building or fire departments
as of the date of this report. It should be noted that
municipal departments are often slow to respond to these
type requests. It is further noted that in completing CBRE’s
property questionnaire, the property contact reported that
she was not aware of any building code, fire code, and/or
health/environmental department violations. During
CBRE’s assessment of the Subject Property no items of a
code related nature were noted by CBRE’s inspector other
than the need to comply with the City of Houston’s fire
code amendment requiring all existing high-rise buildings
to be fully fire sprinklered by December 31, 2017.
Allowances are included in the Modified Capital Reserves
Schedule to enable the Subject Property to comply with this
requirement.

4.4. Zoning Department

Contact/Source Ms. Demetrius Bryant, Customer Service Representative

Department: City of Houston Building Department
Telephone No./Website: [email protected]
Zone:
Zoning Compliance: There is no zoning in Houston, Texas

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Concerns: Not applicable

Recommendations: No further investigation is recommended.

4.5. Previous Reports

CBRE was not provided any previous reports for the Subject Property.

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5. SITE

5.1. Topography and Storm Water Drainage

Description
Topography: The Subject Property is relatively flat with a slight overall
slope to the southeast toward the Gulf of Mexico.

Surface Water Bodies: There are no surface water bodies on or immediately

adjacent to the Subject Property.

Observations/Comments
General Condition: Good
Age/Last Action: The topography and storm water drainage are original
and are maintained as part of the routine maintenance of
the facility.

Concerns:

 Signs of Ponding No significant areas of ponding were noted by or reported

to CBRE’s inspector.

 Signs of Erosion No significant areas of erosion were noted by or reported

to CBRE’s inspector.

 Drainage Problems No major drainage problems were noted by or reported

to CBRE’s inspector.

 Indications of Wetlands CBRE did not observe any water bodies or vegetation
indicative of wetlands on the Subject Property. The
majority of the property is covered with the buildings,
paved driveways and parking areas, and landscaping. It
is unlikely that portions of the Subject Property would be
classified as wetlands.

 Other: No other significant concerns relating to topography or

storm water drainage were noted or reported.

Recommendations: The topography and storm water drainage should be

maintained as part of the routine maintenance of the
property.

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5.2. Access and Egress

Description
Access and Egress: Access and egress to the Property is provided by driveways
facing Texas Avenue to the north, Austin Street to the east
and Capitol Street to the south. The parking garage is
accessed only by an entrance facing Austin Street. The
Subject Building is accessed from a pedestrian entrance
on Texas Avenue and from the parking garage to the
south.

Signage: There is building mounted signage on the south elevation

of the building and a canvas canopy with signage on the
north elevation.

Observations/Comments
General Condition: Good
Age/Last Action: The access and egress to the property is original to the
construction of the property. The building-mounted sign
identifying the property is original and the canvas, which is
periodically replaced, is maintained as part of the routine
maintenance of the facility.

Concerns:

 Poor Access/Egress No concerns relating to property access or egress were

noted by or reported to CBRE’s inspector.

 Poor Signage The signage identifying the property was clearly visible
from the road. No concerns regarding the property
signage were noted.

 Other No other concerns relating to access to and egress from

the property were noted by or reported to the CBRE
inspector.

Recommendations: No actions regarding property signage or changes to the

access or egress from the Subject Property are
recommended at this time. Site signage should continue

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to be handled as part of the routine maintenance of the

facility.

5.3. Paving, Curbing and Parking

Description
Driveways/Parking Areas: There are asphalt-paved driveways and parking areas on
the southern and western portions of the Subject Property.
The open surface parking provides 65 parking spaces and
two tuck-under parking spaces near the building. There
are two ADA spaces available to the public which are the
only non-reserved parking spaces on the site. The parking
garage has seven spaces on the first floor and 12 spaces
on the second floor, all of which are reserved.

Curbing: Poured concrete curbs are present along Texas Avenue to

the north, Austin Street to the east and Capitol Street to
the south.

Covered Parking: A two-level garage structure, containing seven parking

spaces on the lower level and 12 parking spaces on the
second level, is present. The garage is of steel-frame
embedded in concrete construction. The first floor is
concrete slab-on-grade and the upper floor is cast-in-
place concrete.

Other: No other significant features were present that related to

the driveways, parking areas or curbing.

Observations/Comments
General Condition: Good
Age/Last Action: The driveways and parking areas are original and are
maintained as part of the routine maintenance of the
facility. The asphalt was last resurfaced, resealed and re-
striped in 2009 and 2010.

Concerns:

 Faded Striping The striping at the property was clearly visible. No

concerns were noted.

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 Cracking/Alligatoring No significant cracking, alligatoring or spalling of the

paved areas was noted during the site visit.

 Depressions/Potholes No major depressions or potholes were observed.

 Insufficient Parking The number of parking spaces is fixed by the size of the
property. There is on-street parking and adjacent public
parking lots available in close proximity to the Subject
Property.

 Other No other concerns relating to the driveways, curbs and

parking areas were noted.

Recommendations: Asphalt parking areas typically have a EUL of 20 to 25

years depending on the quality of the original
construction, level of maintenance, traffic and weather
conditions. The EUL can be extended significantly with
periodic sealing of the surfaces and proactive repair of
cracks and potholes as they develop. Costs for periodic
sealing and striping of the asphalt-paved areas are
included in the Modified Capital Reserves Schedule. No
major resurfacing should be needed during the loan term.

Structural concrete parking garages have a EUL in excess

of 45 years when properly constructed and maintained. It
is anticipated the concrete parking garage will require
some routine repairs during the evaluation period, due to
normal wear and tear. These repairs would include
miscellaneous concrete patching, sealing of floor slabs
and restriping of parking stalls. Costs for these general
repairs are included in the Modified Capital Reserves
Schedule.

5.4. Flatwork

Description
Sidewalks: Concrete sidewalks are present along the northern,
southern eastern boundaries of the Subject Property. The
sidewalks consist of standard poured concrete slabs.

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Patios/Decks: No patios or decks are present at the Subject Property.

Other: No other significant flatwork is present at the property.

Observations/Comments
General Condition: Good
Age/Last Action: Portions of the flatwork have been repaired or replaced as
needed on an ongoing basis. No full scale replacement
has occurred.

Concerns:

 Significant Cracking No significant cracking of the flatwork at the Subject

Property was noted during the assessment.

 Heaving/Settlement No significant areas of heaving or settlement were

observed during the assessment.

 Trip Hazards No significant trip hazards were noted during the

assessment of the property.

 Other No other significant concern relating to the flatwork at the

Subject Property was noted by or reported to the CBRE
inspector.

Recommendations: Concrete flatwork generally has a EUL in excess of 25

years if constructed over a properly stabilized base and
maintained regularly. No areas requiring immediate
attention were noted. The flatwork at the Subject Property
was reported to be a responsibility of the City of Houston.

5.5. Landscaping and Appurtenances

Description
Landscaping: There is no landscaping at the Subject Property.

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Sprinkler System: No irrigation system is present at the Subject Property.

Property Lighting: City owned pole-mounted lights are provided along

adjacent city streets. Incandescent or fluorescent light
fixtures are present near building entrances, and high
intensity lights are located at the rear (south) and west
elevations of the building.

Fencing/Walls: No privacy fencing or retaining walls are present on the

Subject Property.

Other: No other significant landscaping or appurtenances were

observed.

Observations/Comments
General Condition: Not applicable
Age/Last Action: Not applicable

Concerns:

 Poor Landscaping Not applicable

 Inadequate Lighting CBRE completed its assessment during daylight hours. No

significant concerns relating to inadequate or non-
functional lighting were reported to the CBRE inspector.
No obvious damage to the lighting fixtures was observed.

 Damaged Fences/Walls Not applicable

 Other No other significant concerns relating to the landscaping

or appurtenances were noted by or reported to the CBRE
inspector.

Recommendations: The appurtenances should be addressed as part of the

routine maintenance of the Subject Property.

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5.6. Ancillary Structures

Description
Ancillary Structures: The Subject Property does not contain any ancillary
structures.

Observations/Comments
General Condition: Not applicable
Age/Last Action: There are no ancillary structures at the Subject Property.

Concerns: There are no ancillary structures at the Subject Property.

Recommendations: There are no ancillary structures at the Subject Property.

No further action is required.

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6. STRUCTURAL FRAME AND BUILDING ENVELOPE

6.1. Foundation

Description
Foundation: The original plans and specifications for the subject
building were not provided. The foundation of the office
building appeared to be cast-in-place concrete with deep
drilled concrete piers.

The foundation of the parking garage appeared to be

concrete slab-on-grade.

Observations/Comments
General Condition: Good
Age/Last Action: The foundations are original.

Concerns:

 Cracks/Settlement No significant foundation cracks or settlement were noted

by or reported to CBRE’s inspector.

 Insufficient Exposure Due to the presence of asphalt-paved driveways and

parking areas and concrete-paved sidewalks, the
foundations were not visible. This should not pose a
significant concern.

 Water Damage No major areas of flooding or water damage that would

be associated with concerns relating to the foundation
were noted by or reported to CBRE’s inspector.

 Other No additional concerns relating to the foundation at the

Subject Property were noted by or reported to CBRE’s
inspector.

Recommendations: No significant concerns relating to the foundation were

noted and no major expenditures relating to the
foundation are anticipated during the evaluation period.

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6.2. Building Frame

Description
Building Frame: The subject buildings are of steel-frame embedded in
concrete construction, with non-load bearing exterior
walls.

Decking Between Floors: The decking between floors is cast-in-place concrete that
was reported to be eleven inches thick.

Roof Framing/Decking: The roof decking is cast-in-place concrete.

Observations/Comments
General Condition: Good
Age/Last Action: The framing is original and maintained as needed.

Concerns:

 Wall Cracks Wall cracks were noted in the southeast corner of the
parking garage and in the northwest corner of the office
building. The cracking appeared to be from shifting of the
building on the foundation rather than foundation
concerns.

 Bowed Walls No evidence of bowed walls was noted by or reported to

CBRE’s inspector.

 Sagging Ceilings/Floors No evidence of sagging ceilings or floors was noted by or

reported to CBRE’s inspector.

 Sticking Doors/Windows No sticking doors and windows that would indicate

significant movement of the buildings were noted.

 Deteriorated Framing No deteriorated framing or support members were

observed by or reported to the CBRE inspector.

 Fire-Retardant Decking The use of fire-retardant plywood decking started in the

early 1980s. Certain types of fire-retardant treated
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plywood rapidly deteriorate when exposed to excessive

heat and humidity or may cause nails or metal fasteners to
corrode. Common signs of fire-retardant plywood include
darkening of the wood and the presence of a powder-like
substance, warping of the roof and the curling of shingles.
No indications of fire-retardant plywood were noted.

 Other No other concerns relating to the framing or decking at

the Subject Property were noted by or reported to CBRE’s
inspector.

Recommendations: The cracking in the southeast corner of the parking garage

and in the northwest corner of the office building should
be monitored to ensure that they are not growing. No
significant expenditures are anticipated during the
evaluation period.

6.3. Facades or Curtain Wall

Description
Exterior Walls: The exterior walls are curtain walls that consist of hollow
clay tile with brick facing.

Fascia/Soffits/Trim: There are no fascias or soffits. The trim is mainly

limestone.

Doors/Windows: The entrance doors consist of glass in metal frames.

Emergency doors and employee area doors are steel in
steel frame. The windows are non-opening glass
storefront windows in metal framing on the first floor north
elevation and double pane glass in metal frames
elsewhere.

Stairs/Walkways/Landings: A metal fire escape is located on the south elevation of the

building.

Other: No other significant components to the facades were

noted.

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Observations/Comments
General Condition: Good
Age/Last Action: The Property Manager reported there was a major
program between 1999 and 2004 that involved replacing
all cracked damaged or loose brick facing and replacing
the loose or deteriorated mortar. She reported this was
the first time in the history of the Property that this type of
work was completed.

Concerns:

 Use of EIFS An exterior insulation and finish system (EIFS), also referred
to as synthetic stucco, refers to a multi-layered exterior wall
system consisting of a base coat, mesh and insulation
board, and a finish coat that are mechanically secured or
glued to plywood or another substrate. Research has
discovered that if water enters the EIFS wall system through
surface penetrations, around flashings at architectural
details and past caulked joints around window and door
openings, the structural wood framing and sheathing can
rot. No evidence of EIFS was observed.

 Use of Hardboard Siding Hardboard siding is made by combining wood shavings or

fibers with resins or glues. Class action suits have been
brought against some manufacturers of these products,
including Masonite and Louisiana Pacific. These suits
claim that the siding warps, swells and generally
deteriorates. No hardboard siding was observed during
the site visit.

 Deteriorated Wood Wood is not present on the exterior facade or trim.

 Worn Paint The buildings are not painted.

 Damaged Masonry The masonry walls were in good condition. Serious cracks
were noted in at the northwest corner of the office building
and southeast corner of the parking garage. Lesser
cracking was noted elsewhere. All cracking was noted to
be caulked to prevent water penetration. The cracking
appears to be shifting of the buildings on the foundations

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rather than foundation concerns.

 Water Penetration No evidence of water penetration through walls, around

windows and doors, or in any other manner related to the
facade of the building, was observed by or reported to
CBRE’s inspector.

 Termites/Borers No evidence of termites or other wood boring insects was

observed by or reported to CBRE’s inspector.

 Other No other concerns relating to the facades at the Subject

Property were noted by or reported to CBRE’s inspector.

Recommendations: The cracking noted above was the only facade concern. It
should be monitored and periodically re-caulked as part
of the exterior maintenance costs that are contained in the
Modified Capital Reserves Schedule.

Exterior maintenance, such as power-washing, pointing

the masonry work, painting the fire escape and caulking
windows, is likely to be need every 8 to 15 years
depending on the quality of work performed, quality of
materials used and weather conditions. The buildings are
likely to require maintenance during the evaluation period
and costs are included in the Modified Capital Reserve
Schedule.

6.4. Roofing

Description:
Roofing System: The roofing system of the office building is decorative
copper on steel framing embedded in concrete.
The roofing system of the garage is a flat cast-in-place
concrete slab with a built-up roofing (BUR) system.

Drainage: The roof has a slight slope designed to direct storm water
to interior roof drains that tie underground into the city’s
storm water system.

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Parapets/Coping: The parapet walls are concrete with no coping.

Other: Typical roof penetrations are present for sanitary stacks,

furnace and water heater exhausts and roof vents.

Observations/Comments
General Condition: Good
Age/Last Action: The office roofing system is original with a major repair
after hurricane Ike in 2008. The parking garage roof
appears to be 10 to 15 years old.

Concerns:

 Leaks No leaks were noted by or reported to CBRE’s inspector.

 Significant Ponding No indications of significant ponding were noted during

the assessment.

 Evidence of Repairs No significant areas of patching or repairs were noted

during the assessment.

 Area of Roof Damage No significant areas of damaged roofing were noted

during the assessment. No significant damage to the
flashing or parapet areas was noted during the
assessment.

 Damaged Gutters There are no gutters or downspouts.

 Other No other concerns relating to the roofing systems were

noted.

Recommendations: Based on a EUL of 20 to 25 years, no major replacement

of the copper roofing system is anticipated during the
evaluation period, provided normal levels of routine
maintenance, such as patching periodic leaks and
clearing drainage systems, are performed.

Based on the age of the roof and a EUL of 15 to 20 years,

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garage roof replacement is likely to be required during the

evaluation period and costs for this work have been
included in the Modified Capital Reserves Schedule.

In addition, activities including, but not limited to, keeping

drains clear and repairing leaks promptly, should be done
as part of routine maintenance.

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7. MECHANICAL, ELECTRICAL AND PLUMBING SYSTEM

7.1. Heating, Ventilation and Air Conditioning

Description
Heating and Cooling: Heat and cooling is provided by a four-pipe steam and
chilled water system. The steam is produced by two 2.5
MMBH Ajax steam boilers. Chilled water is produced
from two 250-ton Carrier centrifugal chillers with a
cooling tower on the roof of the parking garage.

Observations/Comments
General Condition: Good
Age/Last Action: The current steam boilers were replaced in 1975 and have
been periodically overhauled.

The two current chillers and cooling tower were installed in

2005.

Concerns:

 Inoperable Equipment All of the systems and equipment observed were operable
at the time of the assessment. No significantly obsolete
equipment was noted. No concerns regarding inoperable
equipment was reported to CBRE by the property contacts.

 Insufficient Capacity No concerns regarding the capacity of the HVAC systems

were reported to CBRE. The units appeared adequately
sized for the current usage of the property.

 Use of CFC Refrigerants As of July 1, 1992, it became illegal to intentionally vent

CFC refrigerants to the atmosphere, and the manufacture
of CFC refrigerants was phased out in 1995. CFC
refrigerants include R-11, R-12, R-113, R-114 and R-115.
No CFC refrigerant use was noted or reported.

 Other No additional concerns relating to the HVAC system at the

Subject Property were noted by or reported to CBRE’s
inspector.

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Recommendations: CBRE anticipates a major overhaul of the boilers and the

chiller/cooling tower systems will be required during the
evaluation period and has included allowances for this
work in the Modified Capital Reserves Schedule.

The regular maintenance of the chillers and boilers should

be handled as part of routine maintenance.

7.2. Electrical

Description
Level of Service: The subject building is serviced by a 600-volt, three
phase, four-wire service at 3,000 amperes.

Wiring: All wiring observed was copper.

Overload Protection: Overload protection is provided by circuit breakers.

Metering: The Subject Property is centrally metered. No individual

tenant metering is provided.

Other: No other significant electrical components were noted.

Observations/Comments
General Condition: Good
Age/Last Action: The electrical system has been upgraded many times
during the history of the Subject Property with the last
upgrade being in 2005.

Concerns:

 Insufficient Capacity No concerns regarding the capacity of the electrical

system were reported to CBRE.

 Aluminum Wiring No aluminum branch wiring was observed.

 Inappropriate Receptacles In general, ground fault current interrupt (GFCI)

receptacles were required by code to be installed in areas
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near water sources, such as in bathrooms and kitchens. In

the areas observed, CBRE noted GFCI receptacles were
present in the appropriate areas.

 Other No additional concerns relating to the electrical system at

the Subject Property were noted by or reported to CBRE’s
inspector.

Recommendations: No concerns with the electrical system were noted. The

electrical system should continue to be maintained as part
of the routine maintenance of the facility.

7.3. Plumbing

Description
Supply Piping: The supply lines are a combination or copper, black iron
and heavy galvanized metal, according to Mr. Petrash.

Waste Piping: The waste lines are heavy galvanized metal, according to
Mr. Petrash

Hot Water Production: Domestic hot water at the property is generated by two
gas-fired commercial water heaters in the sub-basement
utility room.

Other: The upper floors flow into the city sewer system by gravity
flow. There is a lift station in the basement to lift the wastes
from the basement to the city sewerage system.

Observations/Comments
General Condition: Good
Age/Last Action: The supply and waste piping is original and is maintained
as part of the routine maintenance of the facility. Water
heaters are replaced on an as-needed basis and were last
replaced in 2005.

Concerns:

 Inoperable Equipment All of the systems and equipment observed were operable

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at the time of the assessment. No significantly obsolete

equipment was noted. No concerns regarding inoperable
equipment was reported to CBRE by the property contacts.

 PB Piping Polybutylene (PB) piping was used extensively in the south

and west during the 1980s. Major problems with this
piping were reported and numerous class-action suits
resulted. The problems arise because the plastic fittings
used with PB piping allegedly corrode when they come in
contact with the chlorine in tap water. This problem can
often be remedied by replacing the cemented plastic
fittings with compression fittings. Newer installations that
employ copper or brass fittings and manifold systems are
typically quite reliable. No PB piping was observed by or
reported to CBRE’s inspector.

 ABS Piping Acrylonitrile-butadiene-styrene (ABS) pipe is rigid black

plastic pipe used to drain sinks, tubs, showers, toilets,
washing machines and dishwashers. Six class action
complaints allege that ABS pipe manufactured at certain
times between 1984 and 1990 by Polaris Pipe Co.
("Polaris"), Gable Plastics, Inc. ("Gable"), Centaur Mfg.,
Inc. ("Centaur"), Centaur Marketing, Inc. a/k/a Phoenix
Extrusion Co. ("Phoenix"), and Apache Plastics, Inc.
("Apache") is defective and may leak. The overwhelming
majority of the allegedly defective ABS pipe at issue is
located in the State of California. No ABS piping was
observed by or reported to CBRE’s inspector.

 Galvanized Piping Galvanized pipe is defined as “a steel pipe or wrought-

iron pipe, of standard dimensions, which has been
galvanized by coating it with a thin layer of zinc.”
Galvanized piping has been utilized as a water supply
system throughout the country, and is not limited to certain
dates of construction. Galvanized piping systems typically
exhibit corrosion more quickly than other plumbing
systems. Galvanized steel piping is still in use; however, it
is not installed in modern construction. It oxidizes from the
inside out, the oxidation (rust) reduces the interior
diameter of the pipe, restricting the flow of water and it
usually first leaks at threaded joints where the pipes are
joined. Galvanized pipe corrodes more quickly when it
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comes in direct contact with copper; dielectric couplers

are special connectors to prevent galvanic action or
electrolysis.

According to Mr. Petrash, there is heavy galvanized piping

at the Subject Property and no problems have been
reported in the 47 years that he has been associated with
the Subject Property.

 Deterioration/Leaks No evidence of wide spread deterioration of or leaks in

the supply and waste piping was observed by or reported
to the CBRE inspector.

 Insufficient Water Pressure No concerns associated with insufficient water pressure

were observed by or reported to the CBRE inspector.

 Blocked Drainage No concerns associated with blocked waste water drains

were observed by or reported to the CBRE inspector.

 Inadequate Hot Water No concerns associated with the quantity or quality of the
hot water supply were observed by or reported to the
CBRE inspector.

 Other No additional concerns relating to the plumbing system at

the Subject Property were noted by or reported to the
CBRE inspector.

Recommendations: No significant replacement of the supply and waste lines is

anticipated during the evaluation period. These systems
should be maintained as part of routine maintenance.
Based on the age of the boiler and chiller systems, it is
anticipate that the boilers and chiller system will need to
either be replaced or overhauled during the evaluation
period and allowances for this work are included in the
Modified Capital Reserves Schedule. The commercial
water heaters can be maintained as part of the routine
maintenance of the Subject Property.

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7.4. Elevators and Escalators

Description
Elevators: There are four passenger Otis cable elevators that service
floors one to 21. There is one freight Otis cable elevator
that services the basement to 21st floor. The passenger
elevators are original and were last modernized in 2002
to meet ADA and firemen’s recall regulations. The freight
elevator was modernized in 2010. All elevators have a
capacity of 2,500-lb.

Escalators: No escalators are present at the Subject Property.

Other: No other significant lifts or mechanical forms of vertical

transport systems were noted at the Subject Property.
Observations/Comments
General Condition: Good
Age/Last Action: The elevators were modernized in 2002 to meet ADA and
Fireman’s recall regulations. The freight elevator was
modified in 2010. The equipment is maintained under a
full service contract with Otis Elevator.
Concerns:

 Inoperable Equipment All of the elevators appeared to be operational at the time

of the assessment. No problems regarding the elevators
were reported to the CBRE inspector.

 Out of Date Inspection The inspection certificates for the elevators were current.

 Other No other concerns regarding the elevators at the Subject

Property were noted by or reported to the CBRE inspector.

Recommendations: The elevators are maintained under an annual service

contract that includes all necessary repairs and
replacement. Allowances for this work, therefore, are not
included in the Modified Capital Reserves Schedule.

Elevators typically need annual service, which is

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considered a routine maintenance item and a major

overhaul every 20 to 25 years. Based on the age of the
elevators, it is anticipated that major overhauls for the four
passenger elevators will be needed during the loan term
and allowances for this work are included in the Modified
Capital Reserves Schedule.

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8. INTERIOR ELEMENTS

8.1. Common Areas

Description
Interior Finishes: The common interior areas are mainly the original painted
plaster interior walls and ceilings. During tenant
renovations, some of the old plaster walls have been
replaced with drywall construction. Many of the original
plaster ceilings have been replaced with acoustical tile.
The common flooring is mainly economy grade carpeting.
The main lobby has a stone tile floor and decorative
plaster walls and ceilings. The tenant suites vary greatly
according to the tenant’s needs. The ceilings are a
combination of plaster and acoustical tile. The floors are
a combination of carpet, vinyl flooring, hardwood and
ceramic tile. Restrooms typically have vinyl floor tile,
gypsum board walls and acoustical tile ceilings.

Observations/Comments
General Condition: Good
Age/Last Action: Some of the common area finishes are original and have
been painted or repaired as a routine maintenance item.
Much of the original plaster walls and ceilings have been
replaced with drywall and acoustical tile, respectively.

Concerns:

 Damaged Walls/Ceilings Minor damage to the walls and ceilings of the common
areas was noted during the assessment. The stairwell was
noted to be faded and damaged in some areas. The
worst area was at the 19th floor landing.

 Damaged/Worn Flooring The common area floors were generally in good condition
with no significant areas of damage or wear observed.

 Other No other concerns relating to the interior finishes of the

common areas were noted by or reported to the CBRE
inspector.

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Recommendations: Many areas of the common hallways and stairs were noted
to have faded or peeled paint. Small areas of damaged
plaster were noted in the stairwell. The worst area was at
the 19th floor landing. The Property Manager reported
there was a tentative budget of $200,000 over three years
for renovation of the common areas. Allowances for this
work, based on the Property Manager’s reported tentative
budget, are included in the Modified Capital Reserves
Schedule. Periodic replacement of vinyl flooring and
carpeting is anticipated during the evaluation period and
allowances for this replacement have been included in the
Modified Capital Reserves Schedule.

8.2. Tenant Spaces

Description
Interior Finishes: The interiors of the tenant spaces are finished out to meet
the needs of the individual tenant spaces. Generally
speaking the walls are painted or wallpapered gypsum
board, the ceilings are suspended systems with either 2’x2’
or 2’x4’ lay-in panels and the floors are a mixture of
carpeting, vinyl floor tile, ceramic tile and hardwood
flooring. Many of the tenant spaces have the original
plaster walls and ceilings. The tenant occupying the
second floor removed the old plaster and left the walls
and undersides of the upper floors exposed.

Observations/Comments
General Condition: Good
Age/Last Action: Interior finishes are handled as part of the tenant
improvement (TI) allowances negotiated as part of the
lease or by the tenant during the lease. Once the TI is
completed, any repairs or replacement are generally the
responsibility of the tenant.

Concerns:

 Damaged Walls/Ceilings No significant damage to the walls and ceilings of the

tenant areas was noted during the assessment.

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 Damaged/Worn Flooring The flooring in the tenant spaces was generally in good
condition with no significant areas of damage or wear
observed.

 Other No other concerns relating to the interior finishes of the

common areas were noted by or reported to the CBRE
inspector.

Recommendations: Interior finishes are the responsibility of the tenant and are
either handled in the TI allowance negotiated as part of
the lease or by the tenant during the term of the lease.
Therefore, no allowances for tenant area finishes have
been included in the Modified Capital Reserves Schedule.

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9. LIFE SAFETY/FIRE PROTECTION

9.1. Sprinklers and Standpipes

Description
Fire Sprinklers and Standpipes: The Subject Property has fire suppression sprinklers in the
basement, first and second floors only. Standpipes are
located at every level in the stairwell.

Observations/Comments
General Condition: Good
Age/Last Action: The fire sprinkler system was installed in 2005 and is
maintained as part of the routine maintenance of the
facility by HG Fire.
Concerns:

 Inoperable Equipment There were no obvious visual indications of inoperable fire

sprinkler equipment. According to the property contact,
the system is fully operable.

 Insufficient Water Pressure According to the property contact, the water pressure at
the Subject Property is sufficient to operate the fire
sprinkler system.

 Out of Date Inspections CBRE reviewed the inspection certificates for the fire
sprinkler system and found them to be current.

 Recalled Sprinkler Heads Over the years, there have been extensive recalls of
sprinkler heads manufactured by Central, Omega and
Star. Some of these sprinklers could either fail in a fire, or
trigger unexpectedly. According to property management,
the sprinkler heads at the property were inspected and
none of the sprinkler heads were involved in a recall.

 Other No additional concerns relating to the sprinkler system at

the Subject Property were noted by or reported to CBRE’s
inspector.

Recommendations: No major overhaul or replacement of the existing fire

sprinkler system is anticipated during the evaluation
period. The system should continue to be maintained as
part of the routine maintenance of the facility.

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City of Houston Amendments to the International Fire

Code require all existing high-rise buildings, defined as a
building existing within the corporate limits of the city on
December 31, 2005 and that has floors used for human
occupancy located more than 75 feet above grade plane,
must be equipped with an automatic fire sprinkler system.
The sprinkler retrofit of existing buildings may be complied
with in phases with 50% of the floors within the building
being equipped with an operational sprinkler system on or
before December 31, 2014 and the building being fully
equipped with an operational sprinkler system on or
before December 31, 2017. Allowances are included in
the Modified Capital Reserves Schedule to facilitate the
installation of sprinkler coverage in the sections of the
building not currently protected by sprinklers not later than
the dates stipulated by the City.

9.2. Alarm Systems

Description
Fire Alarm Systems: Fire alarms consisted of hard-wired smoke detectors
located in all tenant suites, common hallways and the
stairwell. CBRE tested random detectors and found them
to be operational.

Other Systems: There are fire hoses on every floor and standpipes on
every floor in the stairwell.

Observations/Comments
General Condition: Good
Age/Last Action: The alarm systems at the Subject Property were installed in
2005 and are maintained as part of the routine
maintenance of the facility by FireSafe.

Concerns:

 Inoperable Equipment All of the systems and equipment observed appeared

operable at the time of the assessment. No inoperable
equipment was reported to the CBRE inspector.

 Other No additional concerns relating to the alarm systems were

noted by or reported to CBRE’s inspector.

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Recommendations: No major overhaul or replacement of the alarm systems is

anticipated during the evaluation period. The systems
should continue to be maintained as part of the routine
maintenance of the facility.

9.3. Other Systems

Description
System: Emergency lighting is provided in the hallways and
stairwell. Portable fire extinguishers are strategically
located through the buildings.

The restaurant tenant, Irma’s Southwest Grill, has a grease

vapor ventilation hood under which all cooking is done
and a grease trap to collect all grease, which is removed
from the premise by a licensed hauler. There is an
automatic fire extinguishing system under the grease vapor
ventilation hood.

Observations/Comments
General Condition: Good
Age/Last Action: The systems are less than ten years old and maintained as
part of routine maintenance.

Concerns:

 Inoperable Equipment The system appeared operable at the time of the

assessment. No inoperable equipment was reported to
the CBRE inspector.

 Other No additional concerns relating to the system were noted

by or reported to CBRE’s inspector.

Recommendations: No major overhaul or replacement of the system is

anticipated during the evaluation period. The system
should continue to be maintained as part of the routine
maintenance of the facility.

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10. ADDITIONAL CONSIDERATIONS

10.1. Natural Hazards

Description
Seismic Zone: Zone 0
Source: Uniform Building Code, Figure 16-2, Seismic Zone Map
of the U.S.

Flood Plain Designation: The Subject Property is located in Zone X (Unshaded), which is
defined as an area outside the 500-year flood plain.
Source: Federal Emergency Management Agency (FEMA), Flood
Insurance Rate Map (FIRM) Panel No. 48201C0690 L,
dated June 18, 2007,

Wind Zone: Wind Zone III(200 mph)

Hurricane Susceptible
Region: Yes
Source: Wind Zones in the United States map
www.fema.gov/plan/prevent/saferoom/tsfs02_wind_zone
s.shtm

Observations/Comments
Age/Last Action: No seismic or wind upgrades were noted or reported at the Subject
Property. It is assumed that construction was completed in
accordance with the codes applicable as of the date of
construction.

Seismic Concerns: Properties located in Zones 3 or 4 are considered potentially

vulnerable to significant impact from earthquake activity. The
Subject Property is not located in one of these zones.

Wind or Hurricane Properties located in high Wind Zones III or IV, a Special Wind
Concerns: Region or a Hurricane Susceptible Region is considered potentially
more vulnerable to significant impact from wind and hurricanes
(high wind, storm surge, etc). The Subject Property is located in
Zone III and a Hurricane Susceptible Region.

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Recommendations: Given the seismic zone for the area including the Subject Property,
no further action with regard to seismic risk is recommended at this
time.

Based on the Wind Zone Map, the property is located within Wind
Zone IIII (200 mph) and a Hurricane Susceptible Region; therefore,
hurricane damage protection/insurance may be prudent.

10.2. Microbial Contamination (Mold)

Description
A visual screening for suspect mold was conducted. The screening was limited to observations
in the areas walked and should not be considered a comprehensive survey of the property. No
sampling was conducted. No assessment or investigation behind walls or in any other generally
inaccessible areas was performed. Inquiries were made of the owner and/or property manager
regarding any knowledge of past and current leaks at the property, any known mold issues, and
any tenant complaints regarding health problems, musty odors or water leaks. When
applicable, areas of reported or likely water leaks or water intrusion/penetration were inspected.

Observations/Comments
Concerns: No significant indications of mold or water infiltration were
noted by CBRE’s inspector. No concerns relating to mold
or water infiltration were reported to CBRE by property
management or the tenants.

Recommendations: No concerns relating to mold were identified during the

assessment and no further action is recommended at this
time.

10.3. Americans with Disabilities Act

Title III of the Americans with Disabilities Act of 1990 (ADA) prohibits discrimination on the basis
of disability by public accommodations and requires places of public accommodation and
commercial facilities to be designed, constructed and altered in compliance with the
accessibility standards outlined in the regulations. Places of public accommodation are
facilities, or portions thereof, that are operated by a public entity, whose operations affect
commerce and would be open to the public. General categories include: 1) Hotels or other
place of lodging; 2) Restaurants or other establishments serving food or drink; 3) Theaters or
other places of exhibition or entertainment; 4) Convention centers or other places of public
gathering; 5) Grocery stores or other sales or rental establishments; 6) Banks or other service
establishments; 7) Bus terminals or other transportation stations; 8) Museums or other places of
public display; 9) Parks or other places of amusement; 10) Nurseries, schools or other places of

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education; 11) Day care centers or other social service centers; and, 12) Bowling alleys or other
places of exercise or recreation. Commercial facilities include facilities whose operations will
affect commerce and are intended for non-residential use by a private entity such as
manufacturing facilities and office buildings. Private clubs and residences are not covered
under the ADA. A facility can be a mixture of any of these categories, for example a
manufacturing facility that has an extensive customer service operation would be considered a
public accommodation at the service area and a commercial facility for the remainder of the
facility.

All places of public accommodation and commercial facilities constructed for first occupancy
after January 26, 1993 must be constructed to be accessible. Any alteration made to a place
of public accommodation or commercial facility after January 26, 1992, must be made so as to
ensure that, to the maximum extent feasible, the altered portions of the facility are readily
accessible to and useable by individuals with disabilities. Alterations include, but are not limited
to, remodeling, renovations, rehabilitation, reconstruction, historic restoration, changes or
rearrangement in the plan configuration of walls and full-height partitions. Normal
maintenance, reroofing, painting or wallpapering, asbestos removal, or changes to mechanical
and electrical systems are not alterations unless they affect the usability of the building or facility.

A public accommodation is required to remove architectural barriers in existing facilities, prior

to the making of any alterations, where such removal is readily achievable, i.e., easily
accomplished and able to be carried out without much difficulty or expense. Examples include,
but are not limited to, providing designated handicapped parking spaces, adding small ramps
and curb cuts, widening doorways, rearranging furniture, adding raised markings on elevators,
installing grab bars in toilet stalls and rearranging toilet partitions to increase maneuvering
space. If not readily achievable, alternative methods of providing service, such as access to the
management office, must be offered. Alternative methods include, but are not limited to,
installing an intercom system between the leasing office and an accessible area, or relocating
activities to accessible locations. The determination as to whether removal of a barrier or an
implementation of a component or system is readily achievable is often a business decision,
which is based on the resources available to the owner or tenants, and contingent upon the
timing of implementation. Determination of whether barrier removal is readily achievable is on
a case-by-case basis; the United States Department of Justice did not provide numerical
formulas or thresholds of any kind to determine whether an action is readily achievable. It is the
property owner’s burden to prove that a modification is not readily achievable, or would pose
an undue financial or administrative burden.

CBRE is providing a Tier I survey. A Tier I survey is limited to visual observations and does not
include taking extensive measurements or counts, or the inspection all areas of the Subject
Property. As such, a Tier I inspection would not be expected to be as comprehensive or
accurate as a Tier II or Tier III ADA survey. The scope of this limited visual survey is specifically
limited to the following four areas: parking, path-of-travel, public restrooms and elevators.
CBRE’s opinions regarding ADA compliance should be considered preliminary and a finding

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that the property is in general compliance with ADA guidelines should not be construed to mean
that no areas of ADA non-compliance exist.

On July 23, 2004, the Architectural and Transportation Barriers Compliance Board (also known
as the Access Board) published a final rule adopting revised guidelines to implement the ADA
and the Architectural Barriers Act (ABA) in the Federal Register. 69 Fed. Reg.44083. These
guidelines became effective on September 21, 2004 as guidance for the ADA standard-setting
agencies (Department of Justice and Department of Transportation) and the ABA
standard-setting agencies (Department of Defense, Department of Housing and Urban
Development, the General Services Administration, and the U.S Postal Service). Each of these
standard-setting agencies is required to publish enforceable regulations that include design
standards that consistent with the Access Board's guidelines. The Access Board's guidelines
have no legal effect on the public until the standard-setting agencies have completed their rule
making process.

The Department of Justice has published an Advance Notice of Proposed Rulemaking (ANPRM)
to begin the process of revising the Department's ADA regulations to adopt design standards
that are consistent with the revised ADA Accessibility Guidelines published by the Access Board.

The ANPRM is the first of three steps in the regulatory process and is designed to solicit public
comment on several issues relating to the potential application of the revised guidelines and to
obtain background information needed for the regulatory impact analysis (a report analyzing
the economic costs and benefits of a regulatory action) that will accompany the proposed and
final rules. The ANPRM will be followed by notice of proposed rulemaking (NPRM) and a final
rule.

Parking Facility

The term "parking facility" is used instead of the term "parking lot" in the ADA guidelines so that
it is clear that both parking lots and parking structures are required to comply with these
requirements. The number of parking spaces required to be accessible is to be calculated
separately for each parking facility; the required number is not to be based on the total number
of parking spaces provided in all of the parking facilities provided on the site. Each parking
facility should comply with the following table.

Parking Requirements: Total Spaces Total ADA ADA Van

Proposed in ( ) 1-25 1 1
26-50 2 1
51-75 3 1
76-100 4 1
101-150 5 1
151-200 6 1

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Parking Requirements: Total Spaces Total ADA ADA Van

201-300 7 1(2)
301-400 8 1(2)
401-500 9 2
501-1000 2% of total 1 of 8 (1 of 6)
> 1000 20, plus 1 for 1 of 8 (1 of 6)
each 100, or
fraction thereof,
over 1,000

Description
Parking Facilities: The Subject Property features 65 open surface spaces that
are all reserved. There are two ADA parking spaces in the
surface parking lot that are the only parking spaces that
are not reserved. There are 19 garage spaces, all of
which are reserved parking spaces. There is no public
parking at the Subject Property other than the two ADA
parking spaces.

Observations/Comments There is no public parking at the Subject Property other

than the two ADA parking spaces.
Concerns:

 Insufficient Spaces The manager reported the ADA spaces are adequate for
the needs of the tenants.

 Poor Location of Spaces There is no public parking at the Subject Property other
than the two ADA parking spaces.

 Inadequate Signage There is no public parking at the Subject Property other

than the two ADA parking spaces.

Recommendations: There is no public parking at the Subject Property other

than the two ADA parking spaces. The two ADA spaces
should be maintained as part of the routine maintenance
of the Subject Property.

Path of Travel

There should be at least one accessible route provided within the boundary of the Subject
Property from public transportation stops accessible parking spaces, passenger loading zones, if
provided, and public streets and sidewalks. An accessible route means having an adequate

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number of properly located, ADA compliant curb cuts, ramps and entrances with the
appropriate signage.

Description
Accessible Path: The front door is accessible from paths from the east and
west elevations.

Observations/Comments

Concerns:

 Insufficient Curb Cuts Based on the layout of the Subject Property, no curb cuts
were required.

 Insufficient Ramps Based on the layout of the Subject Property, no ramps

were required.

 Insufficient Routes There were a sufficient number of accessible routes at the

Subject Property. The routes appeared to be of sufficient
width and free of obstacles.

 Insufficient Entrances The accessible entrances appeared to be of sufficient

width, with ADA compliant thresholds and hardware.

 Insufficient Signage No concerns with insufficient signage were noted.

Recommendations: The accessible routes on the Subject Property appeared to

be sufficient and in general compliance with the ADA
guidelines and no further action is recommended.

Restrooms

Restroom facilities should accommodate the disabled with respect to the existence of toilet stalls
that appear to be designed for accessibility, lavatories or sink at accessible heights with
adequate clearance underneath, and compliant emergency fire alarms and strobes.

Description
Restrooms: According to Ms. Totten, Floors 1, 2, 3, 19 and 20 have
renovated ADA compliant restrooms. Floors 4 through 17
and 21 do not have ADA compliant restrooms. This was
verified by field observation.

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Observations/Comments
Concerns:

 Improper Location The ADA compliant restrooms were located along an

accessible route.

 Inaccessible Restrooms The entrance doors for each accessible restroom

appeared to be at least 32 inches wide with accessible
hardware. The corridors in the restrooms and the stall
doors for the accessible stalls appeared to be at least 32
inches wide. The accessible stalls appeared to have at
least 60 inches of turning diameter and contained grab
bars.

 Inadequate Sinks At least one sink in each accessible restroom appeared to

be at an accessible height, with 29 inch clearance for
wheelchairs. All exposed pipes were adequately insulated
and the sink handles are operable without grasping,
pinching or twisting.

 Insufficient Signage The accessible restrooms had sufficient signage to identify

them.

Recommendations: Some of the restrooms at the Subject Property have

been brought into compliance with the ADA
regulations. The remaining restrooms do not meet the
guidelines. Given that the restrooms are not open to
the public, instead serve only the office tenants and
their guests, the areas of the building, where the
restrooms are located, would be considered a
commercial facility and not a public accommodation.
As such, there is no requirement to bring the restrooms
into compliance. If, however, the restrooms are altered
or renovated, they must be brought into compliance
with the ADA guidelines at that time. An allowance for
this work has been included in the Modified Capital
Reserves Schedule.

Elevators

Elevators should have call buttons with visual signals to indicate when a call is registered and
answered; interior control buttons designated by Braille and by raised standard alphabet
characters for letters and Arabic symbols for numerals; emergency controls grouped at the

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bottom of the control panel; interior panel floor buttons with visual signals which light when
each call is registered and extinguished when each call is answered; visual and audible
signaling provided at each floor stop; doors with a reopening device that will stop and reopen a
car door if the door becomes obstructed; and an emergency two-way communications system,
which does not require voice communication.

Description
Elevators: The four passenger elevators were upgrade to meet ADA
requirements in 2002. The freight elevator was upgrade
to meet ADA requirements in 2010.

Observations/Comments
Concerns:
 Improper Call Buttons The call buttons on each floor were in general compliance
with visual signals indicating when a call is registered and
is answered. The call buttons were at a height that would
be considered accessible to someone in a wheelchair.

 Improper Interior Controls The interior control panels appeared to be in general

compliance with the ADA guidelines, with raised numbers
and Braille, emergency controls grouped at the bottom,
floor indicators with visual signals and audible signaling at
each floor stop. The control panels were accessible to
someone in a wheelchair.

 Inadequate Doors The doors of the elevators were at least 32 inches wide
and had reopening devices that stop and reopen the door
in the event they are stopped by a person or object.

Recommendations: The elevators at the Subject Property appeared to be in

general compliance with the ADA guidelines. No further
action is recommended at this time.

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APPENDIX 1
Property Maps, Drawings and Description

© 2011 CB Richard Ellis, Inc.

 PROPERTY PLAN/DIAGRAM

Great Southwest Building

1314 Texas Avenue
 Date:
Scale:
2011
None
Houston, Texas N
CBRE Project No: 11-460TX-0456 FIGURE 1

© 2011 CB Richard Ellis, Inc.

 TAX PLAT/MAP

Great Southwest Building

1314 Texas Avenue
 Date:
Scale:
2011
None
Houston, Texas N
CBRE Project No: 11-460TX-0456 FIGURE 2

© 2011 CB Richard Ellis, Inc.

 FLOOD ZONE MAP

Great Southwest Building

1314 Texas Avenue
 Date:
Scale:
6/17/2002
None
Houston, Texas N
CBRE Project No: 11-460TX-0456 FIGURE 3

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APPENDIX 2
Property Photographs

© 2011 CB Richard Ellis, Inc.

 PCA Photo 1: PCA Photo 2:

South elevation and building-mounted South elevation as seen from a distance

signage

PCA Photo 3: Great Southwest Building

1314 Texas Avenue
North elevation (behind smaller building Houston/ Texas
in front) CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 4: PCA Photo 5:

Subject Property as seen from the Subject Property as seen from the east
northeast

PCA Photo 6: Great Southwest Building

1314 Texas Avenue
West elevation of the office building (note Houston/ Texas
cooling tower on the roof of the garage CBRE Project No.: 11-460TX-0456
building)

© 2011 CB Richard Ellis, Inc.

 PCA Photo 7: PCA Photo 8:

Eastern boundary along Austin Street Northern boundary along Texas Avenue

PCA Photo 9: Great Southwest Building

1314 Texas Avenue
Southwest corner of the Subject Property Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 10: PCA Photo 11:

Parking lot for the Subject Property near Main entrance on Texas Avenue
the southern boundary along Capitol
Street

PCA Photo 12: Great Southwest Building

1314 Texas Avenue
Copper roof of the office building Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo13: PCA Photo 14:

Underside of an upper floor Underside of the roof as seen from an

upper level utility room

PCA Photo 15: Great Southwest Building

1314 Texas Avenue
Roof of the parking garage Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 16: PCA Photo 17:

Inside the parking garage Elevator equipment in the penthouse

PCA Photo 18: Great Southwest Building

1314 Texas Avenue
Water tank on the upper floor Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 19: PCA Photo 20:

Chiller in the sub-level utility room Commercial water heaters for domestic
hot water

PCA Photo 21: Great Southwest Building

1314 Texas Avenue
Cooking equipment in the restaurant Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 22: PCA Photo 23:
:
Inside the lobby Common hallway

PCA Photo 24: Great Southwest Building

1314 Texas Avenue
Common hallway Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 25: PCA Photo 26:

Fire escape in need of painting Second view of the fire escape

PCA Photo 27: Great Southwest Building

1314 Texas Avenue
Tenant reception area Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 28: PCA Photo 29:

Peeling paint in stairwell Tenant work area

PCA Photo 30: Great Southwest Building

1314 Texas Avenue
Tenant conference room Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 31: PCA Photo 32:

Tenant lobby Tenant private office

PCA Photo 33: Great Southwest Building

1314 Texas Avenue
Tenant work area Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 34: PCA Photo 35:

Utility chase Toilet stall in ADA restroom

PCA Photo 36: Great Southwest Building

1314 Texas Avenue
Fire hose Houston/ Texas
CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 PCA Photo 37: PCA Photo 38:

Cracking in the southeast corner of the Second vie of cracking in the southeast
parking garage corner

PCA Photo 39: Great Southwest Building

1314 Texas Avenue
Cracking in the northwest corner of the Houston/ Texas
office building CBRE Project No.: 11-460TX-0456

© 2011 CB Richard Ellis, Inc.

 GREAT SOUTHWEST BUILDING
HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

APPENDIX 3
Physical Deficiency/Deferred Maintenance and Modified Capital Reserves Schedule

© 2011 CB Richard Ellis, Inc.

 TABLE 1

OPINION OF PROBABLE COSTS TO REMEDY PHYSICAL DEFICIENCIES - DEFERRED MAINTENANCE TABLE

July 14, 2011

ASSESSMENT & CONSULTING SERVICES

Property: Great Southwest Building

1314 Texas Avenue
Houston, TX 77002
CBRE Project No. 11-460TX-0456

IMMEDIATE SHORT TERM

ITEM QUANTITY UNIT UNIT COST COSTS COSTS COMMENTS
None $0 $0
ESTIMATED COST $0 $0

Total Physical Deficiencies - Deferred Maintenance: $0

TABLE 1

© 2011 CB Richard Ellis, Inc.

 TABLE 2

MODIFIED CAPITAL RESERVES SCHEDULE

07/14/11

Property: Great Southwest Building

1314 Texas Avenue Projected Term: 12
ASSESSMENT & CONSULTING SERVICES Houston, TX 77002 Building Age: 84
No. of Buildings: 2
CBRE Project No. 11-460TX-0456 NRSF: 147,448
Facility Type: Office
MODIFIED CAPITAL RESERVES SCHEDULE - COST PER YEAR SUMMARY
EFF SECTION/ TOTAL
ITEM EUL AGE RUL QUANTITY UNIT UNIT COST PHOTO NO. YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12 RESERVES
SITE
- - - $3,200 - - - $3,200 - - - $3,200 $9,600
Asphalt seal & stripe 5 1 4 120,000 SF $0.08 5.3
- - - - - - - - - - - - $0
Asphalt overlay 20 2 18 SF $0.60 5,3
- - - $48 - - - $48 - - - $48 $143
Concrete striping 5 1 4 38 LF $3.75 5.3

Concrete maintenance NA - - - - - - - - - - - - $0
LS 5.4
- - - - $10,000 - - - - - - - $10,000
Garage maintenance 45 40 5 1 LS $10,000.00 5.3
EXTERIOR
Exterior maintenance 10-15 7 3-8 LS LS $20,000.00 6.3 - - $40,000 - - - - - - - - - $40,000

Roof replacement-garage 20 12 8 4,800 SF $2.50 6.4 - - - - - - - $12,000 - - - - $12,000

Fire escape painting 8 7 1 LS LS LS 6.3 $20,000 - - - - - - $20,000 - - - - $40,000

Roof maintenance NA var var 2 LS $20,000.00 6.4 - - $20,000 - - - $20,000 - - - - - $40,000

MECHANICAL
Fire Suppression Spirnkler Compliance 50 na na 133,000 SF $3.50 7.1 $77,583 $77,583 $77,583 $77,583 $77,583 $77,583 - - - - - - $465,500

Chiller replacement 25 6 19 Each 7.1 - - - - - - - - - - - - $0

Cooling tower replacement 25 6 19 Each $100.00 7.1 - - - - - - - - - - - - $0

Chiller overhaul 10 6 4 2 Each $25,000.00 7.1 - - - $50,000 - - - - - - - - $50,000

- - - - - - - - $7,000 - - - $7,000
Commercial water heaters 15 6 7 2 Each $3,500.00 7.3

Cooling Tower Overhaul 10 6 4 1 Each $10,000.00 7.3 - - - $10,000 - - - - - - - - $10,000

Boiler overhaul 15 6 9 2 Each $3,500.00 7.3 - - - - - - - - $7,000 - - - $7,000

- - - - - - - $20,000 $20,000 $20,000 $20,000 $80,000

Elevator overhaul - passenger 20 9 10 4 Each $20,000.00 7.4

Elevator overhaul - freight 20 1 19 1 Each $25,000.00 7.4 - - - - - - - - - - - - $0

INTERIOR
Common area finishes 7-10 var var 4 EA $50,000.00 8.1 $100,000 $50,000 $50,000 - - - - - - - - $200,000

Common area flooring 7 var var 20,000 SF $1.00 8.2 - - $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $20,000

Tenant flooring/finishes--TI 7 SF TI 8.2 - - - - - - - - - - - - $0

ADA restroom renovation 20 na na 12 EA $3,500.00 - $7,000 - $7,000 - $7,000 - $7,000 - $7,000 - $7,000 $42,000

Notes: TOTAL UNINFLATED $197,583 $134,583 $189,583 $149,831 $89,583 $86,583 $22,000 $64,248 $36,000 $29,000 $22,000 $12,248 $1,033,243

1. Inflation factor 2.5% 100.00% 102.50% 105.06% 107.69% 110.38% 113.14% 115.97% 118.87% 121.84% 124.89% 128.01% 131.21% -

2. TOTAL INFLATED $197,583 $137,948 $199,181 $161,351 $98,883 $97,961 $25,513 $76,370 $43,863 $36,217 $28,162 $16,070 $1,119,103

CUMULATIVE TOTAL INFLATED -

$197,583 $335,531 $534,712 $696,064 $794,947 $892,908 $918,421 $994,791 $1,038,654 $1,074,871 $1,103,033 $1,119,103
Definitions
AVE. EUL - Average Expected Useful Life

EFF. AGE - Effective Age (Estimated)

RESERVES SUMMARY Total Uninflated Total Inflated
RUL - Remaining Useful Life (Estimated)
Total Reserves $1,033,243 $1,119,103
EA - Each; Var. - Var
Per SF Reserves (All Years) $7.01 $7.59
SF - Square Feet; LF-Linear Feet
Per SF (Per Year) $0.58 $0.63
TI - Tenant Improvement

LS - Lump Sum

TABLE 2

© 2011 CB Richard Ellis, Inc.

 GREAT SOUTHWEST BUILDING
HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

APPENDIX 4
Personnel Qualifications

© 2011 CB Richard Ellis, Inc.

  
ASSESSMENT AND CONSULTI NG SERVICES 
 

Eugene Thomas

Education: B. S. Industrial technology, Northeastern University

A. E. Sanitary Engineering, Northeastern University

Licenses/Registrations

Years of Experience: 37 years

Summary of Professional experience

Eugene Thomas is a seasoned due diligence professional with over 37 years of national experience
and a sound working knowledge of all property types. He has extensive diversified experience directly
related to the development and financing of multifamily housing, independent living apartments for
seniors, assisted living facilities, skilled nursing facilities, and student housing, as well as commercial,
retail, hospitality, institutional and industrial properties. He has performed engineering due diligence
and construction monitoring assignments in 44 of the continental united states and the district of
columbia.

Mr. Thomas was the Vice President of Engineering and Chief Engineer on the staff of two major
national commercial mortgage lenders for a cumulative period of 19 years. In this capacity he was
responsible for the management of all architectural, engineering, environmental and construction
management activities related to the underwriting of loans utilizing the Fannie Mae DUS, Freddie Mac
Program Plus, HUD/FHA Mortgage Insurance, and Capital Markets lending platforms. As a working
Chief Engineer, Mr. Thomas personally provided property condition assessments, construction
document reviews, and construction monitoring services on hundreds of projects. In addition he
provided technical assistance for the lender’s national real estate portfolio, which exceeded $10
billion. This experience has given Mr. Thomas unique insight, respect and sensitivity for the client’s
needs and expectations and the ability to produce reports that are timely and beneficial to the end
user.

Previously, Mr. Thomas was at the U. S. Department of Housing and Urban Development (HUD) for
nearly 16 years where he held several positions within the Housing Development and Housing
Management Divisions, primarily as a Construction Analyst and General Engineer in the Architectural
and Engineering Branch. In this capacity he was responsible for the review, technical processing and
approval of all architectural and engineering exhibits required for the development of multifamily and
skilled nursing facilities utilizing the department’s housing programs including the FHA Insured
Mortgage Programs (Sections 221d(4), 221d(3), 220, 241 and 232), Section 202 Direct Loan,

© 2011 CB Richard Ellis, Inc.

  
ASSESSMENT AND CONSULTI NG SERVICES 
 
Section 8 New Construction/Substantial Rehabilitation, Low Rent Public Housing (including Indian
Housing), HUD/Farmers Home Administration Section 515 Rural Housing, and certain other
categorical programs involving loans and grants for housing and neighborhood facilities. This
experience has given Mr. Thomas particularly strong skills related to handicapped accessibility
considerations including ADA, FHAA, and UFAS requirements.

In addition Mr. Thomas has approximately 12 years of experience working in the design field where
he specialized in soils and foundations, including deep pile and caisson foundations, and municipal
public works projects.

© 2011 CB Richard Ellis, Inc.

  
ASSESSMENT AND CONSULTI NG SERVICES 
 

Craig Campbell, P.E.

Education: BS Chemical Engineering, Purdue University, 1970

MBA, University of Evansville, 1972

Licenses/Registrations Registered Professional Engineer, State of Missouri, EN020267

Years of Experience: 37 years

Summary of Professional experience

Mr. Campbell has over 12 years of consulting experience in the environmental and property condition
industry in the United States. He has conducted Environmental Site Assessments (ESAs) and Property
Condition Assessments (PCAs) for a wide range of local and national clients, including banks, agency
lenders, investment banks, life companies, law firms and property owners. The properties he has
evaluated have included multifamily residential, retail, office, industrial, government buildings and
hospitality.

Mr. Campbell has provided hundreds of environmental site assessments in accordance with ASTM
E1527, the USEPA All Appropriate Inquiry rules, Fannie Mae Delegated Underwriting Standards,
Freddie Mac guidelines and other client specific scopes of work. His environmental background
includes a detailed understanding of the risks associated with hazardous and regulated materials
storage, use generation and disposal, above ground and underground storage tanks, polychlorinated
biphenyls

Mr. Campbell has provided hundreds of property condition assessments in accordance with ASTM
2018, Fannie Mae Delegated Underwriting Standards, Freddie Mac guidelines and other client
specific scopes of work. He is experienced in assessing site improvements, building structures and
envelopes, and mechanical, electrical and plumbing systems for evidence of deferred maintenance or
problematic or deleterious materials. He has been responsible for estimating Immediate Needs
Reserves as well as On-Going Reserves need to maintain a property, based on his observations and
interviews with personnel familiar with the property.

In addition, Mr. Campbell has 13 years experience in insurance industry inspections, evaluations, loss
control and solicitations. This includes property insurance (fire & extended coverages), general

© 2011 CB Richard Ellis, Inc.

  
ASSESSMENT AND CONSULTI NG SERVICES 
 
liability, workers compensation, builder’s risk, fleet and other coverages. He has developed,
implemented and improved loss control programs in numerous industries.

Furthermore, Mr. Campbell has 14 years experience as a technical service engineer serving industries
such as petroleum, chemicals, cement, paper, power, metals and both light and heavy manufacturing.
He evaluated clients’ processes and recommended improvement, performed failure analysis and field
trouble-shooting, trained and supervised plant workers, educated technical and sales people,
performed estimating and project management and provided assistance in corporate litigation.

© 2011 CB Richard Ellis, Inc.

 GREAT SOUTHWEST BUILDING
HOUSTON, TEXAS CBRE P ROJECT #11-460TX-0456

APPENDIX 5
Interview/Questionnaire Documentation/Correspondence

© 2011 CB Richard Ellis, Inc.

 Assessment & Consulting Services

PROPERTY CONDITION INFORMATION

PREVIOUS REPORTS

1. Are you aware if a Property Condition Assessment or structural assessment has ever been performed on the
subject property? If yes, are you aware of the recommendations made in the report or can you provide a copy
of the report?
 Yes
x
 No  Do Not Know

CAPITAL IMPROVEMENTS

1. Have any capital improvements been conducted on the subject property in the past five years? If yes, please
provide any information such as the type of improvement, approximate date of improvement and cost
associated with each improvement. As an example, have any of the roofs been replaced, concrete/asphalt
repairs, the buildings’ exteriors painted, new HVAC equipment installed, improvements to the parking garage,
etc?
6/05 $459,035 Chillers replacements-EMS System-upgrade to all codes

6/09 $33,155 parking lot-resurfaced asphalt/stripping 06/10 resealed parking lot

9/10 $47,000 3-house water tanks renovated/relined 9/10 9th flr air handler-
replaced pan and coil $17,155 4/06 firemans service freight elevator $10,960.32
2/06 installed davits south face of bldg $47,875 11/09 40' copper roof replaced
$47,780.00
2. Are you aware of any budgeted capital improvements to be conducted this year? If yes, please provide any
information such as the type of improvement and cost associated with each improvement or attach any
contractor bid.
Not as of this date

CURRENT PROPERTY CONDITION/REQUIRED CAPITAL IMPROVEMENTS

Please discuss any noted property condition concerns that require repair or replacement. This would include
roof leaks, damaged asphalt and/or concrete, structural or foundation concerns, problems with the HVAC
systems, the waste or supply plumbing, sprinkler systems, erosion, electrical systems, etc. Is there any evidence
of mold on the property? If yes, please note where the concerns are located and the extent of the concern.

None

© 2011 CB Richard Ellis, Inc.

 Assessment & Consulting Services

LEASE TERMS

Please briefly describe the terms of the lease. What are the responsibilities of the tenant(s)? What are the
responsibilities of the landlord?
Minimum 3 yr lease - tenant responsible inside suite, landlord
responsible for light bulb, janitorial, gen maintenance inside suite and

maintaining building and common areas

REGULATORY COMPLIANCE

1. Are you aware of any outstanding building code violations?

 Yes X No
  Do Not Know

2. Are you aware of any outstanding fire code violations?

 Yes XNo  Do Not Know

3. Are you aware of any outstanding health/environmental department violations?

 Yes  No
X  Do Not Know

If yes to any of the above, please discuss.

4. Is the property in compliance with the Americans with Disability Act? For example, are there a sufficient
number of handicapped accessible parking spaces?
 Yes XNo  Do Not Know

COMMENTS/ADDITIONAL INFORMATION (If necessary. please provide any additional relevant property
condition information that has not been discussed above.)
Yes -
Sufficient handicapped parking

© 2011 CB Richard Ellis, Inc.

 Assessment & Consulting Services

PROPERTY QUESTIONNAIRE – Commercial

Project Number:

GENERAL INFORMATION

Property Name: 1314 Texas 1, Ltd.

1314 Texas Suite 708
Address:
Houston, TX 77002
City, State, Zip

PROPERTY INFORMATION

Property Size (in acres): 0.8557 # of Buildings: 1

Building Square Footage: # of Tenant Spaces: 102

Net Rentable Square Footage: 147,448 # of Parking Spaces: 82

Date of Construction: 1926 # of ADA Parking Spaces: 2

Please attach a Property Site Plan and a Tenant List or Rent Roll to the returned
Questionnaire

UTILITY AND SERVICE PROVIDERS

Green Mtn Energy Holder's
Electric Pest Control

Gas CenterPoint HVAC Maintenance Letsos

Drinking Water City of Houston Roof Maintenance Royal American

City of Houston FireSafe and HG Fire
Sanitary Sewer Fire Systems
City of Houston
Storm Water Security Systems

Solid Waste City of Houston Elevator (if applicable) Otis

Landscaping Other

The questionnaire information was provided by:

Charlotte Totten Property Manager

Name: Title:

Signature:

Date: 07/06/11

© 2011 CB Richard Ellis, Inc.

© 2011 CB Richard Ellis, Inc.