The Big Red Bus Site Proposal Tripp Howell

The Big Red Bus Site Proposal Tripp Howell Drew Thomas Joe Faller Leah Canfield Abby Volmer Jack Krowl Oceanic Opportunity Fund

Proposal Results City Owned t Equity Req. : $26 M n me ce % IRR: 16. 2 a l p Total Budget: $179 M Re Equity Multiplier: 2 x City Owned Proposal Location Property Development Financials Conclusion

Agenda Proposal Location Property Development Financials Conclusion

Market Factors Demographic Economic No Vacancy Political Proposal Location Property Development Financials Conclusion

Adjacent Properties Lakefront Pier • 5 Million Visitors Yearly Multi-family Retail • 400 Units Recently Approved • High Rents, Low Vacancy • 40, 000 People/Day Office • 91% Occupied Inside 3 Mile Radius • • Godsears Site Proposed Redevelopment Across the Street Potential Farmers Market site • Halsey Light Rail 400 Riders Every 6 Minutes Hotel • Doubling Supply Within 1 Year Proposal Location Property Development Financials Conclusion

Development Options Office • Strong demand • High Absorption Multi-Family • Depressed Rents • Saturated Market • Daytime Use IRR: 16. 2% • Non-Complimentary IRR: 11. 7% Hospitality • Strong City Support • Continuous Use • Oversaturated Market • Daytime Use • Alternating Day/Night Uses Synergies Retail • Low • On-Site Parking • Strong City Support Daytime Use • High Rents Proposal Location Property Development Financials IRR: 13. 4% IRR: 17. 6% Conclusion

Re-Entitlement FAR: 1. 5 & Height 45’ City’s Need FAR: 2. 16 & Height 84’ Progressing City’s Needs • Build Bus Depot Connecting to Light Rail 1) Create Transportation Hub • Including Bike Racks 2) Reduce Traffic Congestion 3) Create Amenities Proposal Location • No Additional Parking on Site • Traffic Engineering • Providing Amphitheater • Creating Art Districts Property Development Financials Conclusion

Site Light Rail City Owned Privately Owned City owned Proposal Location Property Development Financials Conclusion

Keating Arts District Property Name Halsey Plaza Ascension Suites Description GLA SF -Boutique Retail - Creative Office -Amphitheatre - Three Stories - Creative Office Suites 198 K 89 K - Six Stories Flagstaff Hall Proposal Location - Bus Station - Two Theatres - Creative Office - Four Stories Property Development Financials 73 K Conclusion

Phase 1 132 Proposal Location Property Development Financials Conclusion

Phase 2 4 Proposal Location Property Development Financials Conclusion

Timeline Construction Phase 1 Hold Plaza & Suites Sale Parcel Expansion Phase 2 Construction Hall Hold Sale 2014 Proposal 2015 Location 2016 Property 2017 2018 Development Financials 2019 Conclusion

Partnership Limited Partner General Partner City of Keating Oceanic Equity - Land Contribution - Site Improvements - TIF Funding - Satisfy City Objectives - TIF → Amenities Proposal Replacement Company Oceanic Equity - Buy/Sell Agreement - Site Improvements - Right of First Refusal - Buy/Sell Agreement - Pro Rata Share Op. Inc. - Right of First Refusal Location Property Development Financials Conclusion

Capital Stack Oceanic Equity Outlay Development Budget Equity Breakdown Capital Outlay Oceanic Equity City of Keating Replacement Comapny City 39% $34 M Total $68 M $27 M $7 M Oceanic 50% Office $136 M Proposal Replacement 11% Location Property Development Financials Conclusion

Waterfall Pro Rata Split LP IRR ≤ 11% General Partner Limited Partners 50% Developer’s Promote LP IRR > 11% Proposal Location General Partner Limited Partners 70% 30% Property Development Financials Conclusion

Project Returns Development Budget Oceanic Equity Outlay Investor’s Return Cash-Out Value: Value at Sale: $8 M $12 M IRR: 14% Proposal Location Oceanic Equity City of Keating Replacement Company Cash-Out Value: $28 M Value at Sale: Office $136 M Property $44 M IRR: 18% IRR: 14% Development Financials Conclusion

Debt Financing Options Option #1 • Acquisition 65% LTC • Acquisition 50% LTC • LIBOR + 300 bps • 5. 75% • Recourse • No Recourse; YM • Construction 70% LTC • Construction 60% LTC • LIBOR + 300 bps • 5. 75% • Recourse • No Recourse; YM • Takeout 75% LTV or 1. 25 DC Proposal Option #2 • Takeout 65% LTV • Treasuries + 250 bps • 5. 75% • Yield Maintenance • No Recourse; YM Location Property Development Financials Conclusion

Sources and Uses Sources • Debt PROJECT • Loan • Equity Uses $108 M • City: $26 M • TIF $3 M • Replacement: $6 M • Oceanic Fund: $34 M Total: Proposal Location $180 M Property • Land: $37 M • Improvements: $123 M • Interest & Fees: $20 M Total: Development $180 M Financials Conclusion

Cash Flow Analysis Reversion Operational NOI: $14. 3 M - Selling Exp: $(4 M) $240 M - Loan Balance: ($121 M) BTCF: $5. 5 M Location $243 M NSP: - DS: ($8. 8 M) Proposal Sales Price: Equity Out: Property Development Financials $119 M Conclusion

Terminal Cap Rate Sensitivity (23%) (16%) (10%) % Optimistic Case Proposal Location Property % Base Case Development % Pessimistic Case Financials Conclusion

Cost Overrun Sensitivity (22%) (20%) (16%) % % Optimistic Case Proposal Location Property (14%) (11%) % Base Case Development % Pessimistic Case Financials Conclusion

Risks and Mitigation Strategies Risk Mitigation Asset Specific Risks Themed T. O. D. Concept Entitlement Delays City Partnership & Contingencies of Sale Increased Automotive Traffic Bus & Light Rail Integration Bid Competition Delivery of Benefits to City Proposal Location Property Development Financials Conclusion

Conclusion Results Equity Req. : $26 M IRR: 16. 2 % Total Budget: $179 M Proposal Location Property Development Equity Multiplier: 2 x Financials Conclusion

Questions? Key Assumptions Market Rents Site Plan Sources and Uses GLA NOI & Reversion Sensitivity FAR Yield Maintenance Vacancy & Absorption Retail Floor Plan Overpass Financing Timeline Parking Waterfall Cash Flow Rental Rate Renderings TIF Financing Re-Entitlement Traffic Flow Marketing & Leasing Replacement Co. Partnership Ascension Suites Construction Costs Bus Station Adjacent Properties Halsey Plaza Flagstaff Hall

Key Assumptions

Market Rents Property Type 1) Office 2) Retail Avg Rent PSF/Month Cortland Avg Rent PSF/Month Keating Rents at Keating Arts District $2. 38 $3. 37 $3. 30 $4. 47 $5. 42 $5. 00

Market Vacancy & Absorption Property Type Office Retail Vacancy Keating Vacancy Cortland Total Market Size Absorption Per Year 9% 19. 3% 3, 095, 255 SF 124, 700 SF 0. 7% 1% 2, 741, 249 SF 41, 080 SF

Timeline Construction Phase 1 Hold Plaza & Suites Sale Parcel Expansion Phase 2 Hall Construction Hold Sale 2014 2015 2016 2017 2018 2019

Re-Entitlement FAR: 1. 5 & Height 45’ City’s Need FAR: 2. 16 & Height 84’ Progressing City’s Needs • Build Bus Depot Connecting to Light Rail 1) Create Transportation Hub • Including Bike racks 2) Reduce Traffic Congestion 3) Create Amenities • No Additional parking on site • Traffic Flow Site • Providing Amphitheater • Creating Art Districts

Marketing & Leasing Events to Entertain Targeted Marketing Signage Marketing Broker Bonus Increased TIs Rent Abatements

Adjacent Properties Lakefront Pier • 5 Million Visitors Yearly Office Multi-family • 400 Units Recently Approved Retail • High Rents, Low Vacancy • 40, 000 People/Day • 91% Occupied Inside 3 Mile Radius • Godsears Site Proposed Farmers Market Across the Street Hotel • Doubling Supply Within 1 Year • Halsey Light Rail 400 Riders Every 6 Minutes

PHASE 2: 50 K OFFICE 24 K THEATRE 74 K TOTAL • • • KEATING ARTS DISTRICT 360 K TOTAL SF TWO MULTI-PURPOSE THEATERS REGIONAL TRANSIT STATION RAISED LAKE VIEW VISTAS LARGE, FLEXIBLE FLOORPLATES SHARED PARKING WITH SUITES EXCEPTIONAL HIGHWAY VISIBILITY 4 PHASE 1: 58 K SF RETAIL 216 K SF OFFICE 12 K AMPHITHEATRE 286 K TOTAL • • • 1 • • • 3 2 HALSEY LIGHT RAIL ACCESS BIKE SHARING PROGRAM UNDERGROUND LOADING ACOUSTICS MANAGEMENT PRIVATE OFFICE PATIOS INNOVATIVE DINING CONCEPTS

Keating Arts District Property Name Halsey Plaza Ascension Suites Description -Boutique Retail - Creative Office -Amphitheatre - Three Stories - Creative Office Suites - Six Stories GLA SF 198 K 89 K Flagstaff Hall - Bus Station - Two Theatres - Creative Office - Four Stories 73 K

Retail Floor Plan Total Retail SF: 58 K • Largest Space: 5 k • Restaurant Uses Focused Around Amphitheatre

Parking Allocation Off Site Parking 4 Story Above Ground 1. 7 Acre Site 960 Spaces On Site Parking 2 Story Underground Existing Structure 140 Spaces

Traffic Flow

Replacement Co. Partnership IRR: 14% IF: Extra Landscaping No Replacement Co Partnership Total SF: 270 K Lease Underground Parking

Construction Cost Asset Type SF Cost / SF Construction Cost Office 289 K $308 $76 M Amphitheatre 12 K $50 $600 K Retail 50 K $158 $8 M 10 K $107 $1 M Bus Station 20 K $125 $2. 5 M Off-Site Parking 260 K $51 $13 M Below-Grade Parking 49 K $160 $8 M Underground Loading

City Overpass Financing Type Amount G. O. Bond$25 M Interest Only Interest Annual PMT Maturity 4. 00% $1 M 7 years

Sources and Uses Sources • Debt • Loan • Equity $108 M • City: $26 M • TIF $3 M • Replacement: $6 M • Oceanic Fund: $34 • Total: $170 M • Land: • Improvements: • Interest & Fees: Total: $37 M $123 M $10 M $170 M

Cash Flow Analysis Reversion Operational NOI: $14. 3 M - DS: ($8. 8 M) BTCF: $5. 5 M Sales Price: $243 M - Selling Exp: $(4 M) NSP: $240 M - Loan Balance: ($121 M) Equity Out: $119 M

TIF Financing TIF FINANCING - $3 M $600 K 19% $2. 5 M 81% Amphitheatre Bus Station IF: No TIF Financing Oceanic Equity Outlay IRR ($37 M) 16. 9%

Partnership Cash Flows Keating (39%) Replacement Co. (11%) Oceanic Equity (50%) 0 1 2 3 4 5 IRR (27 M) - - 5. 3 M 1 M 43 M 14% (7 M) - - 1. 5 M 300 K 12 M 14% (34 M) - - 6. 8 M 1. 4 M 67 M 18% Note: Year 5 CF’s show value after promote

Interest Rate Sensitivity

Base Rental Rate Sensitivity

FAR Sensitivity

Halsey Plaza 1

The Ascension Suites 3

Flagstaff Hall 4

Bus Station 4