Kpmg Cbre Tenant Advisory Process – Phase 2 Execution

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Kpmg Cbre Tenant Advisory Process – Phase 2 Execution 2009 Total demand ±2.56 MSF 2010 Market on Total demand ±5.2 MSF Real Estate, 2% Legal, 20% 2011 Media, 3% Total demand ±6.4 MSF Technology, 24% Health, 2% 67 Tech Tenants Social Service, 3% Online, 1% Real Estate, 2% Online, 1% ±1.248 MSF the Move Financial, 15% Social Service, 2% Unknown, 5.7% Real Estate, 1.3% Unknown, 4% Media, 2% Construction, 2.4% Health, 4.1% Retail, 4% Education, 4.0% Technology, 26.9% • In 2011 there has been 430,000 SF of Public Service, 5% Financial, 15% Key Drivers positive absorption. We haven’t finished Public Service, 6.2% Education, 10% 93 Tech Tenants the year with positive absorption since • Crafting a plan to meet your goals Education, 11% Business Services, 14% ±1.79 MSF Strategy- 2007. Retail, 6.3% 20% • What’s right for your success • Availability has dropped 260 basis points Fit- Occupancy from 20.4% to 17.8%. Technology, 17% 34 Tech Tenants Public Service, 10% • Costs- Know the outcome 15% Business Services, 14% ±435,000 SF Legal, 8.6% • Vacancy is down 20 basis points to • Risks- Understand what’s at stake 15.5% Legal, 12% Financial, 19.6% Options Recommendations 10% • Market- See the opportunities and traps San Francisco CBD Business Services, 12.4% Rental Rates Inflation (%) 1998-2012 • Existing lease has value 5% Base Case • Timing critical 0% Morgan • Rent impact on Gensler value Economic Forecast & Timeline • -5% Scenario 1 No downside SAN FRANCISCO DT Renewal -10% Stanley Position San Francisco Downtown ::TROPHY BUILDING VIEW SP Four-Year Vacancy & Rental Rate Projection 2 Harrison Street Scenario 2 Moody’s Economy.com | Job Growth Forecast Buy/Lease ACE REPORT -15% 60 • No property vacancy 735 Battery Street Scenario 3 -20% • Comps support $55/ RSF rent (Pushing rents) Financial District Economy.com Projected Annual Job Growth 220 Montgomery Street Scenario 4 55 2001 • Market trending to their favor (No fear) CB RICHARD ELLIS, INC. VIEW SP 2002-25% 40% 2011-13 Civic Center ACE 2003 2004 2005 2014-16 2.5% 101 California Street, 44th Floor • 2006Valuations soaring 35% VACANT 1998 2007 1.8% 1355 Market Street AV 1999 2008 San Francisco, CA 94111 AILABLE NEXT 6 MONTHS 2000 2001 50 • Prime Property Fund 2009(low leverage, high yield) 30% $80 2002 2003 2010 AprilM AVAILABLE AFTER 6 MONTHS 2004 $71.22 ay 2005 June 2012 2006 25% $70 July Au 2007 g Sept www.cbre.com/sfdt SUBLEASE AVAILABLE Annual Rent Inflation (%) 2008 Oct Nov 2009 20% $50.42 $60 Dec 22,642 2010 Jan FebM 45 $30.35 $38.89 arch AprilM 15% 15.3% $50 Jon Wittemyer ay June 2013 5,988 $32.34 July 14.9% AugS 10% $40 ept Brad Werner KPM Oct NovD $25.07 ec 40 15,520 60 12.6% Recommended Site Selection JanF Shap Roder 5% $30 17,646 G eb 14.7% Period 29,396 0% $20 7,031 PricewaterhouseCoopers 2000 2001 2002 2003 7.0% 2004 $10 35 55 2005 2006 Site Selection Three Embarcadero Center 2007 2008 3,271 TOTAL VACANCY % 2009 2010 2011 2012 3.4% AVERAGE ASKING RENT 2013 2014 $0 Floors 17-22 & partial 23rd 2015 2016 7,000 Page 1 Documentation 165,784 RSF 30 26,117 50 Design & Construction • $60/ RSF - anticipated rent 26,118 LXD 6/30/2020 • Minimal capital contribution Avg Rent over term: $43.00 FSG 7,462 Direct lease from Boston Properties • Constrained expansion • Sub - $30/ RSF rate 25 Gensler and CBRE opportunity 45 • $225/ RSF acquisition cost 10,271 CB RICHARD ELLIS, INC. • Excellent views • Residual participation • $30/ RSF rate Building A Successful Partnership 1,200 22,083 101 California Street, 44th Floor • Desirable “look” 20 700 • Brick and timber • High ceiling 5,275 13,970 40 Ernst & Young San Francisco, CA 94111 560 Mission Street • Building signage • Large floor plate • Low $30’s/ RSF rate 22,314 www.cbre.com Floors 14-17 • Appeals to old and new • Large floor plate 1,452 15 22,313 35 86,650 RSF • 22,314 • Full floor efficiency “Tech” location 13,927 LXD 9/30/2017 • 22,424 Darin Bosch Trail blazing 20,000 Avg Rent over term: $32.00 FSG • Tax incentives 10 22,300 30 Ken Gilbert SEGMENT 1 2,878 Sublease from JP Morgan Chase Brian Talbot 5 PROJECT ORGANIZATION 17,860 22,133 25 SEGMENT 2 (1 WEEK - FEBRUARY 14 to FEBRUARY 18) 1 4,055 20 RFP DEVELOPMENT LATHAM 1 MARITIME PLAZA & 15 KPM WA Year Built/Renovated: 101 CALIFORNIA ST G (2 WEEKS - FEBRUARY 21 to MARCH 4) TKINS LLP SEGMENT 3 CBRE TENANT ADVISORY PROCESS – PHASE 2 EXECUTION Owner: 1967/1990 . 555 CALIFORNIA ST 21,397 REVIEW Morgan Stanley Year Built/Renovated: APPROVAL PREPARE RFP FOR Anchor Tenants: Del Monte Corporation, 1982/2002 . 10 PROCESS ARCHITECTURAL Owner: ISSUE RFP FOR Farallon Capital Management Total NRA: Hines Year Built/Renovated: 600 MONTGOMER SERVICES PROGRAMMING Deloitte RECEIVE PROPOSALS Anchor Tenants: 1969/1971 SERVICE OPTION DEVELOPMENT Average Floor Plate Size: 515,069 Owner: Y ST REVIEW WORK AND SHORT LIST Morgan Stanley, . 555 Mission Street PLAN & KEY 21,049 Merrill Lynch Vornado Realty Trust Year Built/Renovated: REVISE WORK FIRMS Total Available %: Total NRA: 1 MARKET - SPEAR 5 OBJECTIVES Anchor Tenants: PLAN & DEVELOP INTERVIEW Total View NRA: 1.3% 1,200,000 Goldman Sachs, Owner: 1972 Floors 4-7 and 10-15 CONTRACT FOR (4 WEEKS - MARCH 7 to APRIL 1) Average Floor Plate Size: SCHEDULE ARCHITECTS Morgan Stanley, BofaA KICK-OFF PROGRAMMING 231,000 25,064 Total NRA: AEGON USA Realty Advisors, Inc. 1 MARKET - STEU 166,435 RSF View Available %: Total Available %: Anchor Tenants: Year Built/Renovated: MEETING SERVICES Average Floor Plate Size: 1,459,977 Bank of America, ART FORM CORE & 0.6% Total View NRA: 12.2% Owner: 1976 LXD 6/30/2026 URS Corporation FOUR EMBARCADERO 1 EXTENDED TEAM UPDATE REVIEW FINAL SEGMENT 4 Total Available %: 28,627 Total NRA: Year Built/Renovated: View Available %: 480,000 Morgan Stanley MARKET WORK PLAN & 1976 Avg Rent over term: $51.50 FSG PREPARE 6.0% Average Floor Plate Size: 471,081 Anchor Tenants: ANALYSIS SCHEDULE 22.2% Total View NRA: Salesforce.com, Owner: PRESENTATION Year Built/Renovated: SCHEDULE 64,000 Total Available %: 10,400 Morgan Lewis Morgan Stanley Direct lease from Tishman Speyer DETERMINE NEED SPONSOR REVIEW SCHEDULE INTERVIEW View Available %: Total NRA: KICK-OFF REVIEW WITH Anchor Tenants: Owner: 1967 FOR OUTSIDE MEETING WITH USERS COMPARATIVE ANALYSIS OF OPTIONS 10.6% Total View NRA: 19.8% 863,893 Capital Group Co., SPONSOR Average Floor Plate Size: CONSULTANTS ESTABLISH ROLES Sedgwick et al. LLP Boston Properties, Inc. DEVELOP RFP View Available %: 89,029 Total NRA: & RESPONSIBILITIES REQUIREMENTS Total Available %: 19,000 Anchor Tenants: PREPARE REAL 498,872 Sheppard, Mullin, Richter & BEGIN PROGRAMMING 3.7% Avg. Floor Plate Size: ESTATE RFP (INCLUDING FINANCIAL ANALYSIS) Total View NRA: 6.6% Hampton LLP, Marsh & McClellan REVIEW REAL 16,000 Total NRA: REVIEW BASELINE Total Available %: ESTATE RFP CORE TEAM View Available %: 273,000 861,017 DATA 47.6% Average Floor Plate Size: MEETING WITH Total View NRA: PRESENT 3.4% 20,751 MARKET UPDATE SPONSOR CORE TEAM 208,000 Total Available %: PREPARE LIST SEGMENT 5 View Available %: MEETING WITH (4 WEEKS - APRIL 4 to APRIL 29) 32.7% OF OPTIONS SPONSOR REVIEW RFP PROCESS 11.9% Total View NRA: AND SCHEDULE W/ View Available %: 399,945 SPONSOR DEVELOP NEGOTIATIONS AND TRANSACTION STRUCTURING 57.6% PROPERTY SELECTION ISSUE REAL ESTATE RFP TOUR FACILITIES EVALUATE CRITERIA HOST BIDDERS SUSTAINABILITY CARBON PREPARE PUBLIC CONFERENCE FOOTPRINT FOR EACH RECEIVE AND DETERMINE COSTS NOTICE FOR RFP ISSUE PUBLIC REVIEW PROPOSALS OPTION TO IMPROVE TO NOTICE OF REAL DEVELOP LIST OF LEED STANDARD CONFIRMING OPTIONS (5 WEEKS - MAY 2 to JUNE 3) H ESTATE RFP y TOUR CONFIRMING SCHEDULE d DETERMINE BUILDING e 5 INTERVIEW W/ S PREPARE PRESENTATION OPTIONS CORE TEAM t EFFICIENCY FOR EACH re MEETING WITH e FOR EMPLOYEES USERS t PREPARE PRELIMINARY SEGMENT 6 P PRESENT PROCESS SPONSOR CORE TEAM OPTION ie KEY ACTIVITY & PUBLIC DEVELOP MTC/BATA r TO EMPLOYEES MEETING WITH STACKING PLAN ie INVESTMENT ANALYZE r AND PUBLIC MTC/BATA APPROVE SPONSOR CONFORMING OWN & PREPARE “COUNTER 4 CRITERIA 1 KEY ACTIVITY INVESTMENT CRITERIA LEASE PROPOSALS PROPOSAL” FOR KEY ACTIVITY ANALYZE P PREPARE P ie LANDLORD’S CAPITAL EACH OPTION ie r • Prepare the Real Estate RFP “NEGOTIATION POINTS” r 4 4 MEET W/ LANDLORD Pie 3 STRUCTURE r 4 3 1 FOR EACH OPTION A Q 7 / IDENTIFY KEY TO REVIEW PROPOSALS REVIEWS AND APPROVALS U A TIC 2 • The Core Team is reformed and Extended Team members are identified • Use established facility and location criteria to DUE DILLIGENCE DEVELOP FINANCIAL P ARK FISHERMAN’S Bay Cruises • Review RFP process with sponsors Red & White Fleet ISSUES ANALYSIS PREFORM PRELIMINARY RECOMMEND SHORT LIST • The work plan is review and a project schedule is established develop the RFP • Review project scope and process with employees and public “DUE DILIGENCE” DRAFT “BEST” & P DEVELOP COSTS/ (4 WEEKS - JUNE 6 to JULY 1) WHARF Pier 39 FOR EACH OPTION “FINAL” REQUEST CORE TEAM LEAVEN • Establish RFP Schedule, process and evaluation • Issue RFP ECONOMIC JEFFERSON ST. T MEETING WITH T H • It is important to determine how prescriptive the RFP process REVIEW PRELIMINARY M E Pier 35 J ASSUMPTIONS H SEGMENT 7 A E P P O A M Underwater Y SPONSOR CORE TEAM Y BA N S W W SCHEDULE REVIEW DUE DILIGENCE C R orld D able The Anchorage L C c O criteria The C annery Travelodge A E MEETING WITH aribbean Car ward Johnson O DETERMINE COMMUTE Ho D WITH SPONSORS & ISSUES WITH LANDLORD E S N needs to be given legal requirements and Agency policy • Prepare and issue public notice of RFP REVIEW FINANCIAL A L Tu ORT ER SA N F RA N C ISCO M ARITIM E N AT IO N r na R P O • Retain Architectural Programming Firm TIME IMPACT FOR MTC/BATA FINANCE MTC/BATA REVIEW SPONSOR PREPARE “PURCHASE H ISTO R IC PA RK roun P ANALYSIS AND N ational Maritime Museum d P P P H 3 • It is also important to decide whether to issue an RFP for purchase FINANCIAL ANALYSIS APPROVE SHORT LIST MEET WITH LANDLORDS & SALES” AGREEMENT 600 400 200 S BEAC H 3 EACH SITE DUE DILIGENCE AND CLOSING (FOR PURCHASE) ST.
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