Macy's Redevelopment Site Investment Opportunity

Home , 900 Biscayne Bay, Burdines, Flagler Street, Marquis Miami, Met 3, Miami Center

Macy’s Redevelopment Site Investment Opportunity JOINT VENTURE OR 100% SALE

FLAGLER STREET & MIAMI AVENUE, DOWNTOWN MIAMI

CLAUDE PEPPER FEDERAL BUILDING TABLE OF CONTENTS

EXECUTIVE SUMMARY 3

PROPERTY DESCRIPTION 13

CENTRAL BUSINESS DISTRICT OVERVIEW 24

MARKET OVERVIEW 42

ZONING AND DEVELOPMENT 57

DEVELOPMENT SCENARIO 64

FINANCIAL OVERVIEW 68

LEASE ABSTRACT 71

FOR MORE INFORMATION, CONTACT:

PRIMARY CONTACT: ADDITIONAL CONTACT: JOHN F. BELL MARIANO PEREZ

Managing Director Senior Associate [email protected] [email protected] Direct: 305.808.7820 Direct: 305.808.7314 Cell: 305.798.7438 Cell: 305.542.2700

100 SE 2ND STREET, SUITE 3100 MIAMI, FLORIDA 33131 305.961.2223 www.transwestern.com/miami

NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IS MADE AS TO THE ACCURACY OF THE INFORMATION CONTAINED HEREIN, AND SAME IS SUBMITTED SUBJECT TO OMISSIONS, CHANGE OF PRICE, RENTAL OR OTHER CONDITION, WITHOUT NOTICE, AND TO ANY LISTING CONDITIONS, IMPOSED BY THE OWNER. EXECUTIVE SUMMARY MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

Downtown Miami CBD Redevelopment Opportunity - JV or 100% Sale Residential/Office/Hotel /Retail Development Allowed

POTENTIAL FOR UNIT SALES IN EXCESS OF $985 MILLION

The Macy’s Site represents 1.79 acres of prime development MACY’S PROJECT land situated on two parcels located at the Main and Main Price Unpriced center of Downtown Miami, the intersection of Flagler Street 22 E. Flagler St. 332,920 SF and Miami Avenue. Macy’s currently has a store on the site, Size encompassing 522,965 square feet of commercial space at 8 W. Flagler St. 189,945 SF 8 West Flagler Street (“West Building”) and 22 East Flagler Total Project 522,865 SF Street (“Store Building”) that are collectively referred to as the 22 E. Flagler St. 1.08 Acres “Property” or as the “Macy’s Site”. Site Size 8 W. Flagler St. 0.71 Acres Macy’s flagship South Florida store is operating under a lease Total Project 1.79 Acres expiring in March 2018 on an absolute NNN basis, while the 100.0% West Building is subject to a separate land lease that runs Percentage Leased through November 2016, and is partially used by Macy’s. Macy’s In-Place NOI $2,085,725 will be vacating the property at the end of their lease and Lease Expirations Macy’s Store 22 E. Flagler St. 3/31/18 moving to the new Miami World Center project. West Building 8 W. Flagler St. 11/1/16 The Property is one of the most desirable redevelopment opportunities in all of the CBD--with frontage on Miami Avenue, JV Interest Partnership is 50% JV Equity with a Devel- Preference oper/Invester Flagler Street, and South First Street--and offers an array of potential high return development opportunities ranging from residential condominiums, apartments, office space, and retail 100% Sale will be Considered Also an Option space.

West Site ready for immediate development, while reaping steady and predictable income from Macy’s

CLAUDE PEPPER FEDERAL BUILDING

4 MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

The allowed density can support a condominium project of up to $985 million of sale value on the two sites, based on an average unit size of 1,000 SF applied to a sale price of $550/SF.

INVESTMENT HIGHLIGHTS

WORLD CLASS REDEVELOPMENT OPPORTUNITY The Macy’s Site is one of the most desirable redevelopment parcels in the Miami CBD, and allows a mixed use project with a massive intensity of use providing a developer with significant flexibility in creating a World Class project as their vision deems fit. Residential, Office, Lodging, and Retail are all allowed by right. The current lease with Macy’s offers investors a stable and predictable income stream during preparations for redevelopment.

EPICENTER OF DOWNTOWN “MAIN AND MAIN” LOCATION The Macy Site’s high profile location is at the southwest corner (“West Building”) Immediate Access to All and the southeast corner (“Store Building”) of Flagler Street and Miami Avenue, with frontage along South 1st Street as well. The buildings are directly connected Points of Downtown and to the Miami Avenue Metromover station, providing immediate access to the wealth of amenities in the Downtown/Brickell central business district, including luxury condos, hotels, nightlife, and restaurants-- - a strong draw for both Brickell via Metromover potential residents, office tenants and retailers.

West Flagler Street Barlington Group East Flagler Street Sublease

Street Level Retail

Commercial Macy’s Store Building and and Office Building

Ground Level South Miami Avenue Retail Skybridge

Street Level RetailStreet 8 West 22 East Flagler Street Flagler Street

Elevated Street Level Retail Metromover Station

Southwest 1st Street Southeast 1st Street

5 MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

INVESTMENT HIGHLIGHTS (CONT’D)

FLAGLER STREET FRONTAGE

Flagler Street is the dominant commercial corridor of Downtown Miami, and is the office and retail main street for the market. Amenities abound along this renowned corridor, including numerous high grossing retailers, restaurants, financial institutions and professional offices. The location is the center of Government, with the immediate area home to county and federal courthouses as well as the Miami-Dade County Government Center.

6 MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

INVESTMENT HIGHLIGHTS (CONT’D)

ROBUST OFFICE MARKET WITH SUPPLY CONSTRAINED INVENTORY Demand for office space is strong, with no new office construction and a defined inventory with few available sites, creating the perfect recipe for near term rent spikes and stabilized market occupancy. The location, at the center of Downtown, footsteps from the Courthouses, and at the center of Government, is ideal for an office component of new development on the Macy’s Site.

MACY’S OFFERS PREDICTABLE INCOME WHILE DEVELOPMENT IS PLANNED The Macy’s Site is under two leases, the east parcel is leased to Macy’s and expires in March of 2018 and the ground lease on the west parcel expires in November of 2016. The combined net income from the leases to the owner is $2,085,725. Macy’s will be moving to a new site at Miami World Center upon expiration of their lease.

RENAISSANCE OF DOWNTOWN INTO “24/7” GLOBAL CITY The proliferation of high quality residential and a blossoming amenity base continues to attract a significant expansion of residents living in the CBD, which in turn intensifies demand for office space in this evolving 24/7 City. Seasoned business professionals, young professionals, and international visitors have all chosen to live, work and play in Miami’s urban center because it offers the infrastructure, connections, and lifestyle options that result in a true urban environment in a self contained community. The amenity base includes top restaurants, name brand retailers, grocers, bars, and entertainment venues. Confidence abounds in the market, with the Property ideally located at the epicenter of the expanding amenity base.

7 MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY ABUNDANCE OF AMENITIES AND LOCATION CONVENIENCE

CLAUDE PEPPER FEDERAL BUILDING

8 MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

INVESTMENT HIGHLIGHTS (CONT’D)

INTENSE RESIDENTIAL DEMAND Given the intense demand from both local and foreign buyers for residential in the Downtown and Brickell markets, it is likely that residential condos will be the dominant component of any new development on the site.

>> Accelerated absorption of the condo inventory has emanated not only locally from professionals attracted by the urban lifestyle, but also from Northeast US residents looking to replicate a vibrant urban lifestyle in a tropical environment, as well as a significant demand base from Latin America and Europe.

>> Accelerated absorption of the condominium inventory has emanated from local professionals attracted by the urban lifestyle, but also from a significant demand base from Latin America and Europe, as well as Northeast US residents looking to replicate a vibrant urban lifestyle in a tropical environment.

>> The 23,000 Downtown condominium units built since 2003 are almost fully absorbed, with 95% occupancy - up from approximately 62% four years ago, according to the Downtown Development Authority. The market is ripe for new residential development on such a prime site. FOREIGN “ALL CASH” CONDO BUYERS The foreign-Buyer market has intensified demand for residential condominiums and continues to outstrip supply. The robust demand from Latin America, Canada and Europe largely involves high quality buyers prepared to pay all cash for their units, and have considerably strengthened the market, resulting in a transformation of the buyer pool now dominated by cash buyers.

CLAUDE PEPPER FEDERAL BUILDING

9 MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

PROPOSED JOINT VENTURE TERMS

The Seller (“Partner”) is seeking to retain a 50% interest in the property and sell the remaining 50% percent equity interest to an outside developer/investor.

The seller will also consider a 100% interest sale of the Property. The preference to remain as an ownership partner is driven by the Sponsors’ strong long term belief in the redevelopment opportunity and desire to reap anticipated further upside.

SPONSOR/PARTNER OVERVIEW Aetna Realty and United States Realty & Investment Company (U.S. Realty) are two firms with one goal, seeking growth opportunities through real estate investments. Aetna is a private equity investment company focus primary on real estate-related assets and investment instruments. Our firm’s opportunistic investment approach has allowed it to acquire and manage numerous, successful national and international assets.

Over the past twenty years, Aetna Realty has successfully invested in diverse and complex properties. Headquartered in New York City, Aetna Realty has regional offices in Chicago, Florida, Nevada, New Jersey, Pennsylvania, Phoenix, Texas, Wisconsin & Canada. Aetna Realty has national presence and a global view.

The firm’s team provides committed investment and captive asset management capabilities with a strong history of optimizing value. Our professional staff provide a unique combination of finance, construction, repositioning, acquisition and dispositions, leasing, management and operations of real estate assets to exploit financial market inefficiencies, mitigating risk and enhancing equity returns.

Aetna Realty provides comprehensive management to ensure the highest level of strategic planning for our portfolio of properties. Our property managers work with our asset management team to reduce operations costs, provide quality services to the tenants, achieve maximum income and appreciation of the property values. We are dedicated to having efficient, complete, and service- oriented professionalism that satisfies all of our real property needs. This includes operations, project management, preventative maintenance, financial reporting and accounting.

Web site: http://www.aetnarealty.com

10 MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

DOWNTOWN MIAMI / BRICKELL MAP

Miami Arsht International Performing University of 14th Art and Design To Miami Beach 1st 1st Arts Center

Miami

1st Resorts World

2nd 13th 13th 13th Herald 2nd Macarthur

Miami A1A

1st 95 1st 12th 12th 12th Perez Art Museum 5th 395 11th 2nd Musuem 6th 11th 11th Park 11th 11th Miami Frost Museum of Science

10th 1st Miami2nd World Center

1st 1st 9th 9th 9th 2nd Proposed 8th Convention Center

5th 7th American Airlines Arena 6th 6th

1st Miami Culinary Port 1st

All Aboard Florida Miami Institute American (Railroad Station) Miami Dade Bayside Market Place 4th College

Biscayne Government Center 2nd 3rd

1st 886 North River Centro (Condos) 2nd 3rd

1st County Flagler Bayfront Park Courthouse 3rd 1st Flagler Flagler Caribbean

1st e 1st 1st

1st 2nd 2nd 1st Met 3 (Apts./Whole Foods)

1st 970 3rd 3rd Met Square (Movie Theater/Retail) 4 h BiscayneBoulevard 4th One Brickell (Mixed Use) 5th Miami Circle Park Brickell City 5th

6th Centre Miami 6th

(Mixed1st 1st Use) 7th Brickell Key

4th Brickell 8th 7th Park

6th 3rd 9th 9th 1st 9th 8th r 10th 10th 10th Mary Brickell 11th 11th Village (Mixed Use) 15th

5th 1st 12th 12th 18th 18th 17th 13th 972 4th 13th 14th Brickell Bay

3rd 2nd 1st 14th 17th 15th 14th 20th 18th

19t 16th h 14th 21st 2nd 18th 18th Brickell 15th 11 22nd 1st 19th 1

23rd 20th Miami

21st

22nd

23rd

24th MACY’S SITE MIAMI, FLORIDA EXECUTIVE SUMMARY

CLAUDE PEPPER FEDERAL BUILDING

THE OFFERING PROCESS The Property is being offered for sale to principals only, subject to limiting conditions described in this Offering Memorandum and the Confidentiality Agreement. Potential purchasers should recognize the following:

Property Tours: Interested purchasers should contact broker to arrange a Property tour.

FOR MORE INFORMATION, CONTACT:

PRIMARY CONTACT: ADDITIONAL CONTACT: JOHN F. BELL MARIANO PEREZ Managing Director Senior Associate [email protected] [email protected] 305.808.7820 305.808.7314

100 SE 2ND STREET, SUITE 3100 | MIAMI, FLORIDA 33131 | P: 305.808.7310 | www.transwestern.com/Miami

No warranty or representation, express or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to omissions, change of price, rental or other condition, without notice, and to any listing conditions, imposed by the owner

12 PROPERTY DESCRIPTION MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

PROPERTY OVERVIEW

POTENTIAL FOR RESIDENTIAL SALES IN EXCESS OF NEARLY $975 MILLION

The 1.79 acre Macy’s Site encompasses two parcels ideal for redevelopment located at the epicenter of Downtown Miami. The Macy’s Site is comprised of the 0.71 acre parcel at 8 West Flagler Street (“West Building”) and the 1.08 acre site located at 22 East Flagler Street (“Macy’s Store Building”). South Miami Avenue runs through and separates the parcels, which also enjoy frontage along South 1st Street.

The Macy’s Site is one of the most desirable redevelopment opportunities in all of the CBD--with frontage on Miami Avenue, Flagler Street, and South First Street--and offers an array of potential high return development opportunities ranging from residential condominiums, apartments, office space, and retail space. A mixed use project incorporating a myriad of development scenarios is possible due to the market’s strong residential and tenant appeal for a variety of residential and commercial uses.

Building Size Land Size Improvement 8 W Flagler Street 158,832 SF 0.71 Acres 8-story Commercial Building

22 E Flagler Street 312,412 SF 1.08 Acres 10-story Macy’s Store and Offices

14 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

To Brickell Government Center Metro Rail/Metromover Miami Avenue Station Metromover Station

Riverwalk Metromover Station

ON-SITE METROMOVER STATION A Metromover Station is incorporated into the south section of the two sites along First Street. The Metromover is elevated above Miami Avenue, and conveniently empties onto the Property. This is a key distinction for the Property, offering any residents or tenants of future development direct and immediate access to all parts of Downtown and Brickell via the Metromover station.

EXISTING IMPROVEMENTS Collectively, the “Property” comprises 522,865 square feet of space within two retail/office buildings.

BUILDING SIZE (SF) LEASE EXPIRATION LESSEE ANNUAL INCOME West Building 158,832 11/1/2016 Cheatham/Meeks $29,591 8 W Flagler Street

Store Building 312,412 3/31/2018 Macy’s $2,080,000 22 E Flagler St Site Building Total 471,244 Basements* 47,041 Bridge/Miami Ave* 4,580

Basement/Bridge 51,621 Total SF 522,865

*Square footage includes basement under both buildings, underground “tunnel” under Miami Ave, and skybridge over Miami Ave. 15 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

MACY’S STORE BUILDING The Macy’s Store Building is located on the southeast corner of Flagler Street and Miami Avenue, literally the center of Downtown Miami. Macy’s Department Store (formerly Burdines) has served as the center point of Downtown’s thriving retail corridor. The Store Building consists of ten (10) fully sprinklered floors totaling 312,412 square feet, excluding basement space. The building contains four (4) elevators, with marble finishes along the elevator bank walls. The first four (4) floors contain the retail department store, and have a combination of tile, wood and carpet flooring. In addition to the elevators, escalators provide vertical access to floors 2-4 in the department store. The 5th and 6th floors are accessible only via elevator, and house Macy’s Southeast Regional Offices and Women of Tomorrow Mentor and Scholarship Program (5th), as well as Financial Federal Credit Union (6th), respectively. The remaining upper floors have smaller floorplates, and are currently not utilized.

Macy’s will be vacating their lease upon expiration in March of 2018, and move to the Miami World Center project. The income from the Macy’s Lease is paid to the owner of the site, and is the interest being sold in this offering.

16 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

MACY’S

17 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

WEST BUILDING The West Building is located on the southwest corner of Flagler Street and Miami Avenue, and consists of approximately 158,832 square feet on eight (8) floors. This building is connected to the Macy’s Store Building via a skybridge over Miami Avenue accessible from the 3rd and 5th floors, as well as through a “tunnel” that runs under Miami Avenue. The West building is currently occupied by ground floor retail tenants, with the upper floors currently vacant, save for the 3rd and 5th floors that are partially utilized by Macy’s. The skybridge access from the 3rd floor of the Store Building leads to the Mattress department located in the West Building, while the 5th floor access from the skybridge leads to portion being used by Macy’s Southeast Regional Offices. Also of note, certain mechanical systems that service the Store Building are located in the West Building, with Macy’s responsible for maintenance and repair (but not replacement).

The portion of the site fronting Miami Avenue and Flagler Street is subleased to Barlington Group, that has in turn leased out the store fronts to a variety of retailers, a restaurant and night club. The ground floor retail tenants include Avenue D Jazz and Blues Club, Cortes Restaurant, Dr. G’s Weight Loss Center, Café Froots, The Bistro Café, Le Chat Noir Wine and Cheese, and Quarterman’s Ice Cream Parlor.

There is a first position ground lease that expires in November of 2016, with the income from said ground lease paid to the owner of the site. This is the interest being sold in this offering.

SITE PLAN

West Flagler Street Barlington Group East Flagler Street Sublease

Street Level Retail

West Commercial Macy’s Store Building and and Office Building

Ground Level South Miami Avenue Retail Skybridge

Street Level RetailStreet 8 West 22 East Flagler Street Flagler Street

Elevated Street Level Retail Metromover Station

Southwest 1st Street Southeast 1st Street

18 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

WEST BUILDING

BARLINGTON SUBLEASE RETAIL - WEST BUILDING

19 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

ZONING AND USES A development singly focusing on residential condo development could support nearly $985 million in sales if developed to maximum density. Under the new zoning code, Miami 21, the site is zoned T6-80 Urban Core. This designation offers a multitude of development opportunities including high density multifamily/condominium, office, retail, and hospitality. Details regarding development opportunities are further discussed in the Zoning and Development section of this offering that follows the Property Description, with a summary of maximum density of development outlined in the following chart. Due to setback requirements and the irregular shape of the lots, actual buildable square footage may vary from the chart below, which does not include bonus square footage either.

22 E. FLAGLER LOT 1 8 W FLAGLER BUILDING TOTAL SITE LOT 2 Residential/Condo/Lodging Total SF 1,125,432 SF 748,944 SF 1,874,376 SF Total Units (Condo) 1,080 710 1,790 Total Units (Lodging) 2,160 1,420 3,580 Commercial: Office/Retail Total SF 1,125,432 SF 748,944 SF 1,874,376 SF

ICONIC REDEVELOPMENT OPPORTUNITY The Property is ideally located at the center of the CBD, and is one of the most coveted redevelopment sites in the market. Site attributes providing the asset a competitive market advantage include a location that is at the center of Downtown, connected to the Miami Avenue Metromover station, and is walking distance to all the amenities the market has to offer.

Development opportunities on the site abound, with demand intense for both residential and commercial product, as minimal new office space has been constructed during the past few years, nor is any in the pipeline. The office inventory is defined for years to come, with no further construction and few sites available to develop with office.

POTENTIAL DEVELOPMENT OPPORTUNITIES:

• Redevelop the West Building which has a land lease expiration in November 2016 and, upon completion, redevelop the Macy’s Store Building in March of 2018.

• Residential in the form of condos, apartments and hotel is supported by dominant demand, with the lower levels of a mixed use project well suited for office and retail components.

• More residents living in CBD, more demand for office space and residential in this evolving 24/7 City. Support for growth of current income stream and future residential development is optimal.

• The site is truly irreplaceable, and currently underutilized.

20 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

Metrorail

Miami-Dade County Courthouse I-95 Miami Avenue Exit I-95 Miami On-Ramp

Miami Avenue

Flagler Street

OFFICE TENANT/POTENTIAL RESIDENTIAL DEMAND GENERATORS:

• The Property offers a central location to “Everything” – a strong draw for both office tenants and potential residents, and is within convenient walking distance of all the CBD’s luxury condos, hotels, nightlife, and restaurants.

• The 24/7 City Urban Work, Live and Play environment is favored by both prospective office tenants and future residents.

• Public transportation options are exceptional and a strong draw for office tenants and potential new residents, with the Miami Avenue Metromover station attached to the Property, which connects with the Bayside Marketplace, American Airlines Arena, Bayfront Park, the Adrienne Arsht Center, Mary Brickell Village, as well as numerous stops throughout the CBD and Brickell.

• Miami’s reputation as an International Global City provides strong demand for office space by multinational office users and Latin American, European and Canadian residential condo buyers.

21 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

SITE DATA

AREA MEASURES Combined Lot Size: 1.79 acres

AREA MEASURES Store Building West Building Total 22 E Flagler 8 W Flagler Lot Size (SF) 46,893 SF 31,206 SF 78,0899 SF Lot Size (Acres) 1.08 Acres 0.71 Acres 1.79 Acres

ADDRESS 8 West Flagler Street and 22 East Flagler Street Miami, FL 33131

TAX PARCEL NUMBERS 01-0112-020-1070 Both buildings are under the same folio number

PARKING No parking is available on site, however there are several parking garages and surface lots located adjacent to the Property

MACY’S EXECUTIVE OFFICES

22 MACY’S SITE MIAMI, FLORIDA PROPERTY DESCRIPTION

BUILDING DATA

Store Building West Building 22 E Flagler 8 W Flagler YEAR BUILT/RENOVATED 1947/1965 1947/1965 PER COUNTY APPRAISER

FLOOR PLATES: FLOOR PLATE ESTIMATES FLOOR PLATE ESTIMATES Macy’s Store Building West Building 1ST 48,780 1ST 29,443 2ND 48,780 2ND 29,443 3RD 48,780 3RD 29,443 4TH 48,780 4TH 29,443 5TH 48,780 5TH 29,443 6TH 48,780 6TH 6,455 7TH 11,218 7TH 2,582 8TH 3,384 8TH 2,582 9TH 2,567 10TH 2,567 TOTAL 312,412 TOTAL 158,832

COMBINED 471,244

BASEMENT, SKYBRIDGE & TUNNEL SIZE ESTIMATES STORE BASEMENT 17,073 A value of 40% of the estimated floor size has been selected to provide a calculation, but the actual size is unknown.

WEST BASEMENT 29,968 A value of 100% of the estimated floor size has been selected to provide a calculation, but the actual size is unknown.

SKYBRIDGE - 3 FLOORS 3,435 Three floors estimated at 1,145 SF each.

UNDER MIAMI AVENUE 1,145 A value of 100% of the estimated overhead walkway floor size has been selected to provide a calculation, but the actual size is unknown.

TOTAL 48,186

Note: Square footages above are estimates, and neither Owner nor Transwestern make any representations as to the accuracy of the information.

23 CENTRAL BUSINESS DISTRICT OVERVIEW MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

MIAMI CENTRALMIAMI’S BUSINESSCENTRAL BUSINESS DISTRICT DISTRICT OVERVIEW – AN INTERNATIONAL 24/7 CITY The Central Business District (CBD) is the destination for global business as well as a vibrant residential community. The CBD is comprised of two markets: Downtown to the north and Brickell to the south. Downtown is distinguished as the Urban core of the CBD, serving as the traditional center of Government and Law Firms, and is home to the American Airlines Arena, Bayside, Bayfront Park, the new Museum Park complex and the Arsht Performing Arts Center. Brickell is one of the most prestigious business addresses in the State of Florida, and has an international reputation as the Wall Street of Latin America, serving as the first choice for firms conducting business in Latin America and Europe.

LIVE / WORK / PLAY CITY The Macy’s Site is a Miami Central Business District landmark, located at the direct center of Downtown at the intersection of Miami Avenue and Flagler Street. The CBD has experienced a renaissance during the last 10 years, and has emerged as a renowned international city with a thriving commercial and residential base. Seasoned business professionals, young professionals, and international visitors have all chosen to live, work and play in Miami’s urban center because it offers the infrastructure, connections and lifestyle options, which results in a true urban environment and a self-contained community where everything is accessible by foot.

Edgewater Omni

DOWNTOWN BRICKELL

95 Miami River

INTENSE DEMAND FOR RESIDENTIAL UNITS The Macy’s Site is a prime candidate for residential condominium development by local and international developers due to its iconic central location within the CBD, Flagler Street commercial corridor frontage, its incorporation of a Metromover Station on the site, and its strategic location at the center of Downtown. The Property is ideal for new residential development, and its unique location attributes will capture superior market share of the intense demand for new condo units.

The boom in residential development since 2003 has transformed the CBD into a highly appealing urban live and work environment, attracting a vibrant demographic and socio-economic population ranging from young professionals to empty- nesters to international business people and visitors. The expansion of the residential base and 24 hour population spurred a dramatic increase in surrounding amenities and retail uses serving the new residents and existing office users. The Downtown market’s amenity and residential base is within convenient walking distance of the Macy’s Site, which is a strong draw for existing office tenants and future residents.

25 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

INTENSE DEMAND FOR RESIDENTIAL UNITS

Accelerated absorption of the condo inventory has exceeded industry expectations, with demand emanating not only locally from urban professionals attracted by the urban lifestyle, but also from the migration of Northeast US residents looking to replicate a vibrant urban lifestyle in a tropical environment, as well as a significant demand base from Latin America and Europe. Many of these foreign purchasers are all cash buyers, and have considerably strengthened the market, resulting in a transformation of the buyer pool dominated by cash buyers.

• The 23,000 Downtown condominium units built since 2003 are almost fully absorbed, with 97% occupancy - up from approximately 62% three years ago, according to the Downtown Development Authority. • The market is ripe for new residential development on a prime site such as Macy’s.

FOREIGN “ALL CASH” CONDO BUYERS

The aforementioned foreign-Buyer market has intensified demand for residential condominiums and continues to outstrip supply. The robust demand from Latin America largely involves high quality buyers prepared to pay all cash for their units, and this group has fueled the funding of many new projects. A majority of the developers proposing to build new condo towers in the CBD are influenced by these cash buyers and are implementing a deposit structure that is common in Latin America whereby buyers agree to make multiple cash payments during the course of construction, also known as the “Latin America Financing Model,” which allows developers in many instances to self finance through high level of cash payments from buyers in lieu of a construction loan.

• The all cash buyer eliminates the need for developers to seek lender financing of new construction – buyers self finance new projects, enhancing feasibility and profitability of new projects.

• The foreign buyer views Miami as a Global city and the capital of “Latin America.”

Government Center Miami-Dade County Courthouse

Miami River

26 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

WORLD CLASS HOTELS ENHANCE MARKET PERCEPTION AND TOURISM

The Miami CBD encompasses nearly 7,000 hotel rooms, boasting the highest concentration of luxury hotels in the region. The Macy’s Site location is ideally suited for an upscale hotel as a component of new development, with its key location at the center of the CBD’s amenity base and walking distance to office space for business travelers. The CBD is experiencing a growing demand for hotel rooms, and has long been a destination of choice for business travelers, while capturing an entirely new and deep market of leisure travelers.

• The Viceroy hotel is located across the Brickell Bridge at the entrance to Brickell, while JW Marriott Marquis Miami and the Epic hotel offer world-class hotel accommodations in Downtown. Other upscale hotels in the market include the Mandarin Oriental, the Conrad, and the Four Seasons.

• “In season” room rates from the top hotels range from $370 to $1200 per night.

VICEROY EPIC JW MARRIOTT

OFFICE MARKET: MAIN AND MAIN LOCATION The CBD contains the highest concentration of prime office space in South Florida, with the Macy’s Site located at the center of Downtown. Demand for office product is robust and enhanced by the appeal of living and working in an urban environment, highly attractive to employees adverse to Miami’s intensified suburban traffic congestion.

Future residents of a proposed condo on the Macy’s Site can live and work within blocks of their future home, or potentially work and live in a fully integrated office and residential project developed on the Macy’s Site. Meanwhile, existing office tenants are conveniently located in the immediate area of other prestigious businesses and benefit from the location at the epicenter of business.

27 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

DOWNTOWN IS THE FOCUS OF GOVERNMENT

Downtown attracts many of the largest law firms and legal vendors, as it is home to the central offices and departments of the Miami-Dade County government. The Stephen P. Clark Government Center is the central headquarters of Miami-Dade government, which includes the offices of the Miami-Dade Mayor. Downtown is home to many city, county, state, and federal courthouses, jails, judge offices, and law firms. Some of the courthouses in Downtown are the Dade County Family Court, U.S. Court of Appeals Judge, U.S. District Court Clerk, Miami-Dade County Courthouse, Federal Courthouse, U.S. Magistrate Judge, and City of Miami courthouses.

FLAGLER RETAIL - DOWNTOWN’S PREMIER SHOPPING ADDRESS

Historically, Flagler Street has been Downtown’s major shopping street dating back to the 19th century. Today, it is still Downtown’s major shopping street, with the Property, Florida’s flagship Macy’s (formerly Burdines), there since 1912, as well as Miami’s own local department stores: La Época, on Flagler and SE 2nd Av; Alberto Cortes, on Flagler and SE 3rd Av. Flagler Street is also home to many well-known and established jewelers, many of whom have been in Downtown since the early 20th century (i.e.: Morays Jewelers, founded in 1900). This area is called the Miami Jewelry District and comprises four Downtown blocks from Miami Avenue to SE 2nd Av on Flagler Street and NE 1st St.

FLAGLER STREET RETAIL CORRIDOR & COURTHOUSES

CLAUDE PEPPER FEDERAL BUILDING Government Center

Miami-Dade Miami-Dade County Family Court Courthouse Services

Flagler Street Retail Corridor

28 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

GROWING STUDENT RESIDENCY IN DOWNTOWN

Downtown is home to several colleges and universities within walking distance of the Macy’s Site, and students that attend these universities may be an important component of a redevelopment at the Property for residential development. Miami Dade College’s Wolfson Campus is located in the heart of Downtown, at 300 NE 2nd Avenue. The Wolfson Campus has 600 faculty, and provides education to over 27,000 students each year. Part of the Campus is the Miami Culinary Institute located at 415 NE 2nd Avenue. The main Wolfson Campus and the Culinary Institute are both within walking distance of the Property, or are a few stops away via the Metromover. The Miami International University of Art & Design is also located just minutes northeast of the Property on Biscayne Blvd and 15th Street, and is easily accessible via Metromover to the Adrienne Arsht Station. The University provides education to roughly 2,200 students, with programs in design, media and visual arts, fashion and culinary arts.

Miami Culinary Institute Miami International University of Art Design

Miami-Dade College - Wolfson Campus

29 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

BISCAYNE/BRICKELL TROLLEY The transformation of the Miami CBD into a fully-integrated pedestrian-oriented 24/7 urban environment is enhanced by the trolley service that began in April of 2012 and seamlessly connects the entire Downtown and Brickell markets, and gives residents and visitors access to the Health District and Stadium via connecting trolley routes as well. The Brickell/Biscayne route, which begins at the southern end of Brickell and makes its way up to Margaret Pace Park in the Arts District, primarily runs along Brickell Avenue and Biscayne Boulevard.

30 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

METROMOVER Moreover, the elevated rail Metromover is an electrically- powered, fully automated people-mover system that stops at 20 stations throughout Downtown and Brickell. The service is free and the Metromover provides easy access to all regions of the CBD via three connecting lines: the Downtown Loop, the Omni Loop and the Brickell Loop. A Metromover station is incorporated directly into the Macy’s Site, providing future residents or tenants direct access to all regions of Downtown and Brickell. • As many sites in the CBD have been developed with residential, the options for new office development are scarce, and the last wave of office construction is absorbing at a rapid pace.

• The Macy’s Site would be the most desirable business address if new class A office product were to be incorporated into a new development, especially for the region’s prime law firms.

31 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

MIAMI CBD MAJOR PROJECTS MAP

Miami Arsht International Performing University of 14th Art and Design To Miami Beach 1st 1st Arts Center

Miami

1st Resorts World

2nd 13th 13th 13th Herald 2nd Macarthur

Miami A1A

1st 95 1st 12th 12th 12th Perez Art Museum 5th 395 11th 2nd Musuem 6th 11th 11th Park 11th 11th Miami Frost Museum of Science

10th 1st Miami2nd World Center

1st 1st 9th 9th 9th 2nd Proposed 8th Convention Center

5th 7th American Airlines Arena 6th 6th

1st Miami Culinary Port 1st

All Aboard Florida Miami Institute American (Railroad Station) Miami Dade Bayside Market Place 4th College

Biscayne Government Center 2nd 3rd

1st 886 North River Centro (Condos) 2nd 3rd

1st County Flagler Bayfront Park Courthouse 3rd 1st Flagler Flagler Caribbean

1st e 1st 1st

1st 2nd 2nd 1st Met 3 (Apts./Whole Foods)

1st 970 3rd 3rd Met Square (Movie Theater/Retail) 4 h BiscayneBoulevard 4th One Brickell (Mixed Use) 5th Miami Circle Park Brickell City 5th

6th Centre Miami 6th

(Mixed1st 1st Use) 7th Brickell Key

4th Brickell 8th 7th Park

6th 3rd 9th 9th 1st 9th 8th r 10th 10th 10th Mary Brickell 11th 11th Village (Mixed Use) 15th

5th 1st 12th 12th 18th 18th 17th 13th 972 4th 13th 14th Brickell Bay

3rd 2nd 1st 14th 17th 15th 14th 20th 18th

19th 16th 14th 21st 2nd 18th 18th Brickell 15th 22nd 1st 19th 1

23rd 20th Miami

21st

22nd

23rd

24th 32 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

BAYSIDE MARKETPLACE

The Bayside Marketplace is one of the Downtown’s most recognizable retail landmarks. The waterfront two story retail and marina complex includes numerous retailers and restaurants including the Bubba Gump Shrimp Co., Chili’s, Hooters, the Hard Rock Café and a full food court. Opened in 1987, the 230,000 square foot entertainment complex wraps along the banks of Biscayne Bay and attracts nearly 15 million visitors annually. The center stretches from Bayfront Park to the south, to American Airlines Arena to the north, has a dedicated parking garage, and can also be accessed by boat - via the marina, by Metromover - via the College/Bayside station, or by Metrorail - via the Government Center station.

MARY BRICKELL VILLAGE

Located in the heart of Brickell, Mary Brickell Village is a lifestyle retail center that caters to the growing daytime, nighttime and full time population of the CBD. The Macy’s Site has access to Mary Brickell Village directly via the Metromover system. The tenant mix includes restaurants and cafes such as P.F. Chang’s, Starbucks, and the Oceanaire Seafood Room and also features unique dining options such as the Burger & Beer Joint, Rosa Mexicano, Fado Irish Pub, Grinpa Steakhouse, Balans Restaurant along with the renowned Blue Martini Lounge. The center is also anchored by a Publix Supermarket and LA Fitness. Spanning over two full city blocks, the center attracts business professionals, locals, and is a destination retail center attracting customers from outside the region. The air rights were recently acquired by a partnership between LNR Property, LYND Development and BlackRock to develop an upscale rental project known as EnV Mary Brickell Village to contain 390 units.

33 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

RIVERWALK

The riverwalk is a pedestrian friendly public walkway that stretches from the mouth of the Miami River to Museum Park. The lavish walkway is to be filled with museum quality art, lush landscaping, a cascading waterfall, seating areas, and an open café, and will connect popular attractions such as American Airlines Arena, the Perez Art Museum, the Frost Museum and Bayside Marketplace. The plan is to extend this walkway as far south as the Rickenbacker Causeway, serving to truly connect Miami’s Central Business District and help usher in the vision of a walkable downtown.

CENTRO

Centro is a residential tower which broke ground on the site located at 151 SE 1st Street in downtown. The 39 story tower is slated for 352 “loft” condominium units on 39 floors. The available units come in seven (7) unique, open-concept floor plans that allow owners to arrange their space to individual tastes, while minimizing walls and taking full advantage of the floor-to-ceiling windows and views of the city. Units range in size from 500 sf to 1,131 sf. Centro will also be the first tower to feature the only designated “Parkspot” hub located in front of the building, where users of the popular carsharing service car2go will have reserved parking and be able to conveniently begin trips in available vehicles at the property.

Centro

Knight Center Metromover Staion

Hyatt Regency Hotel & Convention Center

34 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

Residential projects are not the only ones taking place. Commercial, retail and necessary amenities to service the influx of residents to Downtown are being developed, including Whole Foods.

METROPOLITON 3 – WHOLE FOODS

Currently under construction at 200 SE 2nd Street, Met 3 was originally slated to be a 74-story residential apartment tower rising above downtown’s first Whole Foods Supermarket. The 36,000 square foot store and adjacent 12-story parking garage opened in January, 2015. The ownership has development rights to build more than 400 units above the high end grocery store and parking garage.

MET SQUARE

Located at 300 SE 3rd Street, Met Square is a four-story atrium-style entertainment and lifestyle complex that will include a movie theater, as well as a diverse roster of retailers, restaurants and entertainment venues. Met Square was originally scheduled to contain a 438’ hotel tower, 570 hotel rooms, a 1,700 seat indoor theater and a 41,000 sf restaurant.

Met 3/Whole Foods

Met Square

35 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

BRICKELL CITYCENTRE (UNDER CONSTRUCTION)

The latest mixed use project to solidify the urban lifestyle of the Miami CBD is the $1.05 billion Brickell CityCentre development from renowned Hong Kong based Swire Properties. Located in the Brickell market just blocks to the south from the Property, CityCentre has an estimated completion date of 2016. Brickell CityCentre is one of several projects that is being developed in response to the heightened demand for residential, hotel, office, and retail space in the Miami CBD. Upon completion, the project will strengthen demand for office space and residential by enhancing an already rich amenity base. With the purchase of 701 Brickell Avenue in mid-2013, the project will now extend all the way to Brickell Avenue, with an 80 story tower reportedly slated for the portion of the site that fronts Brickell Avenue.

HIGHLIGHTS PROJECT STATISTICS • 9.1 acres along South Miami Avenue between • 520,000 sf shopping center 8th Street and 6th Street • 120,000 sf of office space

• 5.4 million square feet of office, residential, • 120,000 sf wellness center hotel, retail and entertainment space, in addition to a two-level underground parking • 800 condominiums in two towers garage that spans seven acres below the • 243 hotel rooms property • 93 serviced apartments • Incorporates key transportation centers with the • 3,100 parking spaces Miami Metromover while offering easy access to Interstate 95. • Phase II - 742,000 sf office tower

36 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

Proposed Developments

MIAMI WORLD CENTER - DESTINATION DISTRICT

• Miami World Center is a proposed high intensity mixed use, pedestrian-friendly project mixing retail, office, hotels and residential buildings of different scales with open spaces to ensure an urban neighborhood feel.

• Billed as the “City within a City,” Miami Worldcenter hopes to set a new benchmark for excellence in modern urban development. Organized around five monumental “districts” - the long axis of 1st Avenue, Worldcircle, Worldsquare, Worldwalk &Worldplaza and 7th Street Promenade - Miami Worldcenter will create a sequence of urban spaces that will establish it as an authentic urban experience. Encompassing nearly 30 acres in Miami’s Park West neighborhood, the development will include retail, office, hospitality, residential and educational uses.

• Macy’s and Bloomingdales recently unveiled plans to open new stores in the Project, expecting to open a 195k square foot Macy’s and a 120k square foot Bloomingdales in late 2016 which would anchor three levels of retail comprising nearly 750k square feet in all in the Mall at Miami Worldcenter. Groundbreaking is scheduled for late 2014. Macy’s will be moving from the Property for sale in this offering.

Proposed Use Legend Retail Office Hospitality Residential Education

37 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

CONVENTION CENTER & HOTEL AT OLD MIAMI ARENA SITE

• 500k sf convention center

• 1800 room 58 story Marriott hotel

• 1500 SF theater

• 2300 car parking garage

• 80k sf outdoor event deck

• Linked directly to the All Aboard Florida Railway via bridges

MDM Group, the developers of the Met Miami Project, have announced plans for a new convention center and hotel will be built on the site of the demolished Miami Arena, and would be the largest hotel in South Florida, totaling 1800 rooms. The project would include a 58 story, Marriott branded hotel rising over a large podium that contains the 500k sf convention center, a 1,500 seat theater and a 2,300 car garage. In addition to the resort-like amenities, including a pool deck with expansive views of downtown and the bay, the property will also include ballrooms, meeting rooms, convention floor space and an 80,000 square foot outdoor event deck. The property will also link via skybridges directly to the All Aboard Florida Railway station to be built across the street, and the Overtown Metrorail station. This project is still in the planning stages, and no timetable has been announced.

ALL ABOARD FLORIDA STATION NW 1ST AVE AND NW 3RD ST

The project is proposed next to mixed use tower at 56 and 70 SW 1st street. The goal of the $1.5 billion All Aboard Florida project is to offer hourly passenger rail service between downtown Miami and Orlando, with intermediate stops in downtown Fort Lauderdale and West Palm Beach, with a travel time of three hours and three minutes. In the future, the plan is to extend the service west to Tampa and north to Jacksonville. In addition to the Miami-Orlando train, All Aboard Florida is also planning a transportation hub that would provide links between the intercity train and the Miami-Dade transit services such as Metrorail, Metromover and Metrobus.

The Miami station and its towers 1.5 million square feet of office space, almost a million square feet in 785 units of residential, 495,000 square feet in 820 hotel rooms, 450,000 square feet of retail, and a 63,000 square foot intercity passenger rail station and concourse. It will have 3,730 parking spaces, a significant reduction from what is required under the zoning code. No timetable has been set for this project.

38 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

GENTING (OMNI MALL / MIAMI HERALD SITE)

To the north in the Downtown region is the Resorts World Miami project, originally involving a $3.1 billion development plan for the Miami Herald site situated on 13.9 acres on Biscayne Bay. Original planned development included:

• 700,000 SF of convention and meeting space which includes a 200,000 SF of column free ballroom space • 5,200 guest rooms distributed among a super-luxury hotel, a contemporary hotel, a family hotel and a convention hotel • Two residential towers totaling 1,000 units • The towers are deigned to sit atop an 8 story podium, where guests would walk through a double story, 250,000 SF luxury retail center, housing more than 50 restaurants, lounges, bars, nightclubs and an entertainment area showcasing South Florida’s music and culture. • Rooftop 3.6 acre outdoor lagoon allowing guests to swim from Biscayne Boulevard to the edge of Biscayne Bay. • A renovated Baywalk, which would begin at the Miami River and run three miles north to Margarat Pace Park, linking Bayfront Park, Bayside Marketplace, American Airlines Arena, Museum Park, the Miami Art Museum, the new Miami Science Museum, the Adrienne Arsht Center and the Omni Center.

The main centerpiece to the resort was initially a potential casino, but has yet to receive legislative approval. The owners, Genting Group, have announced that should they not receive the approvals for the gaming component, they are committed to move forward with the project, but involving a scaled down version which would amount to roughly 10 percent of the original plan. Preliminary plans call for a luxury hotel with fewer than 500 rooms, plus two condo towers. The total space devoted to restaurants and boutiques would be no more than 100,000 square feet. Genting continues to pursue the gaming approval, and is planning on moving forward with the project this year, having already torn the entrance to the former Miami Herald building and two story parking garage next door. A recently announced deal that would have Genting operating 2,000 slot machines and a poker room at the site under Gulfstream Park’s gaming license is under review as of the time of this publication.

ONE BRICKELL

On the site of the recently sold 444 Brickell Avenue Project, the Related Group has announced its preliminary plans. The project is expected to include three skyscrapers rising 80, 70, and 55 stories, respectively, and will encompass more than 4 million square feet, including 2 million sellable square feet. The long term plans for the site call for a $1 billion project that will contain more than 1,200 residential units, more than 200 rooms in a five-star hotel with meeting and convention space, 200,000 square feet of office space, and street-level.

CULTURE - DOWNTOWN ARTS AND ENTERTAINMENT / MUSEUM PARK

With Biscayne Bay as its backdrop, Museum Park represents Downtown Miami’s urban redesign vision. Overall, the cultural renaissance occurring in Downtown Miami also includes: the world-class cultural facilities at the Adrienne Arsht Center for the Performing Arts, the largest of its kind in Florida; the historic Olympia Theatre at the Gusman Center; the American Airlines Arena houses a Waterfront Theatre that can be configured for concerts and events, and is also home to the Miami Heat basketball team; the Perez Art Museum; and the Frost Museum of Science.

39 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

PEREZ ART MUSEUM

Pérez Art Museum Miami (PAMM), a 29-year-old South Florida institution formerly known as Miami Art Museum (MAM), opened it’s a new, state-of-the-art campus in downtown Miami’s Museum Park in December 2013. Designed by world-renowned architects Herzog & de Meuron, the new facility is a model for sustainable museum design and progressive programming. Located alongside beautiful Biscayne Bay and adjacent to the 20-acre Museum Park, PAMM features 200,000 square feet of sprawling galleries, shaded outdoor verandas, a waterfront restaurant and bar, a museum shop, an education center with a library, media lab and classroom spaces, and more.

FROST SCIENCE MUSEUM (UNDER CONSTRUCTION) The Patricia and Phillip Frost Museum of Science is on track for a 2015 opening. The 250k sf complex will reportedly harness energy from water, sun, wind and even museum visitors to power exhibits. The museum will feature a 500k gallon aquarium, a full dome planetarium, interactive exhibits, innovative technology and two additional wings of exhibition space, learning center and cafes. The Patricia and Phillip Frost Museum of Science is also expected to draw over 700,000 visitors to Miami during its first year of opening, and an additional 600,000 visitors on an ongoing annual basis thereafter, showcasing downtown Miami as an urban waterfront destination to new audiences.

40 MACY’S SITE MIAMI, FLORIDA CBD OVERVIEW

ADRIENNE ARSHT CENTER FOR THE PERFORMING ARTS

The Arsht Center, located at Biscayne Blvd. and NE 13th St., is the largest performing arts center in Florida. Between the Sanford and Dolores Ziff Ballet Opera House, the Knight Concert Hall, the Carnival Studio Theater, the Peacock Rehearsal Studio and the Parker and Vann Thomson Plaza for the Arts, the $470 million center can seat over 6,000 people, and plays host to over 400 performances each year. With a Metromover station located directly in front of both the Macy’s Site and the Arsht Center, residents or tenants of redevelopment will enjoy convenient access.

PORT OF MIAMI $2 BILLION EXPANSION

Modern cruising was invented at PortMiami, and today more than 4 million passengers each year vacation from what is known around the globe as the Cruise Capital of the World. With eleven cruise lines homeporting here, PortMiami continues to be the departure destination of choice for cruises to the Bahamas, the Caribbean, Mexico and other destinations. The world’s leading cargo lines transport to the port, with cargo destined for more than 100 countries and 250 ports around the world flowing through this seaport. Due to its strategic location, the port includes among its top ten trading partners as the Far East, South and Central America, Europe and the Caribbean. Over $2 billion in infrastructure improvements are underway to ready PortMiami for the opening of the expanded Panama Canal. The PortMiami Tunnel will link the Interstate system with Port Facilities and the new freight rail link allows direct connection to the Florida East Coast Railway. .

41 MARKET OVERVIEW MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

MIAMI METRO

The Macy’s Site is located in Miami, Florida, just north of the Miami River. The city of Miami is the heart of Miami-Dade County, also known as the Miami-Miami Beach-Kendall Metropolitan Division (“metro”).

The Miami metro is part of a larger economic region often referred to as “South Florida,” but formally known as the Miami- Fort Lauderdale-Pompano Beach Metropolitan Statistical Area (“MSA”). Comprised of Miami-Dade, Broward, and Palm Beach Counties, the MSA is the eighth largest economic region in the United States, with 5.8 million year-round residents and thousands of seasonal visitors. Miami’s reputation as an international-class city should help South Florida achieve the rank of fifth fastest-growing market among the 10 largest MSAs over the next five years, yielding 330,400 new residents.

This section of the Offering Memorandum will analyze the demographic, economic and competitive environment affecting the Property, including identification and analysis of trends in the Miami Metro and Downtown Miami.

Freedom Tower American Airlines Miami-Dade Arena County Courthouse

Government Center

Metrorail

95 Miami River

43 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

DEMOGRAPHIC OVERVIEW

Population: Miami’s Strong Growth to Continue

Over the past two decades, South Florida has been one of the fastest-growing regions in the country. Since 2000, the Miami-Fort Lauderdale-Pompano Beach Metropolitan Statistical Area (MSA), which includes Miami-Dade, Broward, and Palm Beach Counties, has grown by 754,278 residents, an increase of more than 15%. The MSA is now the eighth most-populous geographic region in the US.

POPULATION LEVEL ANNUAL GROWTH AREA 2000 2010A 2014 2019F 2000-2010A 2010-2014E 2013-2019 22 EAST FLAGLER ST.: 5 MILE RING 404,556 439,821 466,069 499,227 0.8% 1.5% 1.4% 22 EAST FLAGLER ST.: 3 MILE RING 171,089 203,641 222,162 241,898 1.8% 2.2% 1.7% 22 EAST FLAGLER ST.: 1 MILE RING 25,780 45,079 54,830 62,947 5.7% 5.0% 2.8% MIAMI, FL 361,314 399,457 423,747 454,421 1.0% 1.5% 1.4% MIAMI-MIAMI BEACH-KENDALL METRO 2,253,365 2,496,435 2,581,623 2,721,930 1.0% 0.8% 1.1% MIAMI-FT.LAUDERDALE-POMPANO BEACH MSA 5,007,564 5,564,635 5,722,514 6,046,549 1.1% 0.7% 1.1% FLORIDA 15,982,377 18,801,310 19,383,475 20,434,286 1.6% 0.8% 1.1% THE UNITED STATES 281,421,942 308,745,538 316,296,988 327,981,317 0.9% 0.6% 0.7% Source: US Census, Nielsen-Claritas

• The area close to the Property has witnessed explosive growth over the past decade. Population within one mile of the Property has more than doubled since 2000, and now encompasses nearly 55,000 residents. • Population in this one-mile ring is forecast to continue increasing at more than double the pace of the surrounding area, bringing in another 8,000 people by 2019. • The Miami-Miami Beach-Kendall Metropolitan Division (“metro”), which encompasses the whole of Miami-Dade County, has taken on about 328,000 new residents since 2000, pushing its population to 2.6 million. • One of the key reasons for Miami-Dade County’s positive growth was foreign in-migration. Over the last four years, the County actually had a net loss of domestic residents to other parts of the US, especially Broward and Palm Beach Counties, as residents sought more affordable housing, but this was largely offset by foreign nationals moving to Miami. • Miami’s reputation as an international-class city provides a continued impetus for strong growth, and the metro is forecasted to increase in size by 140,307 residents over the next five years. • The three-county MSA is projected to be the fifth fastest-growing market among the 10 largest MSAs over the next five years, yielding about 325,000 new residents.

TEN LARGEST ECONOMIC REGIONS - POPULATION GROWTH FORECAST Population Estimate Annual Growth 2014 2019 2014-2019F Houston-The Woodlands-Sugar Land, TX 6,316,454 6,919,973 1.84% Dallas-Fort Worth-Arlington, TX 6,783,582 7,337,772 1.58% Washington-Arlington-Alexandria, DC-VA-MD-WV 5,874,437 6,286,965 1.37% Atlanta-Sandy Springs-Roswell, GA 5,467,379 5,790,724 1.16% Miami-Fort Lauderdale-West Palm Beach, FL 5,722,514 6,046,549 1.11% Boston-Cambridge-Newton, MA-NH 4,639,405 4,798,087 0.67% Los Angeles-Long Beach-Anaheim, CA 13,064,201 13,450,489 0.58% New York-Newark-Jersey City, NY-NJ-PA 19,880,906 20,418,435 0.53% Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 6,032,802 6,132,054 0.33% Chicago-Naperville-Elgin, IL-IN-WI 9,545,986 9,686,565 0.29% Source: US Census, Nielsen-Claritas 44 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

DEMOGRAPHIC OVERVIEW

Income: Rapid Income Growth Near Property

• The average household income for a one mile radius around the Property has grown by 68% since 2000, compared with average growth of 12.3% on a metro-wide level. This rapid income growth further indicates the development of Miami’s Downtown from a work center to a 24-hour live-work environment. • The metro’s lower-than-average incomes are partly the result of the number of retired residents that make their home in the area. About 14.6% of metro residents are age 65 or older, compared with 13.9% on a national level. • The lack of a state income tax in Florida provides increased purchasing power for household spending.

AVERAGE HOUSEHOLD ANNUAL GROWTH % HHS WITH INC. >$150K INCOME

AREA 2000 2014 2019F 2000-2014A 2014-2019F 2000A 2014E 2019F 22 EAST FLAGLER ST.: 5 MILE RING $40,744 $51,711 $59,756 1.7% 2.9% 3.5% 6.2% 7.6% 22 EAST FLAGLER ST.: 3 MILE RING $38,974 $49,866 $57,563 1.8% 2.9% 3.6% 5.9% 7.1% 22 EAST FLAGLER ST.: 1 MILE RING $34,429 $54,416 $61,759 3.3% 2.6% 3.8% 6.9% 7.8% MIAMI, FL $39,414 $47,974 $55,432 1.4% 2.9% 3.2% 5.3% 6.5% MIAMI-MIAMI BEACH-KENDALL METRO $52,479 $63,311 $72,006 1.3% 2.6% 4.6% 7.8% 9.4% MIAMI-FT.LAUDERDALE-POMPANO BEACH MSA $57,686 $70,014 $79,964 1.4% 2.7% 5.4% 9.4% 11.5% FLORIDA $53,632 $65,254 $74,287 1.4% 2.6% 4.1% 7.3% 8.9% THE UNITED STATES $56,644 $72,809 $83,937 1.8% 2.9% 4.6% 9.5% 12.3% Source: US Census, Nielsen-Claritas

ECONOMIC OVERVIEW

Employment: Miami is on the Road to Recovery

• Miami-Dade County, also known as the Miami-Miami Beach-Kendall Metropolitan Division (“metro”), has already replaced about 60% of the jobs lost to the recession after three years of positive growth. Nearly all Miami’s major sectors showed growth in 2012. • The metro has enjoyed a steadily rising level of employment for most of the last decade. This strong growth prior to the recession, combined with the metro’s quick recovery, allowed Miami to show net growth on par wth the US over the last decade. • Education & Health Services sector was able to add jobs in Miami throughout the recession.

Employment Growth Miami-Miami Beach-Kendall Metro Miami-Fort Lauderdale-Pompano Beach MSA United States 2.5%

2.0%

1.5%

1.0%

0.5%

0.0% 2003-2012 2012 2013 2013-2017

Source: BLS, Moody's

45 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

ECONOMIC OVERVIEW

Employment: Miami is on the Road to Recovery

Over the next five years, the metro employment base is forecast to grow by an average of 1.5% per year, which would create 79,000 new jobs by 2017. This would replace all jobs lost in the recession and set a new employment peak for Miami-Dade County.

• The Professional & Business Services sector is projected to take on more than one third of the new jobs over the next five years, with about 29,300 new positions anticipated by Moody’s Economy.com. • Metro unemployment, currently 7.9%, is above the US rate. The level is forecast to drop to 5.4% by 2017, in line with the US projection.

Sector Jobs Forecast Current Unemployment 7.9% New Metro Jobs Over Next 5 Years Forecast 2017 Unemployment 5.4% (2013-2017)

30,000 25,000 20,000 15,000 10,000 5,000 - (5,000) (10,000)

Source: BLS, Moody's Economy.com

Office Space-Using Employment is Regaining Strength

• One of the largest sectors of Miami’s economy is Professional & Business Services, which employs about 137,200 people, or 13.3% of the workforce. This sector is one of three in which the majority of jobs are in office-using positions (Information and Financial Activities are the other sectors). • The office space-using employment segment is forecast to resume on a much more robust note in Miami over the next five years, outpacing overall employment with a projected expansion rate of 2.2% annually. This would bring nearly 34,200 new office jobs to the metro by 2017, about 43% of the total new jobs projected, providing a positive impact to absorption of office space.

Office Space-Using Growth vs. Total Employment Growth in the Miami Metro Office Space-Using Employment Total Employment 2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

-0.5% 2003-2012 2012 2013 2013-2017

Source: BLS, Moody's Economy.com

46 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

ECONOMIC OVERVIEW

Miami is an International Gateway While the regional and national economies are still struggling to return to solid growth, Miami’s role as the US gateway to Latin America has provided a boost to the local economy. Many Latin American countries weathered the global recession well, which helped keep multi-national operations strong in the Miami area.

• Many US companies base their Latin American operations in Miami, including major companies such as American Airlines, HBO, HJ Heinz, ExxonMobil, Starbucks, Kraft Foods and the newest arrival, Miller Beer. • International tourism, especially from Latin America, has helped offset declines in domestic travel, and the Caribbean cruise industry has been expanding in South Florida, generating leisure & hospitality employment. • Miami-Dade County is home to more than 1,100 multinational corporations, dozens of foreign consulates and trade offices, and various bi-national chambers of commerce. In addition to major US companies that operate Latin American or worldwide headquarters in Miami, the roster includes companies from Latin America, the Caribbean, Europe, Asia, and the Middle East.

Employment by Sector: A Diversified Economy is Helping the Region Grown Over 270,600 people in the metro are employed in the Trade, Transportation and Utilities sector, which includes retail trade as well as employment at Miami International Airport (MIA) and the Port of Miami. This is Miami’s largest employment sector and is 1.37 times over-weighted compared to the US average.

• The airport and port are the primary transportation hubs for passengers and freight between the US and Latin America. Passenger traffic through MIA was nearly 39.5 million in 2012, ranking it 12th in the US, and the facility served 33.6 million passengers from January through October 2013, the latest figures available. The Port of Miami (“PortMiami”) is a major logistics hub and one of the busiest container ports in Florida, as well as the world’s number one cruise port. The facility is currently involved in $2 billion worth of capital improvements upgrades that include a tunnel under Biscayne Bay for more efficient port access, the return of on-dock rail services to facilitate shipping access throughout the southeast, and the deepening of the channel from 42 feet to more than 50 feet, to accommodate larger vessels, expanding trade opportunities. • From a demand perspective, Miami is considered the US gateway to Latin America and the Caribbean. Besides the impressive growth of South American economies, the completion of the Panama Canal expansion in 2014 is anticipated to provide additional growth as larger container ships from Asia will be able to shorten their travel (and reduce costs) through the Panama Canal and make their deliveries along the US Eastern Seaboard, including Miami’s port.

The second-largest employment sector in Miami is Education and Health Services, which encompasses an extensive network of hospitals and educational institutions. The sector was able to sustain 1.4% annual growth over the last five years, while many of Miami’s other sectors were still contracting.

• Three of the metro’s five largest employers fall within this field, including its largest, the University of Miami (UM), with a student enrollment of 15,600. • UM is currently building a 1.8 million square foot Life Science and Technology Park in Miami’s Health District, with lab, office and retail space. According to UM, there are over 1,700 Life Science companies in Miami, necessitating a facility that will provide “infrastructure and interdisciplinary opportunities to foster the development of life sciences, technology and biotechnology innovations.” • As the number of elderly residents continues to grow in the metro, medical care will continue to be a prominent part of Miami’s employment landscape. Medical facilities in the region include Baptist Health System (the metro’s second largest employer), Jackson Health System, Miami Children’s Hospital, and Mount Sinai Medical Center. • The Education and Health Services sector in Miami is forecast to continue its positive job growth and add more than 12,700 jobs through 2017, an annual increase of 1.5%.

47 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

ECONOMIC OVERVIEW Major Employers in the Miami-Miami Beach-Kendall Metro Employment By Sector (Cont.) University of Miami 13,822 Baptist Health Systems of Systems of Southern Florida 13,755 The Leisure & Hospitality industry employs 120,300 in the metro. The Publix Supermarkets Inc. 12,000 sector turned in the strongest performance over the recent five-year Jackson Health System 10,010 period with net growth of 2.5% annually. American Airlines 9,000 AT&T 6,629 • Not only does Miami serve as the gateway to the US for Latin Miami-Dade Community College 6,511 American visitors, but it is also a popular spot for domestic Pecision Response Corp. 6,000 travel. Passenger traffic through MIA has been strong – traffic Wells Fargo & Co. 5,300 rose 3% in 2012, and as of October 2013, traffic was up 2.5% Carnival Cruise Lines 3,500 over the October 2012 year-to-date total. American Sales & Management 3,500 • Thirteen cruise lines have ships at the Port of Miami, including Macy’s of Florida 3,368 the newest arrival, MSC Cruises, a luxury Italian line that joined Royal Caribbean Intl./Celebrity Cruise 3,303 the lineup in late 2013. The port projects it will serve a record Miami Children’s Hospital 3,295 5 million cruise passengers in 2014. Florida Power & Light Co. 3,178 • Miami is a destination for seasonal homeowners (otherwise Florida International University 3,132 known as snowbirds) during the winter months, and offers Winn-Dixie Stores Inc. 3,000 beaches, golf courses, and professional sports teams including Mount Sinai Medical Center 3,000 the 2012 NBA champion Miami Heat, NFL Miami Dolphins, HCA 2,412 and MLB Miami Marlins (known as the Florida Marlins until the Veterans Affairs Medical Center 2,300 name change in late 2011). The sector is forecasted to add Sources: Guide to Military Installations, 2011, South Florida Business Journal, 2013, about 18,900 jobs over the next five years. The Beacon Council, April 2007

Miami’s other sectors are also primed for growth:

• The Professional & Business Services sector, which accounts for 137,200 jobs in the Miami metro, includes a wide spectrum of industries such as legal services, accounting, insurance, engineering and scientific research. Many of the companies in this sector that have facilities in Miami use this location to serve their Latin American clients. • Over the next five years, the Professional & Business Services sector is forecast to be the fastest-growing segment in Miami, expanding by an average 4% per annum. • Construction employment is edging up once again, with jobs being created by non-residential projects such as the University of Miami’s Life Science center and the Miami Truck Tunnel, along with major mixed used projects including Brickell CityCentre. These projects should help the Construction sector add about 1,900 jobs in the metro over the next five years.

With the exception of Manufacturing and Government, growth is forecast in all Miami’s major sectors over the next five years. • Growth is predicted to be strongest in the Professional & Business Services sector (4% annually), followed by Leisure & Hospitality (3%) and Financial Activities (2%). The Information sector and Other Services are forecast to remain stable.

MIAMI-MIAMI BEACH-KENDALL, FAL METROPOLITAN DIVISION UNITED STATES US VS. METRO

Total % of Total Last Five Years Most Recent Next Five Years % of Total Over/Under SECTOR Employment Employment (2008-2012e) Year (2012e) (2013-2017f) Emploment Weight* TOTAL 1,029,900 100.0% -0.7% 1.6% 1.5% 100.0% 1.00 CONSTRUCTION 31,911 3.1% -10.3% 4.2% 1.2% 4.2% 0.73 MANUFACTURING 35,315 3.4% -5.5% -3.0% -0.3% 8.9% 0.39 TRADE, TRANSPORTATION AND UTILITIES 270,610 26.3% 0.2% 2.6% 1.0% 19.1% 1.37 INFORMATION 17,707 1.7% -3.2% 0.0% 0.0% 2.0% 0.86 FINANCIAL ACTIVITIES 71,338 6.9% -1.5% 4.0% 2.0% 5.8% 1.19 PROFESSIONAL & BUSINESS SERVICES 137,207 13.3% -0.3% 3.8% 4.0% 13.5% 0.99 EDUCATION & HEALTH SERVICES 162,010 15.7% 1.4% 0.7% 1.5% 15.2% 1.03 LEISURE & HOSPITALITY 120,306 11.7% 2.5% 5.0% 3.0% 10.3% 1.13 OTHER SERVICES 45,384 4.4% -1.4% -0.4% 0.2% 4.1% 1.08 GOVERNMENT 137,709 13.4% -2.3% -3.8% -0.8% 16.3% 0.82 Source: Bureau of Labor Statistics (Historical); Moody’s Economy.com (Forecast); Numbers in blue and red represent sectors in which the Metro’s employment base is signifi- cantly under or overweighted vs the US, respectively.

48 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

DOWNTOWN CONDO DEVELOPMENT Downtown Miami experienced a renaissance in residential/commercial development recently. The daytime home of bankers and lawyers, the CBD has transformed into a 24/7 live and work environment, attracting many demographic and socio- economic groups, from young professionals to empty-nesters to international business people and visitors.

• From 2003 through 2012, there were approximately 23,000 high-rise condo units built in Miami’s downtown core, with this inventory at 97% occupancy as of November 2013, according to the Miami Downtown Development Authority. As of 2014, Downtown is projected to have a full-time population of 81,100.

OFFICE MARKET OVERVIEW Miami-Dade County has an office inventory of 99.4 million square feet (msf), according to CoStar. Slightly more than one- fourth of the inventory is considered Class 0.

EXISTING INVENTORY VACANCY YTD NET YTD UNDER QUOTED SUBMARKET # BLDS TOTAL RBA DIRECT SF TOTAL SF VAC % ABSORPTION DELIVERIES CONST SF RATES Aventura 53 2,234,983 212,885 217,573 9.7% 53,936 40,724 0 $39.27 Biscayne Corridor 131 3,708,012 718,601 718,601 19.4% 7,600 0 0 $32.48 Brickell 67 7,833,383 1,086,464 1,122,015 14.3% 116,968 0 286,449 $39.66 Coconut Grove 98 2,057,276 138,182 146,582 7.1% 28,882 0 0 $31.04 Coral Gables 441 10,716,578 1,165,100 1,192,382 11.1% 241,410 0 68,030 $34.66 Coral Way 230 2,428,531 90,586 93,611 3.9% 37,754 0 0 $23.85 Downtown Miami 80 11,085,559 1,992,791 2,012,482 18.2% 108,275 0 0 $33.70 Hialeah Gardens 57 408,430 16,477 16,477 4.0% 1,775 0 0 $22.04 Kendall 529 11,738,040 1,071,734 1,071,734 9.1% (33,088) 0 60,000 $28.07 Medley/Hialeah 340 4,378,847 353,000 356,776 8.1% 51,704 0 36,942 $22.87 Miami 561 7,066,413 473,917 518,177 7.3% (42,790) 0 92,589 $25.14 Miami Airport 348 16,107,944 1,680,480 1,723,319 10.7% 417,371 80,000 60,000 $24.35 Miami Beach 156 4,294,051 387,745 387,745 9.0% (21,268) 0 0 $33.78 Miami Lakes 137 3,509,595 685,934 686,234 19.6% 60,632 0 0 $22.39 Northeast Dade 506 6,429,040 756,339 756,339 11.8% 40,186 0 0 $22.43 Outlying Miami-Dade Cnty 7 194,314 877 877 0.5% (877) 0 0 $0.00 South Dade 216 2,200,034 215,986 215,986 9.8% (17,609) 0 0 $20.51 West Miami 359 3,333,233 294,775 294,775 8.8% 22,256 0 0 $24.58 TOTAL 4,316 99,724,263 11,341,873 11,531,685 11.6% 1,073,117 120,724 604,010 $29.73

Miami Office Trends - All Classes - YE 2014 Miami Office Trends - All Classes - YE 2014 Absorption Completions Vacancy Avg. Weighted Rent % Change

4,000,000 16.0% 16.0% $35.00

14.0% 14.0% $30.00 3,000,000 12.0% 12.0% 10.0% $25.00 2,000,000 10.0% 8.0%

Vacancy $20.00 6.0% 1,000,000 8.0% 4.0% Rent PSF

Square Feet Square $15.00 YOY ChangeYOY 6.0% 2.0% 0 0.0% $10.00 4.0%

(1,000,000) -2.0% 2.0% $5.00 -4.0%

(2,000,000) 0.0% -6.0% $0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

49 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

Downtown Office Submarket The Property is located in the Downtown office submarket of Miami, according to CoStar. The submarket is the business hub of Miami and encompasses an area north of the Miami River and east of I-95, stretching north to I-395.

• The submarket has 10.8 msf, according to CoStar. This represents about 11% of the Miami-Dade office inventory total. • About half of the Downtown inventory is considered Class A space.

Inventory Source: CoStar INVENTORY BY BUILDING CLASS - DOWNTOWN SUBMARKET Class A 2014 2013 2012 2011 2010 2009 Inventory 5,167,642 5,167,642 5,167,642 5,167,642 5,167,642 4,415,154 Deliveries 0 0 0 0 752,488 0 Class B 2014 2013 2012 2011 2010 2009 Inventory 4,555,404 4,555,404 4,555,404 4,555,404 4,555,404 4,555,404 Deliveries 0 0 0 0 0 40,300 Class C 2014 2013 2012 2011 2010 2009 Inventory 1,372,606 1,372,606 1,372,606 1,372,606 1,372,606 1,372,606 Deliveries 0 0 0 0 0 0 • The last major addition to the submarket was the 750,000 sf Wells Fargo Center in 2010. • New construction is at a lull in Miami’s dense core, with nothing delivered since 2010, and nothing currently under construction, according to CoStar.

Vacancy Source: CoStar VACANCY BY BUILDING CLASS - DOWNTOWN SUBMARKET 2014 2013 2012 2011 2010 2009 Class A 17.7% 20.2% 19.7% 22.2% 23.4% 12.6% Class B 21.2% 20.5% 21.3% 20.3% 19.7% 20.7% Class C 9.7% 10.4% 11.3% 11.0% 11.8% 10.6% Overall 18.1% 19.1% 19.3% 20.0% 20.4% 15.9% • The Downtown submarket’s vacancy rate reached a low of 8.7% in late 2006, before starting its upward climb. • The addition of the Wells Fargo Center in 2010 caused the vacancy rate to jump from an already-high 15.4% to a record 21.3% midyear. Vacancy has started to decline as the existing space is taken up.

Rents Source: CoStar QUOTED FULL SERVICE RENTS - DOWNTOWN SUBMARKET 2014 2013 2012 2011 2010 2009 Class A $39.60 $40.46 $39.31 $42.08 $42.53 $43.69 Class B $28.84 $26.60 $26.36 $26.11 $26.40 $28.16 Class C $26.60 $19.03 $19.78 $20.05 $19.33 $21.78 Overall $33.57 $32.12 $31.58 $32.80 $33.04 $33.94 • Asking office rents in the submarket peaked at $37.00 per square foot (psf) in 2008, and have fallen about 13% since then to $32.18 psf. • Downtown asking rents are 13.6% higher than the overall Miami asking rent, evidencing the desirability of the submarket.

50 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

Downtown Office Submarket

Office Building Specifics

The Property is located in CoStar’s Downtown submarket, the center of Miami’s thriving business district. The submarket has about 75 buildings, with more than half of the buildings having an RBA of less than 100,000 sf. Most of the inventory is more than 30 years old, though many buildings have been renovated. The bulk of the submarket’s inventory is Class B/C stock, according to CoStar and most are less than 20 stories high • The comp set was derived from the submarket’s most recent Class A/B construction, from 1983 to the present. • The average occupancy in the comp set is 82%. Five of the properties are listed as 100% leased, while two are less than 50% leased. • Asking rents were not available for all properties.

OFFICE (CLASS A/B) - DOWNTOWN SUBMARKET YEAR BUILT/ PERCENT ASK RENT/ NUMBER OF BUILDING NAME BUILDING ADDRESS CLASS SIZE (SF) RENOVATED LEASED SF STORIES Wells Fargo Center 333 Avenue of the Americas A 2010 752,488 62.2% $40-$42 FS 47 Courthouse Center 40 NW 3rd St B 2009 40,300 69.0% $24.00 FS 11 900 Biscayne Bay 900 Biscayne Blvd A 2008 95,000 74.2% $30-$36 NNN 15 Overtown Transit Village South 601 NW 1st Ct A 2007 305,872 100.0% - 19 Overtown Transit Village North 701 NW 1st Ct B 2007 90,000 100.0% - 17 One Riverview Square 333 S Miami Ave B 2004 163,000 100.0% - 8 NAP of the Americas 50 NE 9th St B 2001 750,000 70.0% $40.00 FS 6 Riverside Center 444 SW 2nd St B 1995 80,000 100.0% - 10 Museum Tower 150 W Flagler St A 1987 243,166 90.4% $29-$32 FS 29 Miami Tower 100 SE 2nd St A 1987 618,990 93.9% $40-$48 FS 47 Southeast Financial Center 200 S Biscayne Blvd A 1984 1,225,000 88.5% $27-$39 NNN 55 Miami Center 201 S Biscayne Blvd A 1983/1991 786,267 89.1% $25-$65 +ELEC 34 Flagler Station 48 E Flagler St B 1983/1986 100,093 60.4% - 6

51 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

APARTMENT MARKET OVERVIEW The Miami metro apartment market contains nearly 111,700 units, according to Reis. Inventory has actually declined by about 17% over the last ten years, due to thousands of units being removed from inventory for condo conversion.

MIAMI MARKET STATISTICS - 3Q’13 INVENTORY INVENTORY (SF/ SUBMARKET ASKING RENT $ VAC % (BUILDINGS) UNITS) Miami Lakes 26 7,428 $1,107 4.3 North Dade 48 10,267 $978 6.3 North Miami Beach 48 9,145 $1,513 3.4 Hialeah 25 4,527 $911 2.0 Opa-Locka 33 4,051 $649 3.5 N Miami/Bayshore 53 8,483 $948 3.8 South Beach 70 15,676 $1,633 2.1 Miami 53 10,066 $1,007 2.5 Airport West 55 14,848 $1,194 5.0 Kendall East 41 5,464 $1,358 4.3 Kendall West 21 4,416 $1,067 1.8 Kendall Lakes 41 11,155 $1,112 4.4 S Dade/Homestead 33 6,138 $694 5.7 TOTAL 547 111,664 $1,157 3.9 Source: Reis

Miami Apartment Market Trends - 3Q'13 Miami Apartment Market Rent Trends - 3Q'13

Completions Net Absorption Vacancy Effective Rent Eff. Rent % Change

4,000 7.0 $1,400 12.0

2,000 6.0 $1,200 9.0

0 5.0 $1,000 6.0 YOY Change Vacancy (%) Vacancy -2,000 4.0 $800 3.0

Units $600 0.0 -4,000 3.0 Rent/Unit

$400 -3.0 -6,000 2.0 $200 -6.0 -8,000 1.0 $0 -9.0 -10,000 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Reis

Source: Reis

52 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

Miami Apartment Submarket The Miami apartment submarket has an inventory of 10,066 rental units, according to Reis. The Macy’s Site is located within the boundaries of this submarket, which are presented in the map below.

• The Miami Submarket represents about 9% of the total Miami rental inventory. • As in the overall market, inventory measures less than it did a decade ago, due to the removal of units that were converted to condominiums.

53 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

Miami Apartment Submarket

Inventory Source: Reis MIAMI APARTMENT SUBMARKET Class A 1Q'13-3Q'13 2012 2011 2010 2009 2008 Inventory 2,258 2,258 2,214 2,040 2,040 2,040 Deliveries 0 44 174 0 0 526 Class B/C 1Q'13-3Q'13 2012 2011 2010 2009 2008 Inventory 7,808 7,808 7,808 7,808 7,808 7,808 Deliveries 0 0 0 0 0 0 • New supply has been limited, with fewer than 750 units delivered in the Miami submarket from 2008 through 3Q’13.

Absorption Source: Reis APARTMENT ABSORPTION BY BUILDING CLASS - MIAMI SUBMARKET 1Q'13-3Q'13 2012 2011 2010 2009 2008 Class A -10 43 198 32 21 474 Class B/C 51 0 88 66 107 -177 • Low construction has led to mainly positive demand in the submarket, outpacing new supply over the most recent five-year period.

Vacancy Source: Reis APARTMENT VACANCY BY BUILDING CLASS - MIAMI SUBMARKET 1Q'13-3Q'13 2012 2011 2010 2009 2008 Class A 3.3% 2.8% 2.8% 4.3% 5.8% 6.9% Class B/C 2.3% 2.9% 2.9% 4.1% 4.9% 6.3% Total Average 2.5% 2.9% 2.9% 4.1% 5.1% 6.4% • The Miami submarket is enjoying a record-low vacancy rate of 2.5%. Class A vacancy is about 100 bps higher than Class B/C as of 3Q’13. • Vacancy is now less than half the peak level registered in early 2009 at the height of the downturn. The rate is 140 bps below the wider Miami market level.

Rents APARTMENT ASKING RENTAL RATES BY BUILDING CLASS - MIAMI SUBMARKET

1Q'13-3Q'13 2012 2011 2010 2009 2008Source: Reis Class A $1,452 $1,404 $1,381 $1,352 $1,336 $1,372 Class B/C $879 $888 $880 $875 $879 $934 Total Average $1,007 $1,004 $991 $974 $974 $1,025

• Asking rents in the Miami submarket currently measure $1007 per unit, 4.4% higher than the recessionary trough. • The rate is a 13% discount to the Miami metro average asking rate. • Rents are anticipated to achieve a new high in 2014, according to Reis, and are forecast to climb at a robust rate of 2.1% annually from 2014 through 2017.

54 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

MIAMI CONDO MARKET OVERVIEW • The Miami Condo market is in the midst of a rebound from the 2007 crash. According to Condo Vultures LLC, About 97% of the 23,000 units added since 2008 are currently occupied. • This absorption is being driven by continued demand from international buyers, particularly from Latin America. The rationale for this demand ranges from favorable exchange rates, to the relative value of purchasing condo units, to employing the condo as a rental unit. • The current market is reflecting this improvement as evidenced by the number of condo transactions, improved pricing and proposed new condo projects. This return to a Miami construction cycle, is in spite of operating in a tighter credit environment, with stricter underwriting standards along with the requiring of greater equity in the project.

Condo Sales/Pricing Velocity Dwindling supply combined with strong demand is reflected in the current sales and condo pricing.

MIAMI CONDO MARKET MATRIX 3Q'13 3Q'12 YR-OVER-YR CHANGE Average Sales Price $379,733 $330,712 14.8% Average Price per sq. ft. $316 $277 14.1% Median Sales Price $220,000 $180,000 22.2% Number of Sales 3,692 3,129 18.0% Source: The Elliman report/Samuel Miller Research

• According to Douglas Elliman / Samuel Miller Research, average sales price has increased 14.8% on a year-over-year basis as of 3Q’13, equating to a current $316/sf, up 14.1% over prior year. • There were 3,692 units sold during the third quarter of 2013, up 18% from third quarter 2012.

Luxury Condo Sales/Pricing Velocity Consistent with the overall Miami market, limited supply combined with strong demand is reflected in the current luxury sales and condo pricing. MIAMI LUXURY CONDO MARKET MATRIX 3Q'13 3Q'12 YR-OVER-YR CHANGE Average Sales Price $1,573,771 $1,479,593 6.4% Average Price per sq. ft. $688 $657 4.7% Median Sales Price $1,200,000 $1,150,000 4.3% Number of Sales 369 311 18.6% Source: The Elliman report/Samuel Miller Research

• Average sales price has increased 6.4% on a year-over-year basis as of 3Q’13, to nearly $1.6 million. This equates to a rate of $688/sf, up 4.7% over prior year. • There were 369 units sold during the third quarter of 2013, up 18.6% from third quarter 2012.

55 MACY’S SITE MIAMI, FLORIDA MARKET OVERVIEW

MIAMI CONDO MARKET OVERVIEW

Downtown Condo Sales/Pricing Velocity SOUTH FLORIDA PRECONSTUCTION CONDO PROJECT PRICING AS OF DECEMBER 2014

Preconstruction Maintenance Presale Units Ratio of Units Mean Price/SF for County Projects Cur- Towers Floors Units Commission Fee Sold Presold Presold Units rently Selling (PSF/Mo) Broward 22 30 323 2,187 1,504 69% $512 5.0% $0.64 Miami-Dade 90 104 2,634 16,363 10,480 64% $820 5.0% $0.77 Palm Beach 6 18 104 533 228 43% $463 5.0% $0.51 South Florida Total 118 152 3,061 19,083 12,213 64% $745 5.0% $0.74 Source: CraneSpotters.com

• The Downtown Condo market reflects an average sales price of $250,937, an increase of 25.3% on a year-over-year basis as of 3Q’13. This translates to pricing of $218/sf, up 21.1% over prior year. • There were 1,980 units sold during 3Q’13, up 20% from 3Q’12. The submarket year-over-year increases are more robust than those seen in the overall Miami condo market.

56 ZONING AND DEVELOPMENT MACY’S SITE MIAMI, FLORIDA ZONING AND DEVELOPMENT

ZONING HIGHLIGHTS

• Owner has the right to build high density multifamily residential units, hotels, office building, commercial space/ retail as well as other uses. • The zoning allows the city’s highest density and greatest variety of uses, including civic buildings of regional importance. • 100% Residential Development: Maximum Gross Building Area 1.87 million square feet • 100% Office Development: Maximum Gross Building Area 1.87 million square feet • Maximum Residential Density 1,790 units. • Maximum Potential Square Footage with Bonuses 2.8 million gross square feet

Miami 21 The City of Miami has adopted a form based zoning code known as Miami 21, which deemphasizes the regulation of uses, and instead emphasizes the regulation of building form. Per the zoning website, Miami 21 takes into account all of the integral factors that make each area within the City a unique, vibrant place to live, learn, work and play. Miami 21’s “Form Based” Zoning code regulates development to achieve a specific form, placing emphasis on the relationship between the street and buildings, pedestrian and vehicles, public and private spaces, and the relationship between multiple buildings, a block, a neighborhood and transitions in scale. The outcomes of this type of zoning code are numerous: zoning areas with greater intensity, mixed use zones, more transitional zones created by emphasis placed on form rather than use, more predictable physical result, a zoning code that is pro-active vs. re-active, and codes and regulations that are easier to read for citizens and are more predictable.

From a development perspective, the Property consists of two distinct lots located at 8 West Flagler Street (West Building) and 22 East Flagler Street (Macy’s Store Building). Both sites are in Transect 6 (T6), or the “Urban Core Zone.” This zone consists of the highest density and greatest variety of uses, including civic buildings of regional importance. T6 emphasizes a network of blocks of streets with wide sidewalks. In T6 zones, there is a consistent street tree planting, and buildings with short setbacks with frequent windows and doors to encourage pedestrian activity.

58 MACY’S SITE MIAMI, FLORIDA ZONING AND DEVELOPMENT

BASIC ZONING INFORMATION 22 E FLAGLER 8 W FLAGLER TOTAL Miami 21 Zone Urban Core T6-80 O Urban Core T6-80 O - Lot Size (SF) 46,893 SF 31,206 SF 78,099 SF Lot Size (Acres) 1.08 ACRES 0.71 ACRES 1.79 ACRES The subject properties lie in the T6-80-O zone, which allows for a development with a maximum of 80 stories and the greatest number of uses in the entire code. The maximum development capacity of the site is constrained by a variety of factors, including the Floor to Lot Ratio (FLR) and the Lot Coverage calculation, which are detailed below. Maximum Development Square Footage Calculations: Maximum development square footage is calculated as the lesser of the maximum allowable square footage as provided by the “Floor Lot Ratio” calculation or the “Lot Coverage calculation,” which are both detailed in the following section. The Floor Lot Ratio (FLR) refers to the multiplier applied to the net lot area that determines the maximum building area allowed above grade. For the T6-80-O zone, the max FLR is 24. The maximum buildable square footage as constrained by the FLR is detailed below.

BUILDABLE SQUARE FOOTAGE - FLOOR LOT RATIO 22 E FLAGLER 8 W FLAGLER CODE DESCRIPTION TOTAL LOT 1 LOT 2 Lot Area 5,000 SF Minimum 46,893 SF 31,206 SF 78,099 SF Lot Width 100 ft. Minimum - - - FLR refers to the multiplier applied to total lot area that determines the 46,893 X 24 31,206 X 24 maximum building area allowed Floor Lot Ratio (FLR) above grade 1,125,432 SF 748,944 SF 1,874,376 SF

FLR: 24

The above development right of 1.87 million square feet must next be compared to the Lot Coverage Calculation, and the lesser of the two calculations prevails. Lot Coverage Calculation is a separate calculation to determine maximum development potential via multiples of the site size in conjunction with maximum floor plate sizes. The lot coverage multiplier is consistent across all product types for the first eight floors, whereas floors 9-80 have differing maximum floorplate limits which vary by product type.

West Flagler Street Barlington Group East Flagler Street Sublease

Street Level Retail

Commercial Macy’s Store Building and and Office Building

Ground Level South Miami Avenue Retail Skybridge

Street Level RetailStreet 8 West 22 East Flagler Street Flagler Street

Elevated Street Level Retail Metromover Station

Southwest 1st Street Southeast 1st Street

59 MACY’S SITE MIAMI, FLORIDA ZONING AND DEVELOPMENT

Lot Coverage Calculation Maximum Development Analysis

BUILDABLE SQUARE FOOTAGE - LOT COVERAGE CONSTRAINED 22 E FLAGLER 8 W FLAGLER CODE DESCRIPTION TOTAL LOT 1 LOT 2 Lot Area 5,000 SF Minimum 46,893 SF 31,206 SF 78,099 SF Lot Width 100 ft. Minimum - - - Lot Coverage Residential/Condo/Lodging 46,893*(80%)*8 31,206*(80%)*8 80% maximum lot coverage Floors Floors Floors 1-8 The following figures represent the total square footage

allowable for floors 1-8 based on the maximum lot coverage 300,115 SF 199,718 SF 499,833 SF 18,000 x 72 Floors 18,000 x 72 Floors Floors 9-80 18,000 SF maximum floorplate 1,296,000 SF 1,296,000 SF 2,592,000 SF Total 1,596,115 SF 1,495,718 SF 3,091,833 SF Commercial: Office/Retail 46,893*(80%)*8 31,206*(80%)*8 80% maximum lot coverage Floors Floors Floors 1-8 The following figures represent the total square footage

allowable for floors 1-8 based on the maximum lot coverage 300,115 SF 199,718 SF 499,833 SF 30,000 x 72 Floors 30,000 x 72 Floors Floors 9-80 30,000 SF maximum floorplate 2,160,000 SF 2,160,000 SF 4,320,000 SF Total 2,460,115 SF 2,359,718 SF 4,819,833 SF

Given that the buildable square footage is limited to the lesser of the maximum allowable square footage as provided by the FLR calculation or the Lot Coverage calculation, the table below demonstrates the maximum buildable square footage for the two sites:

MAXIMUM BUILDABLE SQUARE FOOTAGE 22 E FLAGLER 8 W FLAGLER MAXIMUM DEVELOPMENT Max per Max per Lot Max per Lot 22 E Flagler 8 W Flagler Max per FLR Total Site FLR Coverage Coverage Lot 1 Lot 2 Residential/Condo/Lodging Total SF 1,125,432 SF 1,596,115 SF 748,944 SF 1,495,718 SF 1,125,432 SF (1) 748,944 SF (1) 1,874,376 SF

Commercial: Office/Retail Total SF 1,125,432 SF 2,460,115 SF 748,944 SF 2,359,718 SF 1,125,432 SF (1) 748,944 SF (1) 1,874,376 SF (1) Equals total buildable square footage as limited by the FLR calculation

MAXIMUM BUILDABLE 22 E FLAGLER 8 W FLAGLER TOTAL SITE LOT 1 LOT 2 Residential/Condo/Lodging Total SF 1,125,432 SF 748,944 SF 1,874,376 SF Total Units (Condo) 1,080 710 1,790 Total Units (Lodging) 2,160 1,420 3,580

Commercial: Office/Retail Total SF 1,125,432 SF 748,944 SF 1,874,376 SF 60 MACY’S SITE MIAMI, FLORIDA ZONING AND DEVELOPMENT

Maximum Residential Density Regarding Number of Units Allowed

The Property is within the CBD Residential Density Increase Area, which allows for an increase in density from 150 units/acre to 1,000 units/acre. The table below outlines the permissible density for the subject sites per the Miami 21 zoning code. (Note: Lodging Units are considered as equivalent to one-half (0.50) of a Dwelling Unit. Article 3.4.3 of Miami 21 Code.)

DENSITY PER MIAMI21 ZONING CODE 22 E FLAGLER 8 W FLAGLER TOTAL DESCRIPTION LOT 1 LOT 2 Lot Area 5,000 SF Minimum 46,893 SF 31,206 SF 78,099 SF Lot Area 1.08 ACRES 0.71 ACRES 1.79 ACRES

1.08 AC x 1,000 0.71 AC x 1,000 1,790 units Residential Base residential density for the T6-80 zone is 1,080 units 710 units 150 units/acre. The properties are situated in Density the CBD, which, per Article 4, Diagram 9 of the Miami 21 zoning code, has a residential density 1.08 AC x 2,000 0.71 AC x 2,000 bonus to 1,000 units/acre. Residential 3,580 units 2,160 units 1,420 units

*Lodging units are considered as equivalent to one-half (0.50) of a Dwelling Unit

Parking Requirements

The parking requirements for each type of development are detailed below. Please note that for mixed use properties, the parking requirements can be reduced according to the Shared parking standard.

PARKING REQUIREMENTS Residential »» Principal Dwelling - Minimum of 1.5 parking spaces per principal dwelling unit »» Minimum of 1 additional parking space for every 10 dwelling units »» Parking ratio may be reduced within 1/2 mile radius of TOD and within 1/4 mile radius of a Transit Corridor by thirty percent (30%) by process of Waiver, except when T6 is within 500 feet of T3*

Lodging »» Minimum of 1 parking space for every 2 lodging units »» Minimum of 1 additional visitor parking space for every 15 lodging units »» Parking ratio may be reduced within 1/2 mile radius of TOD and within 1/4 mile radius of a Transit Corridor by thirty percent (30%) by process of Waiver, except when T6 is within 500 feet of T3*

Office »» T6-80 - a minimum of 1 parking space for every 800 square feet of office space »» Parking ratio may be reduced within 1/2 mile radius of TOD and within 1/4 mile radius of a Transit Corridor by thirty percent (30%) by process of Waiver, except when T6 is within 500 feet of T3*

Commercial/Retail

»» T6-80 - a minimum of 3 parking spaces for every 1,000 square feet of space »» Parking ratio may be reduced within 1/2 mile radius of TOD and within 1/4 mile radius of a Transit Corridor by thirty percent (30%) by process of Waiver, except when T6 is within 500 feet of T3*

*Property sits in the 1/2 mile transit shed

61 MACY’S SITE MIAMI, FLORIDA ZONING AND DEVELOPMENT

Transit Shed Map

MACY’S SITE

PUBLIC BENEFITS PROGRAM – DEVELOPMENT BONUSES Development bonuses above the FLR and the Lot Coverage calculations can be superseded via the Public Benefits Program, which intent is to allow bonus building height and FLR in T6 Zones in exchange for the developer’s contribution to specified programs that provide benefits to the public.The maximum bonus development is based on the lesser of the calculation of the FLR or Lot Coverage Scenario.

Floor Lot Ratio Bonus Analysis: The FLR bonus for the sites is up to 50% applied to the base FLR of 24 (24 X 1.5=36) with the maximum buildable square footage detailed below:

BUILDING SQUARE FOOTAGE - WITH FLOOR LOT RATIO BONUS 22 E Flagler 8 W Flagler Code Description with Bonus Total Lot 1 Lot 2 Lot Area 46,893 SF 31,206 SF 78,099 SF

FLR refers to the multiplier applied to total lot 46,893 X 36 31,206 X 36 area that determines the maximum building area Floor Lot Ratio allowed above grade (FLR) 1,688,148 SF 1,123,416 SF 2,811,564 SF

T6-80: 24 + 50% bonus = 36

62 MACY’S SITE MIAMI, FLORIDA ZONING AND DEVELOPMENT

Lot Coverage Bonus Analysis: The program also allows for an increase in the maximum building height from 80 stories to “unlimited”, but is constrained by other items such as FAA regulations. This, in turn, increases the maximum buildable square footage as constrained by the lot coverage calculation, but is beyond the scope of this analysis.

There are several ways to qualify for the Public Benefits Program. Please see Article 3.14 of the Miami 21 Zoning Code for further information.

• Affordable/Workforce Housing (On or off-site) • Public Parks and Open Space • Green Building (Upgrade to Gold or Platinum Certification - A minimum of Silver Certification is a requirement to build on the site) • Trust Fund Contribution (Currently $17.82/sf for this site - i.e. a maximum FLR bonus (937,188 sf) would require a $16,700,690 contribution to the trust fund.)

Other Overlay Districts

The Property also sits in another overlay district that governs the development on the site: Downtown Miami Commercial Historic District.

63 DEVELOPMENT SCENARIOS

64 MACY’S SITE MIAMI, FLORIDA DEVELOPMENT SCENARIOS

PROPOSED DEVELOPMENT STRATEGIES

The Macy’s Site is one of the most desirable development parcels in the Miami CBD, and allows a mixed use project with a massive intensity of use providing a developer with significant flexibility in creating a World Class project as their vision deems fit. The following chart demonstrates the maximum allowed buildable density for the Site

The allowed density can support a condo project of up to $985 million of sale value on the Macy’s Site, based on a reasonable average unit size of 1,000 SF applied to a sale price of $550/SF.

CONDO SALE PRICE X MAXIMUM DENSITY = POTENTIAL SELL OUT PRICING Total Potential Sale Price Max Units Avg Unit Size Estimate Developable SF Sell Out Price $450/SF 1,790 1,000 1,790,000 $805,500,000 $550/SF 1,790 1,000 1,790,000 $984,500,000

• Given the intense demand for residential in the Downtown and Brickell areas, it is likely that residential condos will be the dominant component of any new development on the site.

• The office market is nearing equilibrium, and as the latest office to be completed, 600 Brickell, rapidly leases it space the market will be starved for new class A office space – a prime opportunity for office to be included as a highly feasible component of a new development on the site.

• The healthy hospitality market and key location of the Property at the “Main and Main” center of the CBD would also be a feasible component of new construction.

65 MACY’S SITE MIAMI, FLORIDA DEVELOPMENT SCENARIOS

Market Sale Price Points and Rents

The following market rates are projected for prospective development types discussed in the market section. These market parameters drive the revenue/sales component of any new development decision making process for a developer.

DEVELOPMENT MARKET RENTS Potential Sale/Gross Property Type Metric Revenue Max Development Income 1,874,376 SF Residential Condo $/SF $550 $1,030,906,800 1,790 Units 1,874,376 SF Apartments $/SF/Year $24.00 $44,985,024 1,790 Units

Class A Office $/SF/Year $48.00 1,874,376 SF $89,970,048

Rack Rate/Night 1,874,376 SF Hospitality $500 $653,350,000 High Season 3,580 Units

66 MACY’S SITE MIAMI, FLORIDA DEVELOPMENT SCENARIOS

Development Scenarios - $985 Million Sales Potential

There are numerous potential redevelopment strategies for the Macy’s site involving a mix of residential, hotel, and class A office space, dependent on an individual developer’s vision, expertise, and perceived intensity of demand for each component moving forward. There is a wide variety of development possibilities for the site, and numerous development scenarios. The basic development scenario in this section focuses on residential condominium development, and will be explored in the following analysis. The condo market is thriving, experiencing tremendous demand both domestically and from foreign buyers, and is the easy choice for a developer to reap certainty of maximum development potential. The most likely scenario is one in which a new owner continues to operate the Macy’s Store Building as a going concern until lease expiration in March of 2018 while first redeveloping the West Building, and then redeveloping the Macy’s Store Building in a second phase. This residential redevelopment scenario is based on the following assumptions:

• Develop the West Building which is currently subject to a ground lease expiring in November 2016. • There are no renewal options on the ground lease encumbering the West Building/Site and, as such, a new owner can begin the planning process without the concern of having leases encumber the site beyond the ground lease expiration date of November 2016. • Reap the benefits of the Macy’s lease on the Store Building to provide reliable income stream--$2,080,000 annually through March 2018--during the planning, construction, and sell out periods of the West parcel. • While Macy’s does have a 5 year renewal option to extend the lease expiration of March 2018, Macy’s will vacate and relocate to their new site as an anchor at the Miami World Center Development. At that time, redevelopment of the parcel housing the Macy’s Store Building can commence.

Advantages: »» Simplicity »» Mixed use investment –diversity of return »» Significant cash flow sweep from the Macy’s Store Building during the first phase of the West Building/Site redevelopment »» Immediately reap intense condo demand

The following chart demonstrates the cumulative income generated from both the ground leases and Macy’s lease until expiration. The only expense currently incurred at the Property is liability insurance, which is grown at three percent (3.0%) per year.

Year 1 Year 2 Year 3 Year 4 Year 5 Year Ending 2014 2015 2016 2017 2018 Revenue $2,109,591 $2,109,591 $2,104,659 $2,080,000 $520,000 Expenses $23,866 $24,582 $25,319 $26,079 $6,715 NOI $2,085,725 $2,085,009 $2,079,340 $2,053,921 $513,285 Cumulative Income $2,085,725 $4,170,734 $6,250,074 $8,303,995 $8,817,279

67 MACY’S SITE MIAMI, FLORIDA

FINANCIAL OVERVIEW

68 MACY’S SITE MIAMI, FLORIDA FINANCIAL OVERVIEW

FINANCIAL OVERVIEW

The West Parcel and East Parcel are subject to leases, which are detailed in the charts below. A new owner can expect the cash flow detailed below during the planning stages of redevelopment. The only expenses the owner currently incurs is liability insurance, which is grown at 3.0% annually in the table below.

West Parcel – West Building This interest in the West Parcel is subject to a 99 year ground lease—originally signed in November 1917– and several subsequent subleases, which are detailed below. Items highlighted in gold are direct leases with the fee owner. The actual ground lease calls for $7,500 per quarter ($30,000 per year) in rent, however, ownership is currently collecting $7,397.63 per quarter ($29,591 per year).

WEST PARCEL - WEST BUILDING Term Annual Position Type Lessor Lessee SF Comments Options Expiration Rent Cheatham/ Original ground lease for Lots Fee Owner Ground Meeks (as- 1-2-22-23-24. Square footage is for 1 (Originally 11/1/2016 31,206 $29,591 None Lease signed from land. Rent is fixed with no annual Ashby) Wallace/Tatum) rent increases. Sublease of original ground lease Ground Cheatham/ (Position 1) for Lots 1-2-22-23-24. 2 Century Realty 10/31/2016 31,206 $20,000 None Sublease Meeks Square footage is for land. Rent is fixed with no annual rent increases. Sublease of sublease (Position 2)of Sublease original ground lease (Position 1) for Century Burdines (Ma- 3 of Posi- 10/31/2016 31,206 $17,356 Lots 1-2-22-23-24. Square footage is None Realty cy's) tion 2 for land. Rent is fixed with no annual rent increases. Option to extend for 4, Sublease Macy's Sublease for 20,000 sf of existing Barlington 20,000 See Sched- 5-year periods should 4 of Posi- (Formerly 9/30/2016 storefront retail building situated on Group (Building) ule below Position 3 lease be tion 3 Burdines) Lots 1-2-22-23-24 extended or renewed.

Sublease Barlington Area G (Basement) - No Lease Unknown - No Lease 5 of Posi- Basement Unknown 1,151 $13,706 Group Available Available tion 4

The Sublease in Position 4 between Macy’s and Barlington Group represents a sublease for the ground floor retail units that are bounded by West Flagler Street, South Miami Avenue, and Southwest 1st Street. In turn, Barlington Group has relet those spaces, with a breakdown of the leases following below.

69 MACY’S SITE MIAMI, FLORIDA FINANCIAL OVERVIEW

WEST PARCEL - WEST BUILDING Term Annual Position Type Lessor Lessee SF Comments Options Expiration Rent Barlington Group - Subtenants (Subleases of Position 4) Option to extend for Sublease Barlington Kana Franchis- Area A (Store Unit) - 5% Annual 1, 5-year period should 5 of Posi- 9/30/2016 2,476 $77,175 Group ing (Bistro Café) Rent Increases Position 4 lease be tion 4 extended or renewed. Option to extend for Sublease G Ventures Barlington Area B (Store Unit)- 3% Annual Rent 1, 5-year period should 5 of Posi- (Weight Loss 9/30/2016 1,924 $48,100 Group Increases Position 4 lease be tion 4 and Smoothies) extended or renewed.

Option to extend for Sublease Barlington Mixtura LLC Area C (Store Unit)- 5% Annual Rent 1, 5-year period should 5 of Posi- 9/30/2016 4,418 $87,675 Group (Cortes Rest) Increases Position 4 lease be tion 4 extended or renewed. Sublease Barlington Area D (Store Unit) - No Lease Unknown - No Lease 5 of Posi- Avenue D Unknown 7,373 $105,986 Group Available Available tion 4 Sublease Barlington Ice Cream Area E (Store Unit) - No Lease Unknown - No Lease 5 of Posi- Unknown 523 $0 Group Parlor Available Available tion 4 Sublease Barlington Area F (Store Unit) - No Lease Unknown - No Lease 5 of Posi- Le Chat Noir Unknown 1,151 $25,380 Group Available Available tion 4

The rent paid to Macy’s for the Sublease in Position 4, is determined by taking the greater of (1) a minimum rent which is detailed by suite below or (2) 50% of the gross actual rent paid for the suite.

POSITION 4 - BARLINGTON SUBLEASE RENT SCHEDULE Minimum 50% of Gross Current Actual Rent To Macy's (Greater Premises Description Size Rent Qualifier Rent Actual of Minimum or 50% of Gross) Greater of $10/SF/Year and 50% of Groud Floor North Area A 2,476 SF $24,760 $38,588 $38,588 Gross Rent of subsequent subleases Greater of $10/SF/Year and 50% of Groud Floor North Area B 1,924 SF $19,240 $24,050 $24,050 Gross Rent of subsequent subleases Greater of $10/SF/Year and 50% of Groud Floor North Area C 4,418 SF $44,180 $43,838 $44,180 Gross Rent of subsequent subleases Greater of $10/SF/Year and 50% of Groud Floor North Area E 523 SF $5,230 $0 $5,230 Gross Rent of subsequent subleases Greater of $10/SF/Year and 50% of Groud Floor North Area F 1,151 SF $11,510 $6,853 $11,510 Gross Rent of subsequent subleases Greater of $5.00/SF/Year and 50% of Ground Floor South Area D 7,373 SF $36,865 $52,993 $52,993 Gross Rent of subsequent subleases Greater of $7.50/SF/Year and 50% of Basement Area G 508 SF $3,810 $6,853 $6,853 Gross Rent of subsequent subleases TOTAL $183,404 East Parcel – Macy’s Store Building The east parcel houses the Macy’s Store Building. Macy’s has a five year lease that expires in March 2018, and calls for $2,080,000 in annual rent for the term of the lease. Macy’s also has one (1), five (5) year option, however, they are not expected to exercise the option as they will be moving to the Miami World Center Project.

EAST PARCEL - MACY’S STORE BUILDING Term Annual Position Type Lessor Lessee SF Comments Options Expiration Rent Department Store Lease for Fee Retail Macy's Florida 275,000 SF of building situated on One, 5 year option at 1 Owner 3/31/2018 275,000 $2,080,000 Lease Stores - True NNN - Tenant has a 5 year $2.28M per year (Aetna) option at $2.28 M per year

70 MACY’S SITE MIAMI, FLORIDA LEASE ABSTRACT

Tenant Name: Macy’s Florida Stores, LLC Rentable SF: 275,000 Current Lease Commencement: February 1, 2013 Lease Expiration March 31, 2018 Term of Current Lease: 62 Months Base Rental Rate: Lease Year Annual Base Rent/SF Rent Year 1-5 $2,080,000 $7.56 Annual Increases: None

Options: One, 5 year option at $2,280,000 annually.

Operating Expenses: Tenant pays 100% of taxes and costs of the opera- tion, maintenance, management and repair of the Macy’s Store Building.

Pro-rata Share: 100% LL Responsibility: Replacement of capital items costing over $250,000 over one year.

Tenant Responsibility: All operating costs of the Store Building, skybridge, and interior, maintenance of the exterior and struc- tural portions of the Store Building, including the roof, foundation, bearing and exterior walls. Tenant shall be responsible for maintaining and repairing (but not replacing) the building systems which serve the Premises, whether they are located in the Store Building or the West Building, including air handling units, chillers, switchgear and electric transformers, mechanical, electrical, plumbing, utility lines, fixtures and equipment serving the Premises, though some may be located outside. West Building Sublease: Upon expiration of the sublease for the West Build- ing in 2016, Tenant shall construct demising parti- tions separating the Store Building from the skyway bridge on the Store Building end of the bridge at Tenant’s sole cost and expense. During the period of the Lease, Tenant shall retain easement rights to maintain all Building Systems for the Store Building which may be located in the West Building.

Termination Right Upon Store If Tenant ceases operations or does not occupy at Closure: least 20% of the Premises for a period exceeding 180 consecutive days, Landlord may elect to termi- nate the Lease and recapture the space. Upon such termination, the Lease will end as if it was the original date of termination, and neither party shall have any obligations to the other, except Tenant shall remove all personal property and trade fixtures and surrender Premises.