Ballston Metro Center 901 N

MID-ATLANTIC CAPITAL MARKETS GROUP

Ballston Metro Center 901 N. Stuart Street Arlington, VA

Offering Memorandum Ballston Metro Center 901 N. Stuart Street Arlington, VA

Executive Overview...... 6

Property Specifications...... 22

Tenancy...... 34

Financial Analysis ...... 44

DEAL CONTACTS Gerald P. Trainor 202.775.7091 [email protected]

James V. Cardellicchio 202.775.7094 [email protected]

Wesley M. Machowsky 202.775.7038 [email protected]

Kimberly S. Mughal 202.775.7029 [email protected]

FINANCING Gary McGlynn 301.654.6420 [email protected] MID-ATLANTIC CAPITAL MARKETS GROUP

EXECUTIVE SUMMARY 6 EXECUTIVE OVERVIEW

PROPERTY AT-A-GLANCE Transwestern’s Mid-Atlantic Capital Markets Group has been retained as the exclusive advisor in the sale of the Ballston Metro BUILT / RENOVATED: 1989 / 2015 Center office building situated in the heart of Arlington, Virginia’s highly sought after Ballston submarket. Ballston Metro Center, located SQUARE FOOTAGE: 235,568 SF at 901 N. Stuart Street in Arlington, Virginia (the “Property”), is a value- add investment opportunity. TYPICAL FLOOR: 18,560 SF

Ballston Metro Center is part of a mixed-use project that is situated STORIES: 13 directly above the Ballston Metrorail Station. The project consists of the subject Property (a 235,568 square foot office building), the Arlington ON-SITE PARKING: 360 spaces Hilton Hotel, and the Alta Vista residential condominiums. The three PARKING RATIO: 1.53 / 1,000 SF components are constructed around an enclosed retail pavilion and its 6-story atrium. The subject Property is a 13-story multi-tenant office OCCUPANCY: 61%; falling to 45% building with window lines on all elevations and ground floor retail.

Situated at the epicenter of Ballston, the Property has exceptional access to public transportation, is just a half mile from I-66, and provides access to the rich amenity base of Ballston. The Property provides direct covered access to the Ballston Metrorail Station and the Ballston Common Mall with over 100 retailers; the latter to be re-branded as Ballston Quarter following its renovation and re-development in 2017.

Prior to 2013, 901 N. Stuart had been extremely well occupied, maintaining an occupancy rate between 95%-100%; however, due to BRAC initiatives, the Property lost a 150,000 SF GSA tenant. During this period, the occupancy dropped from 97% to 47%. To assist in the lease-up of the Property, the landlord commenced a $2.3 million renovation of the lobby, front entrance, storefronts, plaza, and elevator cabs to enhance the Property’s marketability.

Ballston Metro Center is uniquely positioned to re-absorb its remaining vacancy due to the recent improvements and its location atop the Ballston Metrorail station. Furthermore, Ballston is in the midst of a renaissance, with the most notable project being the $317 million renovation of the Ballston Common Mall. This revitalization projectBALLSTON will result METRO in an CENTERentertainment-focused central gathering place with street- 901 N. Stuart Street VA_BMC_OM_2016-06-28_mrkt facing retail and pedestrian plaza; all within one block of the Property. TheArlington lease-up (Ballston), of Virginia the Property will greatly benefit from the renovation of the Ballston Common Mall and its re-branding to Ballston Quarter, as tenants seek a diverse amenity base at a cost-effective basis. Lease Expiration Schedule

Expiration CY CY CY CY CY CY CY CY CY CY CY Suite Date Tenant Vacant 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 0800 1/31/17 WorkAround Ballston 8,154 100% G2-1 11/30/17 Applied Predictive - sto 300 93.9% 100.0% 96.8% 96.8% 96.8% SUMMARY OF TERMS 1000 11/30/17 Applied Predictive 18,070 90% 1100 11/30/17 Applied Predictive 16,915 1105 11/30/17 Applied Predictive 1,158 80% Leasehold Interest INTEREST OFFERED: 0105 2/28/19 Presidential Bank 1,724 (see pg. 47) 0806 5/31/19 GSN Games 1,487 70% 0804 6/30/19 Cybraics Inc 3,441 0808 6/30/19 Howroyd-Wright Emplym 1,881 60% EXISTING DEBT: None; Free and Clear 63.8% 0210 6/30/20 My Eye Dr 2,171 61.5% 62.6% 57.8% 57.8% 0106 12/31/20 R.T.D. Inc. 394 50% 0115 6/30/21 Hansan LLC (tivoli's) 2,200 0117 7/31/21 Grace Foods 743 40% 0700 5/31/22 On Deck Capital 18,554 38.9% 0200 11/30/22 Potomac Institute 15,695 30% 0900 11/30/22 Potomac Institute 16,994 0908 11/30/22 Potomac Institute 1,567 20% 1200 11/30/22 Potomac Institute 18,073 S3-2 2/28/23 Starbuck's Corp - sto 330 10% 0103 2/28/23 Starbuck's Corp 1,351 3.6% 2.8% 3.2% 38.9% 0.0% 19.0% 0.0% 1.1% 1.3% 30.1% 0.0% 0.0% 0100 12/31/23 Bank of America 4,977 0% 0610 5/31/27 Shady Grove Fertility 5,719 Vacant 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 0101 6/30/28 Dentelligent, Inc. 1,894 Annual Expirations Cummulative Expirations 0600 2/28/23 Spec Tenant 12,842 (as a percentage of NRA per calendar year) 0802 1/31/24 Spec Tenant 2,132 0810 7/31/24 Spec Tenant 1,465 S1-1 10/31/26 Spec Tenant 1,271 1300 12/31/27 Spec Tenant 18,071 0500 5/31/28 Spec Tenant 18,565 0400 8/31/28 Spec Tenant 18,563 0300 11/30/28 Spec Tenant 18,562 0 01/00 0 0 01/00 0 0 01/00 0 0 01/00 0 0 01/00 0 Annual Total Square Feet 91,471 0 44,597 0 8,533 2,565 2,943 70,883 6,658 0 0 7,613 % of Leased Area (235,263 SF) 38.9% 0.0% 19.0% 0.0% 3.6% 1.1% 1.3% 30.1% 2.8% 0.0% 0.0% 3.2% BOMA Sq Ftg Adjustments 0115 6/30/21 Hansan LLC (tivoli's) 305

Total Building Square Footage: 235,568 BOMA Square Feet

p r o p e r t y v a l u a t i o n INVESTMENT HIGHLIGHTS PROPERTY HIGHLIGHTS ►► Opportunity to purchase well below replacement cost ►► High Quality Asset in an irreplaceable location ►► Stable cash flow to carry through lease-up: • 13-story, first-class building totaling 235,568 SF • In-Place rental income of $6.2 million • 4-levels of underground parking (1.53/1,000 SF) • Average lease term remaining of over 4 years, 6 months • Exquisite renovations: Brand new modern lobby and exterior entrance ►► Uniquely positioned to absorb vacancy due to: • Location directly above the Ballston Metrorail station • Seated atop the Ballston Metrorail station • On-site parking (1.53/1,000) • Spectacular panoramic views of the entire region from the • Part of a mixed-use product in the Ballston live-work-play upper floors locale • Efficient 18,560 SF floor plates ideal for single-tenant and • Lease-up coincides well with the transformation of Wilson multi-tenant configurations Boulevard and the Ballston Common Mall to Ballston • On-site amenities in adjoined retail pavilion Quarter • Covered skywalks to Ballston Common Mall/Ballston Quarter ►► Opportunity for immediate lease-up • Recent mechanical upgrades including two new cooling • 91,471 SF of vacancy towers • 55,690 SF of contiguous space, one of the largest blocks of • Overlooks Welburn Square, a public park/plaza available space near a Metrorail station in Ballston • Most cost-effective solution relative to the competition • Floor plates of 18,560 SF are easily demisable ►► Potential to improve the retail pavilion to boost rents ►► Potential for digital signage on the building’s facade; synergistic to Ballston’s tech-centric 24/7 live-work-play community

MID-ATLANTIC CAPITAL MARKETS GROUP 8 EXECUTIVE OVERVIEW

LOCATION HIGHLIGHTS ►► Ballston serves as a premier example of smart growth planning with transit-oriented development that preserves and enhances the existing residential neighborhoods ►► Prominently positioned in the epicenter of Ballston • High visibility at the intersection of N. Stuart Street and Fairfax Drive 66 • Great signage opportunities • Ease of access: Situated atop the Ballston Metrorail station, a bus depot situated steps away, and just a 1/2 mile to I-66 ►► Direct access to the Ballston Metrorail station, providing tenants access to the Orange and Silver lines and broader connectivity to the Washington, DC ON-RAMP TO I-66 metropolitan area ►► Immediate vehicular access to I-66 and Route 50, serving as a midpoint between downtown Washington, DC and the Tysons and Dulles Corridor • Ballston benefits from its own exit off of I-66 allowing for a more direct commute, unlike some of the other Arlington submarkets including Clarendon, Courthouse, and Virginia OFF-RAMP FROM I-66 Square where access is via local collector roads ►► The Ballston submarket is a major government hub with the presence of major government agencies focused on 21st century innovation, including cyber security, science/technology and military research & development ►► Arlington County boasts premier demographics, ranked amongst the top 10 wealthiest counties in the United States, and attracts a well-educated labor pool for employers ►► Steps away from the Ballston Commons Mall/Ballston Quarter, providing access to an expansive amenity base and walkable to more than 100 restaurants throughout the Ballston Corridor • Forest City Development is in the process of a $317 million dollar re-invention of the Ballston Common Mall into Ballston Quarter that will usher in a renaissance of the Wilson Boulevard Corridor. The final product will serve as a multipurpose nexus, complete with first-class dining options, entertainment venues, and multifamily. The project will ZIPCAR dramatically increase foot traffic within the area, and boost Ballston’s reputation as one of the most walkable neighborhoods in the Washington, DC metropolitan area (for more details on Forest City’s Ballston Quarter: www.ballstonquarter.com). CAPITAL BIKESHARE

Metro on-site

66 Immediate Access to I-66

6 miles to the White House

15 min to Reagan National Airport

24 min to Dulles International Airport Skywalk to Stafford Place & Ballston Commons Mall/Ballston Quarter Pizza Roma

BALLSTON METRO CENTER

Westwood Cafe Fairfax Drive

Dan & Brads

Wilson Blvd

N. Glebe Road BALLSTON COMMON MALL/ BALLSTON QUARTER Coming Soon: 365,000 SF of Retail

Reagan National Airport Metrorail – Access to Orange & Silver Lines 10 EXECUTIVE OVERVIEW

BALLSTON OFFICE MICRO-MARKET HIGHLIGHTS

Overview Net Absorption

►►Ballston has historically outperformed the balance of the ►►Since 1996, the Ballston submarket has averaged 157,000 RB Corridor with higher rents, stronger annual rent growth, SF of positive net absorption annually, compared to only a lower average vacancy rate, and higher annual net 8,000 SF for the balance of the RB Corridor. absorption. ►►The average historical annual absorption since 1996 for office buildings within 1/4 mile of the Ballston Metrorail Inventory & Vacancy station is 130,000 SF which far exceeds the surrounding Metrorail stations such as Virginia square with 46,000 SF and ►►Ballston accounts for 1/3 of the RB Corridor’s office space the Clarendon and Courthouse Metrorail stations, both with with 7.9 million SF, of which 5.1 million SF is located within just 26,000 SF. ¼ of a mile to the Ballston Metrorail station. ►►The vacancy rate has historically been tight, averaging 7.4% Recent Deliveries since 1996. ►►Buildings that have delivered since the start of 2008 in ►►The average historical vacancy since 1996 for buildings Ballston are extremely well-leased at an average of 89% (as located within ¼ mile to the Ballston Metrorail Station is of June 2016). even tighter at 5.5%. *Not included in the vacancy statistics above are the following GSA move-outs: - Dept of Defense vacated 73,000 SF at 4040 N Fairfax Drive - US Coast Guard vacated 87,000 SF at 4200 Wilson Boulevard NEWLY DEVELOPED IN BALLSTON - GSA vacated 150,000 SF 901 N. Stuart Street ADDRESS RBA % LEASED

800 N. Glebe Road 300,707 80% 900 N. Glebe Road 144,000 97% 675 N. Randolph 352,740 100% TOTAL / AVERAGE 797,447 89%

Entrance to subject Property

Escalators to Metrorail Station Blocks of Space TENANTS IN THE MARKET

►►Ballston’s accessibility, housing stock, and amenity base TENANT REQUIRED SF make it a center city location for corporations seeking larger blocks of space. Arlington County 100,000 – 120,000 ►►Ballston is a vital component to Arlington County’s success Akima 70,000 and economy. As such, Arlington County is known for Hobson 60,000 – 75,000 supporting landlords’ large block leasing efforts that help to create jobs. UHS / GW University Hospital 60,000 Independent Community Bankers of 53,000 Asking Rents America (2016)

►►On average, Ballston’s asking rents have grown by 3.2% Solers (2018) 50,000 annually since 1993, higher than the balance of the RB National Institute for the Blind 50,000 Corridor at 2.8% annually. Express Networks 45,000 ►►Ballston commands higher asking rents. As of June 2016, Ballston’s asking rents for all classes of space averaged Grocery Manufacturing Assoc. 40,000 $41.86 PSF, compared to $40.70 PSF for the balance of the Salvation Army (2017) 40,000 RB Corridor. Gannett 40,000 Western Union 35,000 ASKING RENT – ALL CLASSES OF SPACE ASKING RENT – ALL CLASSES OF SPACE Synectics for Mgmt Decisions (2018) 30,000 BallstonBALLSTON vs VS. Balance BALANCE of OF RB THE Corridor RB CORRIDOR $45 Engility 30,000 Ballston Balance of the RB Corridor $40 National Apartment Association 20,000 $35

$30

$25

$20

$15

$10 AVERAGE ASKING RENT AVERAGE $5

$0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016* *At June 2016 Source: CoStar, Transwestern. 12 EXECUTIVE OVERVIEW

BALLSTON OVERVIEW

Ballston is the western anchor of the RB Corridor. The RB Corridor is served Major organizations within Ballston include: by five stops along Metrorail’s Orange and Silver lines. As a result, it is one of the most convenient and accessible office locations in the Washington, ►► DARPA DC metropolitan region. It is also one of the most appealing due to its ►► Office of Naval Research upscale, high-density residential, hospitality and dining inventories, as ►► NRECA well as its active nightlife and other excellent amenities. Ballston boasts: ►► E-Trade ►► Over 1.0 million SF of retail space ►► AES Corporation ►► Virginia Tech Advanced Research Institute ►► 100 restaurants and growing ►► Marymount University ►► 1,100 hotel rooms, plus 22,300 SF of meeting space ►► CACI International ►► 8,000 residential units ►► The Nature Conservancy

Ballston plays a central role in the proliferation of knowledge, creativity and scientific and technical advancement on a national level as nationally known experts in the scientific and technical fields move in and out of Arlington every day. These experts regularly visit government agencies and the private contractors throughout Ballston making it an epicenter of science and research.

Ballston is home to major scientific research agencies such as the Defense Advanced Research Projects Agency (DARPA), Office of Naval Research (ONR), the Air Force Office of Scientific Research (AFOSR), Homeland Security Advanced Research Projects Agency (HSARPA), Virginia Tech, IBM’s Center for Community Security & Resilience, Accenture, Applied Predictive Technologies and CACI. These organizations continue to attract many nonprofit organizations, think tanks, and private sector companies that are also making innovations in science and technology.

In an effort to cultivate this sector of professionals, Ballston has created the Ballston Science & Technology Alliance, a nonprofit 501(c)(3) organization established to serve those engaged in and interested in science and technology. With the greater Washington, DC metropolitan area among the top ten locations for high-technology and knowledge- based businesses in the nation, these businesses require a highly- educated workforce to survive. Many of these workers reside in the urban villages along the RB Corridor.

The United States government is a major demand driver for the Ballston submarket. Agencies, such as the Defense Advanced Research Projects Agency (DARPA) and Office of Naval Research (ONR) are located in Ballston. These high level agencies in turn create demand for private sector contractors that are required to be within a ¼ mile of their headquarters. Ballston’s Revival Several projects are planned or underway that will preserve and enhance Ballston’s charm and character as a vibrant and innovative urban submarket making it unique to the region. The future of Ballston’s streetscape includes art and beautification efforts, integrating technology, the redevelopment of the Ballston Common Mall, among other projects that will foster a collaborative community.

Beautification efforts for Wilson Boulevard and Fairfax Drive, contemporary and cohesive street furniture and planters, and digital banners contribute to the Ballston Business Improvement District’s (BID) placemaking efforts that will transform Ballston into an innovative and unique place. Work has also commenced on wayfinding signs that include replacing static maps with an interactive touchscreen map that is updated continuously, along with illuminated color beacons, and digital light box banners displaying points of interest. Currently there are 450 sign assemblies in the ground, with a planned total of 850 (and 2,500 individual fingerboards) by the end of 2016.

The most notable project is the $317 million renovation of Ballston Common Mall into Ballston Quarter which is connected to Ballston Metro Center via a skywalk. This enclosed mall will be transformed into an entertainment-focused central gathering place with street-facing retail and a pedestrian plaza. Expected to begin opening in 2018, followed by the balance of the retail openings phased through 2019, the mall will feature many retail outlets and restaurants facing Wilson Boulevard, along with restaurants on the second level with terrace seating. Sections of the existing roof will be removed and a system of outdoor shopping alleys and corridors contribute to the modern, open mall that will continue to define Ballston as a 24-7 destination.

Other changes include a new 29-story, 393 unit residential tower at the corner of Wilson and N. Randolph Streets to be completed by 2018, renovations to the streetscape and bus stops surrounding the Ballston Metrorail station at Fairfax Drive and North Stuart Street, a new amphitheater, landscaping, and more room on sidewalks for outdoor cafes. Welburn Square will continue to host art exhibits and a weekly farmers market contributing to Ballston’s culture of connectivity and artistic charm. www.ballstonquarter.com 14 EXECUTIVE OVERVIEW

ARLINGTON COUNTY Payroll Jobs MARKET OVERVIEW Arlington County employs 173,574 payroll employees, up roughly 7,500 jobs, or 4.5% during the 12 months ending December 2015. Arlington County, located in Northern Virginia, is across the Potomac According to Arlington County, jobs are forecast to grow to 301,300 River from Washington, DC. With a population of 220,400, the jobs, or 2.94% per year by 2040. county spans about 26 square miles making it the smallest self- governing county in the nation. Arlington is home to 24 corporate The Professional and Business Services and Federal Government headquarters and to some of the most influential organizations sectors account for the largest number of jobs in Arlington County, in the world such as the Pentagon and DARPA. The county serves accounting for 32% and 16% of total payroll jobs respectively. The as a major business and commerce hub and is home to a highly Professional and Business Services and Leisure and Hospitality skilled and educated labor force. The county has a well-integrated sectors fueled job growth during this period, adding 4,900 transportation network including close proximity to three major and 1,300 jobs, respectively. Despite the shedding of Federal airports, major interstates, and Metrorail access connecting residents government jobs, the private sector has been adding jobs at throughout the Washington metropolitan area. In essence, Arlington a healthy clip. Since 2010, the number of private sector jobs County is an extension of the District of Columbia as it is in very increased 10.5%. close proximity to Capitol Hill, the White House, multiple Federal agencies and many private sector institutions. In fact, 40% of the U.S. population resides within a day’s drive of Arlington and its blend of PAYROLL JOBS BY SECTOR proximity to Washington, DC, expansive business culture, multi- Arlington County | Dec 2015 faceted transportation system and neighborhood charm makes it Professional and Business Services unmatched in the region. 4% 3% Federal Government 7% Leisure and Hospitality Trade, Transportation, and Utilities 7% 32% Arlington County Economic Highlights Education and Health Services State and Local Government 8% ►►8,966 businesses employ 173,574 workers in Arlington Other Services County. Financial Activities 11% Information ►►Government employees, federal and local, make up around 16% 11% Mining, Logging, and Construction 23% of Arlington’s labor force. Manufacturing ►►Arlington County is home to 24 corporate headquarters. Source: Bureau of Labor Statistics, Transwestern. ►►Average household income of $141,640 in 2016 compared to $77,008 nationally. ►►Median household value of $622,676 in 2016, compared PAYROLL JOB GROWTH to the national median of $198,891. Arlington County | 12 Months Ending Dec 2015

►►Over 74% of Arlington County adults boast a bachelor’s Professional/Business Services degree or higher, and 40% have advanced degrees. This Leisure/Hospitality compares to 30% nationally with a bachelor’s degree or Information higher. Other Services +7,937 Education/Health ►►Virginia’s 6% flat-rate corporate income tax is tied for the State and Local Government ninth lowest among states levying a corporate income tax Federal Government in 2016. Manufacturing Trade, transportation, and utilities Construction/Mining -732 Financial Services

-1,500 -500 500 1,500 2,500 3,500 4,500 5,500

Job Change

Source: Bureau of Labor Statistics, Transwestern. Unemployment Transportation & Infrastructure

The unemployment rate in Arlington County edged down to 2.2% Arlington County offers a wide range of transportation options at April 2016, down 60 basis points since April 2015. The county’s including major highways and interstates, Metrorail and Bus unemployment rate is the lowest in the region and is well below service as well as three major airports. the state wide unemployment rate in Virginia of 3.6% and the national rate of 4.7% in April 2016. Several major highways pass through the county including portions of I-66, I-395, Route 50 and the George Washington Population Memorial Parkway, all of which help to connect Arlington County to the surrounding Washington, DC metropolitan area. Recent Arlington is one of the most densely populated jurisdictions improvements and projects include: replacing the Washington in the nation with 8,541 persons per square mile. Arlington Boulevard Bridge over Columbia Pike in Arlington, completed County has approximately 220,400 residents, a 6.1% increase in September 2015, and the I-66 Spot Improvements which will since 2010. Since 2000, the population has grown at roughly improve operation and safety by connecting the Washington 1% per year and is expected to jump to 283,000 by 2040, a Boulevard on-ramp in Ballston, to the off-ramp at the Dulles 28.4% increase. Arlington County is one of the most educated Airport Access Road. Spot Improvements one and two have been counties in the nation and for the third time it was named one completed while spot improvement 3 will be finished in late 2020. of the top 7 Intelligent Communities in the world in 2015 by the Intelligent Community Forum. 74% of adults age 25 and older Arlington County offers its residents and workers 16 ART bus routes, have a bachelor’s degree or higher and 39.9% have a graduate 81 Capital Bikeshare stations, and 89 miles of bicycle routes and or professional degree. Residents between the ages of 25-34 jogging trails. The Washington Metropolitan Area Transit Authority account for 27.6% of the total population, that largest of any age (WMATA) operates an interconnected rail with 11 stations within group. 52% of the population is younger than 35 while 38.6% falls Arlington County located at Rosslyn, Court House, Clarendon, between the ages of 35 and 64. Of the nearly 115,000 housing Virginia Square, Ballston, East Falls Church, Arlington Cemetery, units in Arlington County in 2016, 38% are owner occupied. Pentagon, Pentagon City Crystal City and Reagan National Airport. The Pentagon Metrorail station has the highest volume of activity of any Arlington County station with nearly 29,000 combined passenger entries and exits on an average weekday.

Arlington County is primarily served by two major airports, Reagan Washington National Airport (DCA) and Dulles International Airport (IAD). A third airport, Baltimore-Washington International Thurgood Marshall Airport (BWI), is located 22 miles north and serves the region as well.

Located within Arlington County, the Ronald Reagan Washington National Airport served over 23 million passengers during 2015, an 11% increase from the 2014 total. With the new Use and Lease Agreement that started effective January 2015, capital will be allocated to DCA to help accommodate the growth in passengers. Notably, since 2010, DCA passenger use has exponentially grown, increasing at 27.2% over that period. 16 EXECUTIVE OVERVIEW

Major Employers & Industry Sectors

Given the desirable quality of life, proximity to transportation and the Federal government, a highly educated and creative workforce, and a favorable business climate, many corporate headquarters choose Arlington County’s close proximity to the Arlington County as their home. Arlington County’s business climate District of Columbia along with the growing is improving as several companies are considered among the fastest- growing in their industries and economic investment is on the rise. number of commercial IT, financial, software, Notably, five companies located in Arlington County were on the 2015 communications and technology management Inc. 500/5000 List. HMS received the highest rank of the five Arlington service providers makes it a center for Federal County companies at #72. The 59 employee firm experienced a 3-year government contracting and helps to drive growth of 3,310%. Also notable, Morgan Borszcz Consulting, ranked #1,227. The telecommunications company experienced a 3-year growth much of the local economy. of 254%. Arlington County attracts fast-growing firms that look to take advantage of the educated population and business incentives that promote fast growth.

Notable industry sectors in Arlington County that drive business and fuel economic growth include:

Technology Research Professional & Business Sector Arlington County is home to several Due to its proximity to the nation’s capital Arlington County hosts several Professional technology establishments that employ and home to the Pentagon, Arlington and Business services firms including: thousands of highly educated and skilled County boasts one of the nation’s highest (1) Deloitte – the largest professional services people in technology sectors such as concentrations of scientific research agencies. network in the world providing audit, tax, information technology services, R&D/ Nationally and internationally recognized consulting and financial advisory services, technical services, technology management scientific research firms are headquartered (2) Accenture – a multinational management consulting, telecommunications and others. or have major operations in Arlington consulting and technology services In 2014, Arlington County adopted the County including: the National Science company, (3) The Corporate Executive Board Technology Zone which gives incentives to Foundation, Defense Advanced Research – an advisory firm that provides products and new and small business and expanding firms Projects Agency, the Office of Naval Research, services to businesses worldwide. in the technology industry. Nationally and the Air Force Office of Scientific Research, internationally recognized technology firms the Army Research Office and Virginia Tech’s are headquartered or have major operations Advanced Research Institute. These agencies in Arlington County including SAIC, CACI, knit together a business network that Boeing, Lockheed Martin, Alion Science and spurs creativity, innovation and economic SRA International. development in Arlington County. Further, many corporate headquarters have moved to Arlington County in recent years:

THE GW MEDICAL The largest independent physician network in the Washington, DC area with more than 750 providers, FACULTY ASSOCIATES relocated from Washington, DC to Arlington in March 2016, creating 200 new jobs in the first year. A Germany-based grocer, announced in June 2015 it would be locating its U.S. headquarters at 3500 S. LIDL Clark Street in Arlington, creating 500 new jobs in the county. A technology trade association, moved their corporate headquarters from Washington, DC to Rosslyn, to TECHAMERICA be in the epicenter of the tech corridor in Arlington County in mid-2014. The leading provider of media mobility, moved its headquarters from San Francisco, CA to Arlington in CONVOKE SYSTEMS May, 2011. The diversified education and media company, sold their headquarters building in downtown Washing- GRAHAM HOLDINGS COMPANY ton, DC and moved to Arlington by late-2014. The move involved the relocation of 2,800 employees to the new location. Moved its global headquarters from Washington, DC to Arlington in 2008. By 2018, the company will be CORPORATE EXECUTIVE BOARD moving the headquarters and 1,400 employees to a new building within Arlington County. They plan to add 800 new local jobs.

MAJOR EMPLOYERS IN ARLINGTON COUNTY

COMPANY INDUSTRY NUMBER OF EMPLOYEES Department of Defense* Federal Government 24,000 Arlington County Government & Schools State and Local Government 8,005 Department of Homeland Security* Federal Government 7,300 Deloitte* Consulting Services 7,100 Department of Justice* Federal Government 5,400 State Department* State and Local Government 5,200 Accenture Consulting Services 4,200 FDIC* Federal Government 2,900 Virginia Hospital Center Health Care 2,400 SAIC/Leidos* Research 2,300 National Science Foundation Federal Government 2,200 Environmental Protection Agency* Federal Government 2,000 General Services Administration* Federal Government 1,900 Marriott International, Inc.* Accommodation and Food Services 1,600 Corporate Executive Board Consulting Services 1,500 Booz Allen Hamilton* Consulting Services 1,400 CACI Information Technology Services 1,200 BNA Bloomberg Media 900 Lockheed Martin Corp. Systems Engineering/Defense Contracting 848 SRA International Consulting Services 800 *Q1, 2015 Estimates Source: Arlington County Planning Division and Economic Development, Transwestern; July 2015 18 EXECUTIVE SUMMARY

REGIONAL ECONOMIC OVERVIEW

PAYROLLPAYROLL JOB GROWTH GROWTH Market Fundamentals WashingtonWASHINGTON Metro METRO Area AREA 140 ►►The Washington, DC metropolitan area employs over 3.2 120 5-Year Projected Average = 45,300/Year million people; the sixth largest job market behind New York, 100 20-Year Annual Average = 43,400/Year 80 LA, Chicago, Dallas/Ft. Worth, and San Francisco Bay Area 60 ►►The Washington, DC metropolitan area grew 61,900 net new 40 jobs for the 12-month period ending May 2016; versus the 20 0 historical 12-month average of 43,400 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 -20

►►A total 64,600 net new jobs are projected to be added to the JOBS AVERAGE) (ANNUAL -40 THOUSANDS OF NEW PAYROLL THOUSANDS OF NEW PAYROLL -60 Washington, DC economy in 2016 District of Columbia Suburban Maryland Northern Virginia ►►Northern Virginia represented 44% of the metropolitan Source: Bureau of Labor Statistics, Moody’s, Transwestern. area’s job growth with 27,100 net new jobs during the past 12 months at May 2016 UNEMPLOYMENTUNEMPLOYMENT RATE RATE LargeLARG EMetro METRO AreasAREAS | A| PAprilRIL 2015 2015 VS. AvsPR IAprilL 2016 2016 ►►Northern Virginia’s positive job growth is driven by a National Aril 2015 Average highly educated workforce 6 Aril 2016 E T A

►►The Professional/Business Services sector will lead to job R 5 4 T 43 growth through 2020 with high paying, office using jobs 4 ME N

that have a high multiplier effect on the economy Y

O 3 ►The metropolitan area’s unemployment rate is tied for the L ► 2 EM P

2nd lowest in the country at 3.5%; well below the national N U 1 unemployment rate of 4.7% at April 2016. 0 DFW Den Hou SF Bay Bos Was Ph Phil Atl NY Chi LA Basin Source: Bureau of Labor Statistics, Transwestern.

The RB Corridor is projected to be one of the major recipients Many firms providing government services are located in of Arlington’s job growth due to its profile as an established Northern Virginia, especially in Arlington. This area will remain hub for R+D and science/tech innovation. Ballston’s 24/7 a leader in the receipt of federal dollars, as many government environment and world-class amenities makes it one of the contracts are technology-dependent, and Northern Virginia is most desirable locations in the Washington, DC metropolitan the area leader in technological innovation. area. Federal Government’s FEDERAL PROCUREMENT SPENDING Economic Engine FBYED ECOUNTYRAL PROCUREMENT SPENDING BY COUNTY WWashingtonASHINGTON M MetroETRO A RAreaEA | 2 0 |1 52015 ►►Federal budget cuts and sequestration are no longer occurring and the federal government is once again fueling 1% 2% the metropolitan area’s economy with over $71 billion of 6% District of Columbia procurement spending in 2015. Arlington/Alexandria 12% 27% ►►The federal government’s procurement spending continues Fairfax to shift job growth to the private sector as government Loudoun/Prince William 5% contractors represent 15% of the metropolitan area’s Montgomery workforce Prince George's ►►Northern Virginia captures 53% of the Washington, DC 14% Frederick Balance of MSA Counties metropolitan area’s total procurement outlay 33% ►►72% of total defense spending, fueled by the Department of Defense, is spent in Northern Virginia

Source: U.S.A. Spending.gov, Transwestern. ►►Arlington County receives 14% of total procurement dollars spent in the Washington, DC metropolitan area; the third highest recipient county in the area PROCUREMENT SPENDING Washington Metro Area

Arlington County’s Success / 18 rocureent Sendin 0 P

80 R S 16 O B

Highly Educated & Skilled Workers C

O 0 URE M J (I N

LL 14 60

B ►►The Professional and Technical Services share of employment O E I R LL I

50 N Y T in Arlington County (23%) is nearly four times that of the U.S. A 12 O

P SPE N 40 N F S

overall (6%). O 10 30 ) D RE I ►►More than twice as many Arlington County adults hold a 20 N 8 G SH A bachelor’s degree or higher (74%) compared to the national 10 average (30%). 6 0 5 6 8 00 01 02 03 04 05 06 0 08 0 10 11 12 13 14 15 ►►High education levels have propelled the average household Source: Bureau of Labor Statistics, .S.. Sendin.o, Transwestern. income in Arlington County to $141,640 annually, 17% higher than the Washington, DC metropolitan region average and 84% higher than the national average.

Regional Outlook

►►Strong private sector will continue to drive the region’s economic expansion with health care, education, and cyber security fueling the growth ►►Job growth will continue to strengthen consumer confidence

PROPERTY SPECIFICATIONS 22 PROPERTY SPECIFICATIONS

GENERAL SPECIFICATIONS

OVERVIEW: Ballston Metro Center is a first-class office building that is part of a mixed-use development project. Further- more, the office building and project are uniquely situated directly above the Ballston Metrorail station and are connected via skywalks to the Ballston Common Mall/Ballston Quarter. PROPERTY ADDRESS: 901 N. Stuart Street Arlington, VA 22203 YEAR BUILT / RENOVATED: 1989 / 2015

DEVELOPER: IDI Group

SITE: 72,188 SF (1.66 acres)

ZONING: C-O-A (Mixed-Use Development)

BUILDING AREA

NUMBER OF FLOORS: 13 stories above grade 4 levels below grade RENTABLE BUILDING AREA: 235,568 BOMA SF

TYPICAL FLOOR: 18,560 BOMA SF

RESTROOMS: 1 Men’s and 1 Women’s per floor. The 7th, 8th, and 12th floor restrooms have been renovated.

PARKING: Parking for Ballston Metro Center is governed by a general partnership, Ballston Parking Associates, created between the office and hotel. The hotel manages the garage on behalf of the partnership and has an operating agreement in-place with Central Parking. The net revenues are distributed 64.98% to the hotel and 35.02% to the office building. There are a total of 760 parking spaces with the following allocations:

Ballston Metro Center, Office 360 Hilton Hotel 194 Residential 206 Total 760 spaces

*The garage consists of four levels. The bottom level is dedicated to the condominium owners and access to it is con- trolled by a gate. Levels G1, G2, and G3 contain all available parking for the hotel and office building (554 spaces).

LOADING: An enclosed loading dock facility serves the entire complex and is accessed via 9th Street North, adjacent to the parking garage entrance.

CEILING HEIGHTS: Floors 2–13 8’6” finished ceiling 10’7” slab-to-slab CONSTRUCTION

STRUCTURE: Steel and concrete frame and 8” thick reinforced concrete floor slabs ROOF: The roof is original. It is a ballasted membrane system consisting of a liquid applied inverted roofing system with masonite protection and isolation insulation. FACADE: Precast brick panels

MECHANICAL SYSTEMS

ELEVATORS: Four traction, 3,000-lb capacity, Westinghouse passenger elevators and one 3,500-lb capacity Westinghouse freight elevator provide access to the 1st through 13th floors. Two hydraulic 3,000-lb capacity Westinghouse passenger elevators provide access to the parking garage. The elevator cabs were renovated in 2015 as part of the lobby renovation.

ELECTRIC: Electrical service is fed from the Virginia Power power vault, located adjacent to the building, to the 2500 amp 277/480 volt, 3-phase, 4 wire service main power distribution board. There are three Westinghouse Powerline automatic transfer switches which alternate power supply from Virginia Power or an on-site emergency generator. Typical tenant service is 208/120 single phase 60 Hertz.

EMERGENCY GENERATOR: There is an on-site, 750 KW 937 KVA, 277/480 volt emergency generator.

HVAC: Ten 30-ton water cooled self-contained HVACs serve the interior areas of each floor (one unit on each of floors 3 – 13). Perimeter heat pumps that are tied to the building’s water loop serve the perimeter areas (approximately 60 per floor). The tenants can control their own temperature during normal building hours. There are two rooftop cooling towers; one that serves the office’s closed water loop and one that serves the retail loop, including the units that serve the atrium. The cooling towers were replaced in 2011 and the self-contained 30-ton HVAC’s on floors 11 and 12 were replaced. The perimeter package units have been replaced on an as-needed basis. FIRE / LIFE SAFETY

SPRINKLER SYSTEM: Dry sprinklers serve the parking garage levels and a wet system serves the remainder of the building. SECURITY: Electronic card access security system throughout which is monitored from the main lobby security desk. The security desk is manned 24-hours a day, seven days a week. MISCELLANEOUS

RECENT CAPITAL: Elevators - Shunt Trips $111,000 Exterior Window Caulking / Glazing $215,000 Fire Panel $75,000 Cooling Towers $321,000 2015 Renovations* $2.3 MM *2015 renovations included the lobby, front entrance, storefronts, plaza, and elevator cabs. ATRIUM & PLAZA Expenses are incurred and paid by a separate entity known as Ballston Mutual. The office building manages EXPENSE ALLOCATIONS: these costs and expenses on behalf of Ballston Mutual and bills the hotel and condominiums quarterly. The atrium costs are primarily split 50/50 with the hotel, with a few minor exceptions. The exterior plaza areas are allocated evenly (33%) to the office building, hotel, and condominiums. 24 PROPERTY SPECIFICATIONS

SITE PLAN

O ce Entrance

office footprint floors 3-13

Retail Pavilion Elevators Corridor

Loading Dock

ELEVATED WALKWAY TO THE NSF AND MALL MallRetail Corridor Pavilion 6-story atrium

HILTON HOTEL (floors 1-7)

C e ondo Ent (floors 8-26) anc ALTA VISTA CONDOMINIUMS tr n el E ranc Hot e

OVERHANG OVERHANG (CAR PORT) (CAR PORT) FLOOR PLANS Ground Floor | 13,588 SF Building Entrance Hotel

Sushi 2 Go Ste. 117 Hotel Lobby 743 SF Exp: 7/2021 Loading Dock

Tivoli’s E E l l Ste. 115 e e Esc 2,200 SF v v Esc Exp: 6/2021 (2,505 BOMA SF) 6-Story Atrium

RTD, Inc. Ste. 106 Retail 394 SF Garage Entrance Entrance Exp: 12/2020

Garage Exit Mall Corridor

Metro Dr. Dentist Escalators Bank of America Main Lobby Presidential Bank Ste. 101 Ste. 100 Ste. 105 1,894 SF 4,977 SF 1,724 SF Exp: 6/2028 Exp: 12/2023 Exp: 2/2019 Starbucks Ste. 103 1,351 SF ATM Exp: 2/2023 Building Fire Entrance Control Building Entrance

N. STUART STREET

Hotel 2nd Floor | 17,866 SF

Hotel Restaurant

E E l l e e Esc v v Esc Skywalk to Stafford Place I & Ballston Common Mall

6-Story Atrium 6-Story Atrium My Eye Dr. Open to Below Open to Below Ste. 210 2,171 SF Exp: 6/2020

Potomac Institute Ste. 200 15,695 SF Exp: 11/2022

N. STUART STREET

2016 2017 2018 2019 2020 2021 2022 2023 2027 2028 Vacant 26 PROPERTY SPECIFICATIONS

3rd – 5th Floors (Typical) | 18,562 SF

Vacant Ste. 300 / 400 / 500 (Typical) 18,562 SF

N. STUART STREET

6th Floor | 18,561 SF

Shady Grove Fertility Ste. 610 Vacant 5,719 SF Ste. 600 Exp: 5/2027 12,842 SF

N. STUART STREET

2016 2017 2018 2019 2020 2021 2022 2023 2027 2028 Vacant 7th Floor | 18,554 SF

On Deck Capital, Inc Ste. 700 18,554 SF Exp: 5/2022

N. STUART STREET

8th Floor | 18,561 SF

Howroyd-Wright Vacant Employment Agency Ste. 810 Ste. 808 1,465 SF 1,881 SF Exp: 6/2019 GSN Games Ste. 806 1,487 SF Exp: 5/2019

Ballston WorkAround Ste. 800 Vacant 8,154 SF Ste. 802 2,132 SF Exp: 1/2017 Cybraics Ste. 804 3,441 SF Exp: 6/2019

N. STUART STREET

2016 2017 2018 2019 2020 2021 2022 2023 2027 2028 Vacant 28 PROPERTY SPECIFICATIONS

9th Floor | 18,561 SF

Potomac Institute Ste. 900 18,561 SF Exp: 11/2022

N. STUART STREET

10th Floors | 18,070 SF

Private Stairs Applied Predictive Technologies Ste. 1000 18,070 SF Exp: 11/2017 (vacating)

Floors 10 & 11

N. STUART STREET

2016 2017 2018 2019 2020 2021 2022 2023 2027 2028 Vacant 11th Floor | 18,073 SF

Private Stairs Applied Predictive Technologies Ste. 1100 18,073 SF Exp: 11/2017 (vacating) Floors 10 & 11

N. STUART STREET

12th Floor | 18,073 SF

Potomac Institute Ste. 1200 18,073 SF Exp: 11/2022

N. STUART STREET

2016 2017 2018 2019 2020 2021 2022 2023 2027 2028 Vacant 30 PROPERTY SPECIFICATIONS

13th Floor | 18,070 SF

Vacant Ste. 1300 18,071 SF (completely gutted; no ceiling, walls, or flooring)

N. STUART STREET

2016 2017 2018 2019 2020 2021 2022 2023 2027 2028 Vacant

TENANCY 34 TENANCY

TENANT DESCRIPTIONS

POTOMAC INSTITUTE FOR POLICY STUDIES www.potomacinstitute.org

52,329 SF The Potomac Institute for Policy Studies is an independent, 501(c)(3), not-for-profit public policy research institute. The Institute identifies and aggressively shepherds discussion on key science, technology, and 22.2% of NRA national security issues facing our society, providing in particular, an academic forum for the study of related policy issues. From these discussions and forums, they develop meaningful policy options and ensure Exp: 11/2022 their implementation at the intersection of business and government. The Institute has become one of the nation’s leading authorities in technology study, analysis, and debate. Over the past ten years, they have worked with the Clinton and Bush administrations and Congress to provide effective policy options in the field of science and technology.

The Potomac Institute for Policy Studies was established in 1994 and employs 45 professionals at its single location. In 2013, the Potomac Institute for Policy Studies generated $11,598,620 million in total income with $4,646,655 in assets.

APPLIED PREDICTIVE TECHNOLOGIES, INC. www.predictivetechnologies.com

36,443 SF Applied Predictive Technologies (APT) is the world leader in helping organizations harness the potential of Test & Learn™, a powerful fact-based approach for choosing, targeting, and tailoring strategic and tactical 15.5% of NRA actions for maximum impact and profitability.

Exp: 11/2017 APT’s revolutionary Test & Learn software and its unparalleled consulting expertise empower consumer-fo- (vacating) cused companies to test proposed new initiatives, learn from the results, accurately predict the impact of decisions, and maximize profits. APT provides meaningful information and analysis that details the pros, the cons, and the expected results of each course of action. Thus, corporate decision-makers gain the in- sight to accurately predict the impact of new initiatives and the tools to craft solutions that will strengthen their bottom line.

More than 50 Global 2000 leaders have licensed APT’s Test & Learn™ software, including Starbucks, Kraft Foods, Wells Fargo, IHG, Staples, Lowe’s, Victoria’s Secret, Food Lion, and TD Canada Trust. APT has offices in London, San Francisco, Taipei, and Arlington, VA. APT generated $15 million in revenue during 2013 and employs 92 professionals at its Ballston headquarters. ONDECK CAPITAL, INC. www.ondeck.com

18,554 SF OnDeck’s mission is focused on solving issues in small business financing. Launched in 2007, the company uses data aggregation and electronic payment technology to evaluate the financial health of small and 7.9% of NRA medium sized businesses and efficiently deliver capital to a market underserved by banks. Through this company, small businesses can obtain affordable loans with a fraction of the time and effort that it takes Exp: 5/2022 through traditional channels of business.

OnDeck has deployed more than $1 billion in capital to tens of thousands of businesses across approximately 700 different industries. The company grew 150% in 2013 and was recently named #11 on Forbes’ 100 Most Promising Companies in America list. The company currently has 240 employees working across the country with locations such as Denver CO, in addition to their headquarters in New York, New York.

Since 2007, OnDeck has lent more than $825 million and in May 2013 alone, the company raised $17 million in venture funding. On Deck recently expanded by 7,656 SF to accommodate its growth and now occupies the entire 7th floor of the building.

BANK OF AMERICA, NATIONAL ASSOCIATION www.bankofamerica.com

4,977 SF Bank of America is headquartered in Charlotte, N.C. As of December 21st, 2013, they are operating in all 50 states, the District of Columbia, and more than 40 countries. With 154,027 employees, Bank of America also 2.1% of NRA boasts more than 8 million mass affluent clients and 3 million entrepreneurs and small business clients. The company operates through 5,151 banking centers and 16,259 ATMs nationwide. In 2013, net income Exp: 12/2023 increased to $11.4 billion from $4.2 billion in the previous year. Bank of America has commercial banking relationships with 83 percent of the 2013 Global Fortune 500 and 98 percent of the 2013 U.S. Fortune 500. In the summer of 2014, Bank of America celebrated 230 years of operations. BALLSTON METRO CENTER 901 N. Stuart Street VA_BMC_OM_2016-06-28_mrkt 36 TENANCY Arlington (Ballston), Virginia

Lease Expiration Schedule

Expiration CY CY CY CY CY CY CY CY CY CY CY LEASE EXPIRATION SCHEDULE Suite Date Tenant Vacant 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 0800 1/31/17 WorkAround Ballston 8,154 100% G2-1 11/30/17 Applied Predictive - sto 300 93.9% 100.0% 96.8% 96.8% 96.8% 1000 11/30/17 Applied Predictive 18,070 90% 1100 11/30/17 Applied Predictive 16,915 1105 11/30/17 Applied Predictive 1,158 80% 0105 2/28/19 Presidential Bank 1,724 0806 5/31/19 GSN Games 1,487 70% 0804 6/30/19 Cybraics Inc 3,441 0808 6/30/19 Howroyd-Wright Emplym 1,881 60% 63.8% 0210 6/30/20 My Eye Dr 2,171 61.5% 62.6% 57.8% 57.8% 0106 12/31/20 R.T.D. Inc. 394 50% 0115 6/30/21 Hansan LLC (tivoli's) 2,200 0117 7/31/21 Grace Foods 743 40% 0700 5/31/22 On Deck Capital 18,554 38.9% 0200 11/30/22 Potomac Institute 15,695 30% 0900 11/30/22 Potomac Institute 16,994 0908 11/30/22 Potomac Institute 1,567 20% 1200 11/30/22 Potomac Institute 18,073 S3-2 2/28/23 Starbuck's Corp - sto 330 10% 0103 2/28/23 Starbuck's Corp 1,351 3.6% 2.8% 3.2% 38.9% 0.0% 19.0% 0.0% 1.1% 1.3% 30.1% 0.0% 0.0% 0100 12/31/23 Bank of America 4,977 0% 0610 5/31/27 Shady Grove Fertility 5,719 Vacant 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 0101 6/30/28 Dentelligent, Inc. 1,894 Annual Expirations Cummulative Expirations 0600 2/28/23 Spec Tenant 12,842 (as a percentage of NRA per calendar year) 0802 1/31/24 Spec Tenant 2,132 0810 7/31/24 Spec Tenant 1,465 S1-1 10/31/26 Spec Tenant 1,271 1300 12/31/27 Spec Tenant 18,071 0500 5/31/28 Spec Tenant 18,565 0400 8/31/28 Spec Tenant 18,563 0300 11/30/28 Spec Tenant 18,562 0 01/00 0 0 01/00 0 0 01/00 0 0 01/00 0 0 01/00 0 Annual Total Square Feet 91,471 0 44,597 0 8,533 2,565 2,943 70,883 6,658 0 0 7,613 % of Leased Area (235,263 SF) 38.9% 0.0% 19.0% 0.0% 3.6% 1.1% 1.3% 30.1% 2.8% 0.0% 0.0% 3.2% BOMA Sq Ftg Adjustments 0115 6/30/21 Hansan LLC (tivoli's) 305

Total Building Square Footage: 235,568 BOMA Square Feet

p r o p e r t y v a l u a t i o n STACKING PLAN TOTAL BOMA SF

Vacant Ste. 1300 13th Floor 18,070 SF 18,071 SF (Gutted: No ceiling, ﬂ ooring, or walls)

Potomac Institute Ste. 1200 12th Floor 18,073 SF 18,073 SF New Restrooms Exp: 11/2022

Internal Applied Predictive Ste. 1100, 1105 11th Floor 18,073 SF Stairs 18,073 SF Exp: 11/2017 (vacating)

Applied Predictive Ste. 1000 10th Floor 18,070 SF 18,070 SF Exp: 11/2017 (vacating)

Potomac Institute Sublease: Sublease: Ste. 900, 908 9th Floor 18,561 SF Accelerated Dev. & Digital Reasoning Sublease: SCIF Space Support Corp. Systems Inc. 18,561 SF APIC Corp. (approx. 3,000 SF) Exp: 11/2022

Howroyd-Wright Ballston WorkAround Cybraics, Inc. GSN Games Vacant Employment Agency Ste. 800 Ste. 804 Ste. 806 Vacant 8th Floor 18,561 SF Ste. 802 Ste. 808 Ste. 810 8,154 SF 3,441 SF 1,487 SF Renovated: 2,132 SF 1,881 SF 1,465 SF Exp: 1/2017 Exp: 6/2019 Exp: 5/2019 Exp: 6/2019 New Common Areas New Restrooms On Deck Capital Ste. 700 7th Floor 18,554 SF 18,554 SF New Restrooms Exp: 5/2022

Shady Grove Fertility Vacant Ste. 610 6th Floor 18,561 SF Ste. 600 5,719 SF 12,842 SF Exp: 5/2027

Vacant 5th Floor 18,565 SF Ste. 500 18,565 SF

Vacant 4th Floor 18,563 SF Ste. 400 18,563 SF

Vacant 3rd Floor 18,562 SF Ste. 300 18,562 SF

Potomac Institute MyEyeDr. Ste. 200 Sublease: Ste. 210 2nd Floor 17,866 SF International & National 15,695 SF Security Alliance 2,171 SF Exp: 11/2022 Exp: 6/2020

Sushi 2 Go Tivoli’s Barber Shop Presidential Bank Starbucks Dr. Dentist Bank of America Ste. 117 Ste. 115 Ste. 106 Ste. 105 Ste. 103 Ste. 101 Ste. 100 Ground Floor 13,588 SF Lobby 743 SF 2,200 SF (2,505 BOMA SF) 394 SF 1,724 SF 1,351 SF 1,894 SF 4,977 SF Exp: 7/2021 Exp: 6/2021 Exp: 12/2020 Exp: 2/2019 Exp: 2/2023 Exp: 6/2028 Exp: 12/2023

Vacant P-1 1,271 SF Parking Garage Ste. S1-1 1,271 SF

Applied Predictive Ste. G2-1 P-2 300 SF Parking Garage 300 SF Exp: 11/2017

Starbucks Ste. S3-2 P-3 330 SF Parking Garage 330 SF Exp: 2/2023

TOTAL 235,568 BOMA SF 2016 2017 2018 2019 2020 2021 2022 2023 2027 2028 Vacant 38 TENANCY

RENT ROLL

Annual Rental Rates Tenant Reimbursements Suite Number Tenant Rent Changes Months % to Base Year + Stop Amount Expiration Date/Term Sq Ftg PSF annual on to (PSF) to Abate Abate (Op Expense / Tax) TIs LCs Comments Starbuck's Corp - sto $19.10 Mar-2017 $19.67 - - Gross Lease: Pays no expense - - • Storage Unit: located on the Storage, Suite: S3-2 330 $6,303 Mar-2018 $20.26 reimbursement. P-3 Level of garage. Sep-2014 to Feb-2023 Mar-2019 $20.87 Mar-2020 $21.49 Mar-2021 $22.14 Mar-2022 $22.80 Applied Predictive - sto $18.55 Apr-2017 $19.10 - - Gross Lease: Pays no expense - - Storage, Suite: G2-1 300 $5,565 reimbursement. Mar-2011 to Nov-2017 Spec Tenant $18.00 Nov-2017 $18.54 - - Gross Lease: Pays no expense - $10.32 • Storage Unit: located on Storage, Suite: S1-1 1,271 $22,878 Nov-2018 $19.10 reimbursement. 5.00% the P-1 Level of garage. Nov-2016 to Oct-2026 Nov-2019 $19.67 Nov-2020 $20.26 Nov-2021 $20.87 Nov-2022 $21.49 Nov-2023 $22.14 Nov-2024 $22.80 Nov-2025 $23.49 Bank of America $56.62 Jan-2017 $57.98 - - 0100_NNN (tax, bldg / oe, rtl) - - • Renewal: Three 5-year Retail, Suite: 0100 4,977 $281,798 Jan-2018 $59.37 options with 12 months Dec-2013 to Dec-2023 Jan-2019 $60.80 notice. Opt 1 - 102.4% of Jan-2020 $62.26 prior year's rent. Opt 2 - Jan-2021 $63.75 greater of market or 102.4% Jan-2022 $65.28 of last rent. Opt 3 - 102.4% Jan-2023 $66.85 of prior year's rent. • Exclusive Use: Cannot lease to another bank, financial institution, or commercial lending office. Dentelligent, Inc. $47.92 Jul-2017 $49.12 - - 0101_Net (tax only, no oe's) - - • Renewal: One 5-year option (d/b/a Dr. Dentist) 1,894 $90,760 Jul-2018 $50.35 at market with 12 months Suite: 0101 Jul-2019 $51.61 notice. Feb-2013 to Jun-2028 Jul-2020 $52.90 • Guaranty: A Mashalian Jul-2021 $54.22 and Soft Touch, Inc through Jul-2022 $55.57 Jun-2018. Jul-2023 $56.96 Jul-2024 $58.39 Jul-2025 $59.85 Jul-2026 $61.34 Jul-2027 $62.88 Starbuck's Corp $42.49 Mar-2018 $47.00 - - 0103_NNN (tax, bldg / oe, rtl) - - • Renewal: One 5-yr option Retail, Suite: 0103 1,351 $57,404 at market; notice by Apr-1998 to Feb-2023 5/31/2022. • Termination: One-time right to terminate effective 2/28/2018, with notice by 2/28/2017 and payment of unamortized leasing costs. • Exclusive Use: Sale of coffee beans, gourmet brewed coffee, and espresso based drinks. Does not apply to Tivoli's or Grace Foods Presidential Bank $53.47 Mar-2017 $54.94 - - 0105_NNN (tax, bldg / oe, ofc) - - Retail, Suite: 0105 1,724 $92,182 Mar-2018 $56.45 Mar-1999 to Feb-2019 R.T.D. Inc. (d/b/a/ Barbershop) $42.50 Dec-2016 $43.78 - - 0106_NNN (tax, bldg / oe, rtl) - - • New tenant for Nail Salon. Retail, Suite: 0106 394 $16,745 Dec-2017 $45.09 Argus assumes annual Dec-2015 to Dec-2020 Dec-2018 $46.44 rent escalations are 3.0% Dec-2019 $47.83 annually.. Dec-2020 $49.27 Hansan LLC (d/b/a/ Tivoli's) $36.67 Jul-2017 $37.59 - - 0115_NNN (tax, bldg / oe, rtl) - - • Upon expiration, suite Retail, Suite: 0115 2,200 $80,674 Jul-2018 $38.53 rolls to 2,505 BOMA SF Jun-1990 to Jun-2021 Jul-2019 $39.49 • Renewal: One 5-year Jul-2020 $40.48 option at market with 10 months' notice. Annual Rental Rates Tenant Reimbursements Suite Number Tenant Rent Changes Months % to Base Year + Stop Amount Expiration Date/Term Sq Ftg PSF annual on to (PSF) to Abate Abate (Op Expense / Tax) TIs LCs Comments Grace Foods $44.15 Aug-2017 $45.26 - - 0117_NNN (tax, bldg / oe, rtl) - - • Guaranty: lease is (d/b/a Sushi2Go) 743 $32,803 Aug-2018 $46.39 guaranteed by operator. Retail, Suite: 0117 Aug-2019 $47.55 Aug-1998 to Jul-2021 Aug-2020 $48.74 Potomac Institute $47.00 Jul-2017 $48.41 - - 0200_BY10_$777,606/$1,985,097 - - • Renewal: One 5-year Suite: 0200 15,695 $737,665 Jul-2018 $49.86 option at market with 12 Jun-2000 to Nov-2022 Jul-2019 $51.36 months' notice. Jul-2020 $52.90 • ROFO: Right of first offer Jul-2021 $54.49 to lease any space in the Jul-2022 $56.12 building. My Eye Dr $36.17 Jul-2017 $37.26 - - 0210_BY99_$325,577/$1,140,298 - - Suite: 0210 2,171 $78,525 Jul-2018 $38.38 Jun-2000 to Jun-2020 Jul-2019 $39.53 Spec Tenant $41.00 Dec-2018 $42.23 1-12 100% OFC: Mrkt BY Stop (oe / tax) $50.00 $24.21 • Current Condition: 2nd Suite: 0300 18,562 $761,042 Dec-2019 $43.50 5.00% generation space; prior Dec-2017 to Nov-2028 Dec-2020 $44.80 tenant build-out. Dec-2021 $46.15 Dec-2022 $47.53 Dec-2023 $48.96 Dec-2024 $50.42 Dec-2025 $51.94 Dec-2026 $53.50 Dec-2027 $55.10 Spec Tenant $41.00 Sep-2018 $42.23 1-12 100% OFC: Mrkt BY Stop (oe / tax) $50.00 $24.21 • Current Condition: 2nd Suite: 0400 18,563 $761,083 Sep-2019 $43.50 5.00% generation space; prior Sep-2017 to Aug-2028 Sep-2020 $44.80 tenant build-out. Sep-2021 $46.15 Sep-2022 $47.53 Sep-2023 $48.96 Sep-2024 $50.42 Sep-2025 $51.94 Sep-2026 $53.50 Sep-2027 $55.10 Spec Tenant $42.00 Jun-2018 $43.26 1-12 100% OFC: Mrkt BY Stop (oe / tax) $50.00 $24.80 • Current Condition: 2nd Suite: 0500 18,565 $779,730 Jun-2019 $44.56 5.00% generation space; prior Jun-2017 to May-2028 Jun-2020 $45.89 tenant build-out. Jun-2021 $47.27 Jun-2022 $48.69 Jun-2023 $50.15 Jun-2024 $51.65 Jun-2025 $53.20 Jun-2026 $54.80 Jun-2027 $56.44 Spec Tenant $41.00 Mar-2018 $42.23 1-6 100% OFC: Mrkt BY Stop (oe / tax) $50.00 $12.24 • Current Condition: 2nd Suite: 0600 12,842 $526,522 Mar-2019 $43.50 5.00% generation space; prior Mar-2017 to Feb-2023 Mar-2020 $44.80 tenant build-out. Mar-2021 $46.15 • Landlord is considering Mar-2022 $47.53 sub-dividing and building two spec office suites: #600 - 7,831 SF and #603 - 5,011 SF. Shady Grove Fertility $40.50 May-2017 $41.51 1-7 100% OFC: Mrkt BY Stop (oe / tax) - - Suite: 0610 5,719 $231,620 May-2018 $42.55 May-2016 to May-2027 May-2019 $43.61 May-2020 $44.70 May-2021 $45.82 May-2022 $46.97 May-2023 $48.14 May-2024 $49.35 May-2025 $50.58 May-2026 $51.84 May-2027 $53.14 40 TENANCY

Annual Rental Rates Tenant Reimbursements Suite Number Tenant Rent Changes Months % to Base Year + Stop Amount Expiration Date/Term Sq Ftg PSF annual on to (PSF) to Abate Abate (Op Expense / Tax) TIs LCs Comments On Deck Capital $44.26 May-2017 $45.58 - - 0700_BY15_$953,156/$1,908,831 - - • ROFO: To lease any space Suite: 0700 18,554 $821,200 May-2018 $46.95 on 6th flr at market. Jun-2015 to May-2022 May-2019 $48.24 May-2020 $49.57 May-2021 $50.93 WorkAround Ballston $3.68 - - - - Gross Lease: Pays no expense - - • This is a workstation rental Suite: 0800 8,154 $30,000 reimbursement. space. Landlord collects Feb-2016 to Jan-2017 all revenue that exceeds $5,000 per year. Spec Tenant $42.00 Feb-2019 $43.26 1-6 100% OFC: Mrkt BY Stop (oe / tax) $10.00 $12.53 • Spec build-out; move-in Suite: 0802 2,132 $89,544 Feb-2020 $44.56 5.00% ready. Feb-2018 to Jan-2024 Feb-2021 $45.89 Feb-2022 $47.27 Feb-2023 $48.69 Cybraics Inc $43.50 Jul-2017 $44.81 1-2 100% OFC: Mrkt BY Stop (oe / tax) - - Suite: 0804 3,441 $149,684 Jul-2018 $46.15 3-12 38% Jul-2016 to Jun-2019 GSN Games $43.00 May-2017 $44.29 - - OFC: Mrkt BY Stop (oe / tax) - - Suite: 0806 1,487 $63,941 May-2018 $45.62 May-2016 to May-2019 May-2019 $46.99 Howroyd-Wright Emplymt Agy $41.91 Feb-2017 $43.16 - - 0808_BY14_$987,537/$2,032,537 - - • Renewal: One 5-year Suite: 0808 1,881 $78,833 Feb-2018 $44.46 option at market with 12 Jan-2014 to Jun-2019 Feb-2019 $45.79 months' notice. Spec Tenant $42.00 Aug-2019 $43.26 1-6 100% OFC: Mrkt BY Stop (oe / tax) $10.00 $12.53 • Old management office; Suite: 0810 1,465 $61,530 Aug-2020 $44.56 5.00% move-in ready. Aug-2018 to Jul-2024 Aug-2021 $45.89 Aug-2022 $47.27 Aug-2023 $48.69 Potomac Institute $47.00 Jul-2017 $48.41 - - 0900_See Ste 0200 for Reimb. - - • Renewal: One 5-year Suite: 0900 16,994 $798,718 Jul-2018 $49.86 option at market with 12 Mar-2007 to Nov-2022 Jul-2019 $51.36 months' notice. Jul-2020 $52.90 • ROFO: Right of first offer Jul-2021 $54.49 to lease any space in the Jul-2022 $56.12 building. Potomac Institute $47.00 Jul-2017 $48.41 - - 0908_BY12_$1,026,609/1,990,188 - - • Renewal: One 5-year Suite: 0908 1,567 $73,649 Jul-2018 $49.86 option at market with 12 Mar-2007 to Nov-2022 Jul-2019 $51.36 months' notice. Jul-2020 $52.90 • ROFO: Right of first offer Jul-2021 $54.49 to lease any space in the Jul-2022 $56.12 building. Applied Predictive $46.37 Dec-2016 $47.65 - - 1000_See Ste 1100 for Reimb - - • Renewal: Two 5-year Suite: 1000 18,070 $837,906 options at market with 12 Aug-2012 to Nov-2017 months' notice. • ROFO: One-time right of first offer to lease any space on the 9th & 12th floors. • Argus assumes tenant will vacate. Tenant was recently acquired. Annual Rental Rates Tenant Reimbursements Suite Number Tenant Rent Changes Months % to Base Year + Stop Amount Expiration Date/Term Sq Ftg PSF annual on to (PSF) to Abate Abate (Op Expense / Tax) TIs LCs Comments Spec Tenant $43.00 Jun-2019 $44.29 1-12 100% OFC: Mrkt BY Stop (oe / tax) $50.00 $25.39 • Entry reflects the re- Suite: 1000 18,070 $777,010 Jun-2020 $45.62 5.00% absorption of Ste. 1000. Jun-2018 to May-2029 Jun-2021 $46.99 Jun-2022 $48.40 Jun-2023 $49.85 Jun-2024 $51.34 Jun-2025 $52.88 Jun-2026 $54.47 Jun-2027 $56.11 Jun-2028 $57.79 Applied Predictive $46.37 Dec-2016 $47.65 - - 1100_BY12_$1,026,609/1,907,014 - - • Renewal: Two 5-year Suite: 1100 16,915 $784,349 options at market with 12 Dec-2012 to Nov-2017 months' notice. • ROFO: One-time right of first offer to lease any space on the 9th & 12th floors. • Argus assumes tenant will vacate. Tenant was recently acquired. Applied Predictive $46.26 Dec-2016 $47.53 - - 1105_See Ste 1100 for Reimb - - • Renewal: Two 5-year Suite: 1105 1,158 $53,569 options at market with 12 Jan-2012 to Nov-2017 months' notice. • ROFO: One-time right of first offer to lease any space on the 9th & 12th floors. • Argus assumes tenant will vacate. Tenant was recently acquired. Spec Tenant $43.00 Jun-2019 $44.29 1-12 100% OFC: Mrkt BY Stop (oe / tax) $50.00 $25.39 • Entry reflects the re- Suite: 1100 18,073 $777,139 Jun-2020 $45.62 5.00% absorption of Stes 1100 Jun-2018 to May-2029 Jun-2021 $46.99 & 1105. Jun-2022 $48.40 Jun-2023 $49.85 Jun-2024 $51.34 Jun-2025 $52.88 Jun-2026 $54.47 Jun-2027 $56.11 Jun-2028 $57.79 Potomac Institute $47.00 Jul-2017 $48.41 - - 1200_BY12_$1,026,609/1,990,188 - - • Renewal: One 5-year Suite: 1200 18,073 $849,431 Jul-2018 $49.86 option at market with 12 Dec-2012 to Nov-2022 Jul-2019 $51.36 months' notice. Jul-2020 $52.90 • ROFO: Right of first offer Jul-2021 $54.49 to lease any space in the Jul-2022 $56.12 building. Spec Tenant $43.00 Jan-2018 $44.29 1-12 100% OFC: Mrkt BY Stop (oe / tax) $50.00 $25.39 Suite: 1300 18,071 $777,053 Jan-2019 $45.62 5.00% Jan-2017 to Dec-2027 Jan-2020 $46.99 Jan-2021 $48.40 Jan-2022 $49.85 Jan-2023 $51.34 Jan-2024 $52.88 Jan-2025 $54.47 Jan-2026 $56.11 Jan-2027 $57.79

FINANCIAL ANALYSIS 44 FINANCIAL ANALYSIS

CASH FLOW PROJECTIONS

Year 1 PSF Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending 235,568 SF Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Sep-25 Sep-26 Sep-27

Potential Gross Revenue Base Rental Revenue $50.44 $11,882,584 $10,731,167 $10,712,665 $11,005,516 $11,342,717 $11,738,913 $11,956,568 $12,336,417 $12,730,486 $13,113,611 $13,554,257 Absorption & Turnover Vacancy (17.67) (4,161,727) (1,246,313) (66,850) (13,696) (40,246) (157,810) (593,453) (170,191) (1,195) (39,708) (87,998) Base Rent Abatements (5.31) (1,250,648) (2,619,020) (1,183,450) 0 0 0 0 0 0 0 0 ______Scheduled Base Rental Revenue 27.47 6,470,209 6,865,834 9,462,365 10,991,820 11,302,471 11,581,103 11,363,115 12,166,226 12,729,291 13,073,903 13,466,259 Expense Reimbursement Revenue 0.86 201,417 279,254 426,554 542,478 650,525 735,025 626,860 649,034 751,780 860,216 948,542 Direct Reimb (elec & w+s) 0.18 43,505 45,714 47,539 48,875 50,215 51,532 52,714 54,413 55,996 57,514 59,072 Parking 1.35 319,020 327,793 336,807 346,070 355,586 365,365 375,413 385,736 396,344 407,244 418,443 ______Total Potential Gross Revenue 29.86 7,034,151 7,518,595 10,273,265 11,929,243 12,358,797 12,733,025 12,418,102 13,255,409 13,933,411 14,398,877 14,892,316 Vacancy & Credit Loss (3%) 0.00 0 0 (389,367) (518,002) (507,944) (409,811) 0 (442,471) (635,329) (615,973) (589,715) ______Effective Gross Revenue 29.86 7,034,151 7,518,595 9,883,898 11,411,241 11,850,853 12,323,214 12,418,102 12,812,938 13,298,082 13,782,904 14,302,601 ______Operating Expenses Management Fee (1%) 0.30 70,342 75,186 98,839 114,112 118,509 123,232 124,181 128,129 132,981 137,829 143,026 Cleaning (variable) 0.96 226,957 255,951 275,758 283,982 291,688 298,266 301,219 315,103 325,701 334,164 342,839 Utilities (variable) 2.12 499,543 538,601 567,623 583,946 599,889 614,780 625,844 649,287 669,293 687,151 705,473 R&M and Atrium/Plz Fees 2.19 515,133 529,299 543,855 558,811 574,178 589,968 606,193 622,863 639,991 657,591 675,675 Contract Services 0.27 64,779 66,560 68,391 70,272 72,204 74,190 76,230 78,326 80,480 82,693 84,967 Personnel 1.49 349,885 359,507 369,393 379,552 389,989 400,714 411,734 423,056 434,690 446,644 458,927 Insurance 0.29 67,895 69,762 71,681 73,652 75,677 77,758 79,897 82,094 84,351 86,671 89,055 Taxes 4.21 991,831 1,021,712 1,059,091 1,093,614 1,124,229 1,155,776 1,186,511 1,219,369 1,253,472 1,288,454 1,324,493 Administrative (reimb) 0.42 98,456 101,164 103,946 106,804 109,741 112,759 115,860 119,046 122,320 125,684 129,140 Ground Rent (non-reimb) 1.91 450,000 566,096 753,705 872,774 900,035 932,060 948,365 979,019 1,010,487 1,041,424 1,077,006 ______Total Operating Expenses 14.16 3,334,821 3,583,838 3,912,282 4,137,519 4,256,139 4,379,503 4,476,034 4,616,292 4,753,766 4,888,305 5,030,601 ______Net Operating Income 15.70 3,699,330 3,934,757 5,971,616 7,273,722 7,594,714 7,943,711 7,942,068 8,196,646 8,544,316 8,894,599 9,272,000 ______Leasing & Capital Costs Tenant Improvements 15.13 3,565,130 2,771,220 161,974 23,551 32,313 433,497 1,549,722 308,920 36,402 0 328,648 Leasing Commissions 6.92 1,630,529 1,411,949 121,746 32,973 76,189 275,669 966,440 303,802 21,910 0 198,770 CapEx: Reserve ($0.15 psf) 0.15 35,335 36,307 37,305 38,331 39,385 40,468 41,581 42,725 43,900 45,107 46,347 ______Total Leasing & Capital Costs 22.21 5,230,994 4,219,476 321,025 94,855 147,887 749,634 2,557,743 655,447 102,212 45,107 573,765 ______Cash Flow Before Debt Service (6.50) (1,531,664) (284,719) 5,650,591 7,178,867 7,446,827 7,194,077 5,384,325 7,541,199 8,442,104 8,849,492 8,698,235 ======

8/19/2016 Year 1 PSF Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending 235,568 SF Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Sep-25 Sep-26 Sep-27

8/19/2016

MID-ATLANTIC CAPITAL MARKETS GROUP 46 FINANCIAL ANALYSIS

ASSUMPTIONS ANALYSIS START DATE Oct 01, 2016

NET RENTABLE AREA Occupied Area 143,792 61.1% Vacant 91,471 38.9% BOMA 305 Total NRA 235,568

MARKET LEASING Annual Tenant Leasing ASSUMPTIONS Market Lease Lease Renewal Improvements Commissions Rent Lease Type Term Probability Downtime (Upon Rollover) Escalations New Renew New Renew Storage $18.00 3.0% Gross 7 years 75% 9 mo $0.00 $0.00 0.0% 0.0% Retail: Street $60.00 3.0% NNN 10 years 75% 9 mo $25.00 $5.00 5.0% 3.0% Retail: Interior $35.00 3.0% NNN 10 years 75% 9 mo $25.00 $5.00 5.0% 3.0% Office: Floors 2 - 4 $40.00 3.0% Full Service 7 years 75% 9 mo $35.00 $15.00 5.0% 3.0% Office: Floors 5 - 8 $41.00 3.0% Full Service 7 years 75% 9 mo $35.00 $15.00 5.0% 3.0% Office: Floors 9 - 13 $42.00 3.0% Full Service 7 years 75% 9 mo $35.00 $15.00 5.0% 3.0% Tenant Improvements illustrated above are upon the rollover of the new buildouts. TIs for the lease-up of existing vacancies are listed below and reflect higher allowances due to the condition of the spaces.

INFLATION RATES Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7+ General Inflation (CPI) – 2.75% 2.75% 2.75% 2.75% 2.75% 0.00% Market Rent Inflation – 0.00% 3.00% 5.00% 7.00% 5.00% 3.00%

MISCELLANEOUS INCOME PSF Year 1 Comments Direct Reimb (elec & w+s) $43,505 $0.18 Electric sub-metered charges are 4% of electricity (My Eye Dr). Water & Sewer sub-meter is from retail tenants, 49% of water and sewer costs. Parking $319,020 $1.35 Represents the owner's 2016 budget increased 2.25% to adjust for the Oct 2016 start. Ballston Metro Center's garage is managed by Central Parking under an operating agreement. The operating agreement replaced the former lease structure with Colony effective 1/1/2013, and yielded a 12.8% increase in revenues from 2012 to 2013. The garage includes a total of 360 parking spaces and has generated historical income of $303,135, $280,405, and $288,826 for the periods CY2015 - CY2013, respectively.

GENERAL VACANCY 3.0% of Scheduled Base Rental Revenue, less, Absorption & Turnover Vacancy. The following tenants are excluded during their initial terms: Bank of America, Presidential Bank, and Starbucks.

OPERATING EXPENSES Primarily reflects the owner’s CY 2016 Budget increased 2.25% to account for inflation through 10/1/2016. Note: only 93.7% of certain expenses, excluding taxes, are passed through to the office tenants; the balance is passed through to the retail tenants. PSF Year 1 Comments Management Fee (1%) $70,342 $0.30 1% of EGR is charged to the owner; however, 3% is passed through to all tenants Cleaning (variable) $226,957 $0.96 Stabilized cleaning and day porter is estimated at $0.93 per occupied square foot. Day Porter ($39,232), Trash ($3,068), and window washing ($1,841) are assumed to be stabilized fixed costs. Utilities (variable) $499,543 $2.12 Stabilized electricity is estimated at $2.07 per occupied square foot. Water and sewer is assumed a stabilized fixed cost ($52,273). Due to sub-metering, 96% of electric is passed-through to the tenants, the 4% balance is a direct reimbursement. Similarly, 51% of water and sewer is passed-through, the 49% balance is a direct reimbursement. R&M and Atrium/Plz Fees $515,133 $2.19 R&M includes the building's shared costs for atrium and plaza maintenance. The office building pays 50% of the atrium costs and 33% of the plaza costs. The office building's prorata share of these expenses have been underwritten to $367,026. The balance ($148,107 or $0.63 psf) represents R&M for just the office building. Contract Services $64,779 $0.27 Primarily consists of security ($44,591), HVAC ($5,791), parking garage operations ($5,644), and interior plants ($4,652). Personnel $349,885 $1.49 Includes engineering costs ($146,841), management & administrative costs ($143,466), and taxes & benefits ($59,578). Insurance $67,895 $0.29 Taxes $991,832 $4.21 Includes: RE Tax, BID Tax, Bus Lic Tax. Year 1 RE and BID Taxes represent the 2016 assessment of $80,915,700, and actual taxes through Dec 2016. Effective Jan 2017, and each Jan thereafter, the assessed value is increased 3%. Bus Lic Tax is 0.43% of EGR. RE and BID Taxes increase annually by General Inflation. Administrative (reimb) $98,456 $0.42 Administrative (reimb) includes the management office's rent ($27,608), accounting services ($21,882), and telephone ($7,362). Ground Rent (non-reimb) $450,000 $1.91 Comprised of base rent ($450,000/yr), plus, 8.5% of adjusted gross income. Adjusted Gross Income is defined as the difference between the Gross Income, excluding parking income, (scheduled base rental revenue), less, reimbursement income, TI amortization as part of base rent, direct billed common area expenses, and base revenue of $5,500,000. Historical ground rent payments for the periods 2010 - 2015, respectively, are: $701,317, $653,126, $688,530, $565,777, $450,000, and $450,000.

CAPITAL CapEx: Reserve ($0.15 psf) $35,335 $0.15 Increases annually by General Inflation INITIAL LEASE-UP SUITE SQ FT START RENT/SF TERM INC. TI / SF FREE COMMENTS SCHEDULE S1-1 1,271 SF 11/16 $18.00 10 yrs 3.0% $0 /SF No Storage unit 300 18,562 SF 12/17 $41.00 11 yrs 3.0% $50 /SF 12 mos 400 18,563 SF 9/17 $41.00 11 yrs 3.0% $50 /SF 12 mos 500 18,565 SF 6/17 $42.00 11 yrs 3.0% $50 /SF 12 mos 600 12,842 SF 3/17 $41.00 6 yrs 3.0% $50 /SF 6 mos 802 2,132 SF 2/18 $42.00 6 yrs 3.0% $10 /SF 6 mos Spec build-out; move-in ready 810 1,465 SF 8/18 $42.00 6 yrs 3.0% $10 /SF 6 mos Move-in ready 1000 18,070 SF 6/18 $43.00 11 yrs 3.0% $50 /SF 12 mos Re-leasing of Applied Predictive 1100 18,073 SF 6/18 $43.00 11 yrs 3.0% $50 /SF 12 mos Re-leasing of Applied Predictive 1300 18,071 SF 1/17 $43.00 11 yrs 3.0% $50 /SF 12 mos

GROUND LEASE SUMMARY

LAND OWNER Washington Metropolitan Area Transit Authority (WMATA)

LEASE DATE September 8, 1986

PREMISES 901 N. Stuart Street Arlington, Virginia

SQUARE FOOTAGE 72,119 square feet

LEASE TERM 99 years (60-year initial term, plus 39-year automatic renewal term)

COMMENCEMENT DATE September 8, 1986

EXPIRATION September 7, 2085 (inclusive of 39-year renewal term)

BASE RENT $450,000

PERCENTAGE RENT 8.50% of the Adjusted Gross Income. Adjusted Gross income is defined as the difference between Gross Income (excluding parking revenue) and the sum of increases in operating expenses, common area expenses separately billed to tenants and base revenue in the amount of $5,500,000.

EXPENSES Lessee is responsible for all real and personal property taxes, license and permit fees, charges for public utilities of any kind, assessments and improvements. Landlord (WMATA) is only responsible for paying taxes assessed against the Lower Level associated with the Metro.

OPTION TO RENEW Lessee has one 39-year automatic renewal option under the same terms, except for the Minimum Base Rental payment which will be adjusted to a fair market rate. If Tenant and Landlord cannot agree on the fair market rental rate it will go to the three appraiser process.

CANCELLATION OPTION Lessee may elect not to renew its 39-year renewal option by giving Landlord 12 months notice.

PURCHASE OPTION Should the Land Owner elect to sell the land, the Lessee has the right of first refusal. Should the Land Owner receive an offer to purchase the land, the Lessee has a right to match the offer.

COMMENTS In the event of default, Mortgagee may cure the default. In the event of default and lease termination, a new lease can be created between Land Owner and Mortgagee. 48 FINANCIAL ANALYSIS

SALE COMPARABLES

INTERNATIONAL PLACE ROSSLYN METRO CENTER STAFFORD PLACE II 1 1735 N LYNN STREET 2 1700 N MOORE STREET 3 4121 WILSON BLVD ARLINGTON, VA ARLINGTON, VA ARLINGTON, VA

ARLINGTON GATEWAY 3003 WASHINGTON BLVD 901 N GLEBE ROAD 4 5 ARLINGTON, VA ARLINGTON, VA

1 2 3 4 5 SUBMARKET Rosslyn Rosslyn Ballston Ballston Clarendon

RSF 293,538 SF 407,364 SF 184,548 SF 323,078 SF 209,091 SF

CLASS B B A A A

SELLER Beacon Clover Mgmt Dweck Dweck Penzance

BUYER Meridian Morgan Stanley / AREP Jamestown Piedmont KBS

PRICE $101,000,000 $180,000,000 $88,000,000 $178,000,000 $149,200,000

PRICE PSF $344 psf $442 psf $477 psf $551 psf $714 psf

CAP RATE 6.00% 5.00% 6.10% 5.60% 5.10%

CLOSE DATE Jun-16 Jun-15 May-15 Feb-13 Dec-14

LOCATION Similar Similar Slightly Inferior Slightly Inferior Inferior

QUALITY Similar Similar Slightly Superior Superior Superior

CONDITIONS Built in 1967/renovated Built in 1979, 88% leased. Sits 93% leased at the time of sale Built in 2005. Trophy building Part of property is on a ground in 1991. Across the street atop Rosslyn Metrorail station. with 50% vacating in Dec-2017 that was 99% leased at the lease. Delivered 3/2014. 88% from Metro. 12-stories. 90% Recent renovations include (NSF); the balance is leased for time of sale. leased at the time of sale. 15- leased with US Postal Service the parking level elevator 10 years. year lease with 2.75% bumps taking 80% of the space until lobbies, exterior upgrades and to Center for Naval Analysis 2019/20. $4.4MM renovation the restrooms. The property is (CNA) for 150,000 sf (they are recently completed. directly connected to the metro a 60 yr old think tank..no cred- station through the retail it). 30,000sf lease to Comapp pavilion. for 10 years. 25% of building is a dead wall.

TRANSWESTERN (including their affiliates, subsidiaries, related parties, successors, and assigns, hereinafter referred to singly and collectively as “Transwestern” or “Agent”) have been engaged as the exclusive agent by the owner (“Owner” or “Seller”) for the leasehold interest in Ballston Metro Center (901 N Stuart Street, Arlington, VA), the “Property”.

The Property is being offered for sale in an “as-is, where-is” condition and the Seller and the Agent make no representations or warranties as to the accuracy of the information contained in this Offering Memorandum. The enclosed materials include highly confidential information and are being furnished solely for the purpose of review by prospective purchasers of the interest described herein. Neither the enclosed materials, nor any information contained herein, are to be used for any other purpose, or made available to any other person without the express written consent of the Seller. Each recipient, as a prerequisite to receiving the enclosed information, should be registered with Transwestern as a “Registered Potential Investor” or as “Buyer’s Agent” for an identified “Registered Potential Investor”. The use of this Offering Memorandum and the information provided herein, is subject to the terms, provisions and limitations of the Confidentiality Agreement furnished by the Agent prior to delivery of this Offering Memorandum.

The enclosed materials are being provided solely to facilitate the prospective investor’s due diligence for which it shall be fully and solely responsible. The material contained herein is based on information and sources deemed to be reliable, but no representation or warranty, express or implied, is being made by the Agent or the Seller or any of their respective representatives, affiliates, officers, employees, shareholders, partners and directors, as to the accuracy or completeness of the information contained herein. Summaries contained herein of any legal or other documents are not intended to be comprehensive statements of the terms of such documents, but rather only outlines of some of the principal provisions contained therein. Neither the Agent or the Seller shall have any liability whatsoever for the accuracy or completeness of the information contained herein, or any other written or oral communications, or information transmitted, or made available, or any action taken, or decision made by the recipient with respect to the Property. Interested parties are to make their own investigations, projections and conclusions without reliance upon the material contained herein.

The Seller reserves the right, at its sole and absolute discretion, to withdraw the Property from being marketed for sale at any time and for any reason. The Seller and the Agent each expressly reserve the right, at their sole and absolute discretion, to reject any and all expressions of interest or offers regarding the Property and/or to terminate discussions with any entity at any time, with or without notice. This Offering Memorandum is made subject to omissions, corrections or errors, change of price or other terms, prior sale or withdrawal from the market without notice. The Agent is not authorized to make any representations or agreements on behalf of the Seller.

The Seller shall have no legal commitment or obligation to any interested party reviewing the enclosed materials, performing additional investigation and/or making an offer to purchase the Property unless and until a binding written agreement for the purchase of the Property has been fully executed, delivered and approved by the Seller and any conditions to the Seller’s obligations thereunder have been satisfied or waived.

By taking possession of and reviewing the information contained herein, the recipient agrees that (a) the enclosed materials and their contents are of a highly confidential nature and will be held and treated in the strictest confidence and shall be returned to the Agent or the Seller promptly upon request; and (b) the recipient shall not contact employees or tenants of the Property directly or indirectly regarding any aspect of the enclosed materials or the Property without the prior written approval of the Seller or the Agent; and (c) no portion of the enclosed materials may be copied or otherwise reproduced without the prior written authorization of the Seller or the Agent or as otherwise provided in the Confidentiality Agreement executed and delivered by the recipient(s) to Transwestern.

The Seller will be responsible for any commission due the Agent in connection with a sale of the Property. Each prospective purchaser will be responsible for any claims for commissions by any other broker or agent in connection with a sale of the Property if such claims arise from acts of such prospective purchaser or its broker/agent. Any Buyer’s Agent must provide a registration signed by the prospective investor acknowledging said agent’s authority to act on its behalf.

If you have no interest in the Property at this time, please return this Offering Memorandum to the address below if it is a hard copy or delete the file if it is an electronic copy:

Transwestern Mid-Atlantic Capital Markets Group 1717 K Street, NW, Suite 1000 Washington, DC 20006 Attention: Gerald P. Trainor, Executive Managing Director

FINANCING OPTIONS

BALLSTON METRO CENTER INFORMATION ON FINANCING: 901 N. Stuart Street Arlington, VA Gary McGlynn Managing Director Asset Description: Multi-tenant office building NorthMarq Capital 301.654.6420 [email protected] Square Footage: 235,568

Yr 1 NOI: $2,848,717

Occupancy: 61%; Falling to 45%

5, 7, 10 + 15 Years 3 + 1 + 1 Years

Capital Source: Life Companies, Local Banks Bridge/Debt Funds

LTV: 60% – 65% 70% – 75%

Rate: UST + 225–250 bps LIBOR + 400–500 bps

Amortization: 25–30 years IO

Good News Funding: Yes Yes Mid-Atlantic Investment Sales

Mid-Atlantic Capital Markets Group Private Capital Group

Gerald Trainor, CFA Julian Etches Executive Managing Director Managing Director Jim Cardellicchio Jim Darby Managing Director Senior Vice President Wesley Machowsky 6700 Rockledge Drive Director Suite 500A Bethesda, MD 20817 Kimberly Mughal 301.571.0900 Director 1717 K Street Leo McDermott Suite 1000 Vice President Washington, DC 20006 7160 Columbia Gateway Drive 202.775.7000 Suite 210 Columbia, MD 21046 Mark Glagola 443.285.0770 Managing Director Thomas Hilley III Senior Associate Tina Wakley Senior Associate 7160 Columbia Gateway Drive Suite 210 Columbia, MD 21046 443.285.0770

Multifamily Group

Dean Sigmon Executive Vice President Robin Williams Executive Vice President Justin Shay Vice President 6700 Rockledge Drive Suite 500A Bethesda, MD 20817 301.571.0900

1717 K Street, NW Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, Suite 1000 tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages Washington, DC 20006 competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners T. 202.775.7000 and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

For more information, visit us at www.transwestern.com