1. Successful Build-to-Suits in the Real World

2. Introduction to Presenters Ted Anspacher, SIOR, Anspacher Commercial Real Estate Services Tim Gallagher, SIOR, Clayco Construction Company Tom Mercer, AMB Property Corporation Robert Whittelsey, SIOR, Colliers Bennett & Kahnweiler, Inc.

3. Introduction Goal: Enhance brokers ability to serve BTS clients.Goal: Enhance brokers ability to serve BTS clients. Methods for achieving this goal: –Reviewing all aspects of BTS process. –Review real-life examples. –Detailed take-home materials on a CD.

4. Topics of Discussion Identify and determine the clients scope. Assemble the clients BTS team. Preliminary site selection and land control. Points to remember in preparing RFPs. Projecting and analyzing costs. How rents are calculated by developers. Preparing and reviewing schedules. Exit Strategy. Understand and anticipate risks.

5. Identify and Determine the Clients Scope Qualify Build-to-Suit Prospect Understand the Clients business. Learn the Clients goals and activities. Understand Clients time constraints. Office Space program. Industrial Space program.

6. MITRE: A Clear Scope.

7. US Postal Service: Heavy TIs

8. Compaq: There Will Always Be Change Orders

9. Choose to work with people you trust.

10. Assemble the Clients BTS Team Single Point of Contact with Client Legal Counsel Architectural Services Engineer Municipality Liaison / Economic Development Title Officer Project Manager Representation Team Requirements

11. Designing the RFP Understand the Clients business Details of location & site parameters Define Tenants scope Project Business terms (for lease and for sale) Project time line

12. Content of the RFP Turnkey Development Sale Price & Lease Terms Estimated Operating Expenses Lease Extension Quote Hold Over Clause Legal Issues Answer Site Specific Questionnaire Respond to Clients Required Time Line Developer / Land Owner Credentials & Track Record Architectural Firms Credentials & Track Record

13. Typical 3 Story Office Building PSF Costs ItemLowHigh Land and Due Diligence$17.50$40.00 Land Improvement$5.00$12.00 Design$3.00$8.00 Shell$65.00$120.00 TIs$25.00$50.00 Soft Costs $10.00 $15.00 Total$125.50$245.00

14. Typical PSF Costs for a 200,000 Warehouse ItemLowHigh Land and Due Diligence$3.00$10.00 Land Improvements$2.00$5.00 Design$0.65$2.00 Shell$17.00$25.00 TIs$3.00$10.00 Soft Costs$3.50$8.00 Total$29.15$60.00

15. How Developers Calculate Rents There are three ways for developers to calculate rents –Yield on Costs –Profit Margin –Return on Equity

16. Yield on Costs Total costs$40.00 Development Yield10.50% Net Rent $4.20 Less Vacancy($0.26) Less Reserves ($0.10) Net Operating Income$3.84 Investment Return9.6%

17. Profit Margin Profit Margin Sought = 11% Net Rent $4.20 Net Operating Income$3.84 Cap Rate 8.50% Sales Price$ 45.18 Sales Costs $ (0.99)2.0% Net Sales Proceeds$ 44.27 Less Total Costs ($40.00) Profit $4.2711%

18. Return on Equity Total Costs$40.00 Equity$8.0020% Rate of Return on Equity 15% Rent Required to Cover ROE$1.20 Debt$32.0080% Interest Rate on Mortgage7% Years of Amortization 25 Debt Service (Rent Required for Mortgage)$2.75 Vacancy($0.25)5% Structural Reserve ($0.10) Total Net Rent$4.30 11%

19. Comparing Costs Getting Apples to Apples Comparison Require the responses to follow your format RFP must be thorough and specific to obtain a GMP and/or Guaranteed Rent Make a side-by-side analysis

20. Preparing and Reviewing Schedules WarehousesOffices TaskFastSlowFastSlow Start to RFP48412 RFP to Developer3648 Lease/Reimbursement Agreement 1516 Design48920 Permits48612 Construction21323652 Total Weeks377760110 Fast Track (Overlap)

21. Exit Strategies Generic Building Cancellation Options (arent free) Future Uses Purchase Options Divisibility Dont destroy the Landlords Exit Strategy

22. Best and Final Offer Negotiating Tactics: Talk to Everyone Bring-up Changes in Scope Get Apples to Apples Comparison Getting to the Lease –Development/Indemnity Agreement –Straight to Lease / Purchase Agreement Negotiations

23. The Major Areas of BTS Risk Clearly determine and identify your clients scope. –There will be change orders Understand the risks to schedule: –Response time from client or other parties –Site Entitlements –Weather –Construction Long lead time items. The cost risks should be borne by the developer with the possible exception of site conditions. Choose to work with people you trust.