1. Federal Real Property Exchanges Association of Defense Communities(ADC); Installation Innovation 16 March 2015 Marc Waddill Senior Vice President, Public Institutions JLL

2. 2 Agenda I.Introduction to Federal Real Property Exchanges II.Federal Exchange Authorities III.Example Projects IV.Exchange Participants V.Sample Timeline VI.Exchange Financing VII.Exchange Financial Feasibility

3. 3 Introduction to Federal Real Property Exchanges What is an Exchange? Exchange of title to Federal real property for constructed assets Exchange of title to Federal real property for in-kind consideration, including but not limited to: o Design and construction services for renovation of property o New construction of a replacement building Why pursue an Exchange? No Federal funds required Acquire new facilities, improve space utilization, and dispose of underutilized assets (not excess) in furtherance of the goal of reducing the Federal footprint No screening process associated with traditional disposal

4. 4 Federal Exchange Authorities Department of Defense (DoD) Acquisition Exchange: 10 U.S.C. § 18240 authorizes the Secretary of a military department to acquire a facility, or addition to an existing facility, needed to satisfy military requirements for a reserve component by carrying out an exchange of an existing facility / land under the control of that Secretary through an agreement with a State, local government, local authority, or private entity General Services Administration (GSA) Exchange for Services: Section 412 of PL 108-447, 118 Stat. 2809, 3259 authorizes GSA to exchange real property for in-kind consideration, including construction services on other GSA property Exchange for Acquisition: 40 U.S.C. § 3304 and 40 U.S.C. § 581(c) authorize GSA to acquire real property by exchange where GSA is providing real property and other consideration Exchange for Disposition: 40 U.S.C. § 543 authorizes an executive agency designated or authorized by GSA to dispose of surplus property by exchange

5. 5 Example Project: Camp Parks (Dublin, CA) Current status: o Exchange agreement signed in 2011 o Groundbreaking 6 March 2013 o As of March 2015, first phase of the project was complete and accepted o An example of how the Army, local municipality, and private-sector developer can work together for a win – win – win Phased transfer of a 172-acre parcel in Dublin, CA to occur as each new project is completed and accepted Government Received from Exchange Partner New phased construction of six projects approx. 150k SF, plus infrastructure on adjacent Government-owned land Exchange Partner Received from Government

6. Example Project: Boston (MA) Current status: o Proposed exchange announced September 2008 o Property is still under control of the Army Reserve 13 land parcels totaling 8.1 acres in Boston’s Seaport district, including 620k SF office building Government Will Receive from Exchange Partner Construction services on Devans RFTA, MA Exchange Partner Will Receive from Government 620,000 SF Office Building at 495 Summer Street, Boston 6

7. Current status: o RFI released late 2012, responses were due early 2013 o Phase 1 RFP released December 19, 2014, responses due February 10, 2015 o Expected award in May 2016 Example Project: FBI Building (DC) Existing FBI facility – J. Edgar Hoover Building Existing FBI facility (J. Edgar Hoover Building) and associated land, totaling approx. 2.8M GSF and 6.6 acres Government Will Receive from Exchange Partner New construction of a 2.1M RSF FBI facility for11,000 personnel in one of three possible locations: Springfield, VA; Greenbelt, MD; or Landover, MD Exchange Partner Will Receive from Government 7

8. Example Project: Denver Federal Center (CO) Current status: o GSA is in negotiations with the City of Lakewood regarding the exchange 60-acre parcel located north of the RFD Federal Station Center in Lakewood, CO Government Will Receive from Exchange Partner Construction services on the Federal Center - upgrades in an existing building on GSA site Exchange Partner Will Receive from Government Proposed Exchange Parcel, Lakewood, CO 8

9. 9 Example Project: DOT Volpe Center (Cambridge, MA) Current status o Government issued a Request for Information (RFI) on August 26, 2014 o Stage 1 of the solicitation process will consist of a Request for Qualifications (RFQ) o Stage 2 will follow and consist of a Request for Proposals (RFP) o City of Cambridge introduced the potential re-zoning of the Volpe block to the Planning Board on January 6 and a follow-up discussion is planned for January 27 Portion of the 14-acre Federally owned property in Kendall Square, including associated buildings Government Will Receive from Exchange Partner New construction of a 390K GSF state-of-the-art research and office facility for the Volpe Center with associated parking Exchange Partner Will Receive from Government

10. 10 Participants 1.Government (Direct) Strategic planning used to identify potential exchange parcels; Government to make appropriate parcels available if vacant or consolidate operations if underutilized Receives new and/or upgraded facilities 2.Private sector (Direct) Constructs new and/or upgraded facilities in exchange for land to be developed for private-sector use Earns appropriate risk-adjusted return on investment 3.Local Jurisdiction (Indirect) ‘Partner’ with both Government and Private-Sector in the development process Entitlements (land use restrictions, zoning, permitting): significant impact on value of exchange parcel

11. 11 Sample Timeline Government receives services (i.e., construction, renovation or other) in advance of Exchange Parcel(s) being conveyed to private sector Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10 EXAMPLE PROJECT TIMELINE Services Period: Construction, Renovation, and Other Services Capital Investment Conveyance to Private Sector Value of Asset is Realized by Private Sector Private Sector Ownership

12. Financing 12 Capital Financing Sources Government Loans/Grants/Tax Credits Tax Increment Financing (TIF) Investment Grade Debt Junior (Subordinate) Debt Mezzanine Debt Equity (Retained Earnings or Stock Offering) Private Equity Cost of Capital Low RiskHigh Risk

13. Financing (cont’d) 13 Financing Cost Sensitivity: Holding Scope of Work Constant

14. Financing (cont’d) 14 Financing Cost Sensitivity: Holding Exchange Parcel Value Constant

15. Financial Feasibility 15 Valuation Considerations What Government ReceivesWhat Exchange Partner Receives Site and Infrastructure Costs Hard Costs Soft Costs Contingencies Security Restrictions Sustainability Requirements Government Involvement & Review Process during Design & Construction (i.e., risk of delays and change orders) Environmental Conditions Title Facility Condition Entitlements Timing of Conveyance Market Conditions

16. Financial Feasibility (cont’d) 16 What Exchange Partner Receives What Government Receives If Value Received is less than Conveyed Asset  Cash Equalization Payment by Private Sector If Value Received is more than Conveyed Asset  Scoring Implications EXCHANGE PARCEL VALUE Fair Market Value of Exchange Parcel Less Market Risk Associated with Future Conveyance Less Financing Costs for New Facilities EXCHANGE PARCEL VALUE VALUE RECEIVED BY GOVERNMENT Design Costs Plus Exchange Partner Soft Costs Plus Construction Hard and Soft Costs Plus Cash Equalization Payment (if any) VALUE RECEIVED BY GOVERNMENT

17. Thank You! ADC Installation Innovation 16 March, 2015