Icon by ncotney

VALUATION & ANALYSIS FEBRUARY 2019

AN ICONIC SOUTHEAST ASSET Whole Foods at ICON Midtown is a generational asset in the heart of Midtown Atlanta Entrenched in one of the densest and fastest growing submarkets in the Southeast. The Property will offer Investors the rare opportunity to acquire the most sought after grocer with maximum income security, a captive consumer base, and limited landlord responsibilities.

ICONIC ASSET IN THE HEART OF MIDTOWN ATLANTA - THE FASTEST GROWING SUBMARKET IN THE SOUTHEAST

UNPARALLED ACCESS TO THE IDEAL WHOLE FOODS SHOPPER

FLAGSHIP ATLANTA LOCATION FOR THE MOST SOUGHT AFTER GROCER

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2

TEAM LEADERSHIP • • • • •

Strategy & implementation Investor relationships Market & property tours Road shows and presentations Negotiations

ANALYTICS • • •

Financial Analysis Drafting offering materials Due diligence coordination

FINANCING

HFF DEAL TEAM

HFF OFFICE

•

Debt quotes and capital stack structuring

BRAD BUCHANAN Director

TAYLOR CALLAWAY Analyst ANDREW MICHOLS Analyst

MIKE ALLISON Director

Ed Coco Sr. Managing Director Co-Office Head

• •

ANDREW KAHN Analyst

ANALYTICS

JIM HAMILTON Sr. Managing Director

GRAPHICS & SUPPORT

DEBT

TEAM LEADERSHIP

PRODUCTION SUPPORT

NINA COTNEY Graphics

Paige Marlow Office Manager

H FF S OU T H E AS T RE TA I L S TAT S (Since 2013)

275 RETAIL TRANSACTIONS $8.2 B TRANSACTION VOLUME 43.1 M

SQUARE FEET

• • • • •

Coordinate OM Production Coordinate Vendor Agreements Provide Design Direction Offering Material Production & Marketing Assistance eTeaser Production Investor and Lender Database Administration

FOCUSED MARKETING APPROACH • • •

Leverage and Access to Key Decision Makers Constant Communication with Client and Investor Market Focused Debt Capital Markets Dual-Track

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 3

U N M AT C H E D N AT I O N A L WHOLE FOODS EXPERIENCE HFF IS THE #1 WHOLE FOODS INTERMEDIARY IN THE UNITED STATES OVER THE LAST 24 MONTHS - REAFFIRMING OUR FIRMâ&#x20AC;&#x2122;S SUPERIOR ABILITY TO SOURCE THE MOST AGGRESSIVE CAPITAL FOR WHOLE FOODS ANCHORED RETAIL ASSETS AND ALLOWING US A UNIQUE, REAL-TIME INSIGHT INTO INVESTOR DEMAND FOR THESE TYPES OF ASSETS. STAGE MARKETING / LOI / UNDER CONTRACT CLOSED - 2018 CLOSED - 2017 EQUITY / DEBT

# OF TRANSACTIONS 3 5 3 12

SOUTHEAST RETAIL INTERMEDIARY (2018: Real Estate Alert)

HFF OFFICE

THE HFF DEAL TEAM IS THE MOST ACTIVE RETAIL INTERMEDIARY IN THE SOUTHEAST AND MAINTAINED #1 MARKET SHARE FOR RETAIL TRANSACTIONS IN THE ENTIRE SOUTHEAST IN 2018.

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 4

THE MOST EXPERIENCED WHOLE FOODS INTERMEDIARY

THE HFF DEAL TEAM HAS ACHIEVED RECORD SETTING PRICING ON MULTIPLE WHOLE FOODS ANCHORED ASSETS VIA A COMBINATION OF OUR UNIQUE MARKETING STRATEGY, PERSONAL INVESTOR RELATIONSHIPS, AND OUR ABILITY TO SOURCE AND IDENTIFY THE MOST AGGRESSIVE CAPITAL SOURCES.

THE EXCHANGE AT HAMMOND Location:

Atlanta, GA

Price:

$93,850,000

Buyer:

Jamestown

Seller

Mimms Enterprises

5.1%

WHOLE FOODS MARKET PLAZA

CAP RATE

5.5% CAP RATE

Location:

Birmingham, AL

Price:

$38,900,000

Buyer:

Nuveen Real Estate (TIAA)

Seller

Boyle Investment Co.

LARGEST SOUTHEAST RETAIL TRANSACTION IN 2018

CAHABA VILLAGE Location:

Birmingham, AL

Price:

$59,950,000

Buyer:

L&B Realty Advisors

Seller

Clarion Partners

SOUTHSIDE AT MCEWEN

5.1% CAP RATE

4.7% CAP RATE

Location: Price: Buyer:

Nashville, TN $44,217,000 Nuveen Real Estate (TIAA)

Seller

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 5

Amstar

VA L U AT I O N KEY DEBT TERM ASSUMPTIONS RESIDUAL CAP RATE DELTA 0.00%

HOLD PERIOD

$46,000,000 $44,000,000

$775 PSF

$48,000,000+ $809 PSF

$741 PSF

10 YEARS

LT V

INTEREST RATE

55%

4.00%

AMORTIZATION

I/O

30 YEARS

10 YEARS

VALUATION METRICS SQUARE FEET

YEAR 1 NOI

59,365

$2,055,063

ASPIRATIONAL PRICING

CAP RATE:

UNLEVERED IRR:

4.7% 5.9%

4.5%

4.3%

5.7%

5.5%

7.5%

7.1%

LEVERAGED IRR:

7.9%

7.5%

7.1%

AVERAGE CASH ON CASH:

5.7%

5.3%

4.8%

NPV OF WHOLE FOODS TAX REIMBURSEMENTS

$1,013,704.94 BONDS FOR TITLE Please refer to the assumptions page for a detailed breakdown of the tax savings reimbursement calculations (pg. 26).

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 6

HOW HFF DRIVES VALUE 01

SECURING INVESTOR CONVICTION THROUGH THE STORY OF THE ASSET

ACCESSING AGGRESSIVE CAPITAL

COMPETITIVE MARKETING PROCESS

Through a well-crafted message and exceptional marketing materials, HFF will demonstrate how this will be the best asset to come to market in 2019.

Through the HFF Platform, the Deal Team will be able to source and track the most aggressive capital.

HFF conducts a marketing process that is unmatched by others due to our knowledgesharing platform and ability to identify capital looking for the assets we are marketing.

IRREPLACEABLE IN-FILL MIDTOWN LOCATION

HFFâ&#x20AC;&#x2122;S BLOOMBERG: REAL-TIME INVESTOR FEEDBACK

CREATE THE ALLURE OF EXCLUSIVITY

WHOLE FOODS MARKET ANCHORED

CHECKING THE BOXES: THE STATE OF THE MARKET

SCRIPTED AND INTERACTIVE TOURS

THE IDEAL WHOLE FOODS DEMOGRAPHIC

GLOBAL CAPITAL EXPERTISE

PUSH PRICING THROUGH EMOTIONAL BIDDING PROCESS

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 7

SECURING INVESTOR CONVICTION DURABLE INCOME

PREMIUM PRODUCT

MORE THAN A GROCERY STORE

IRREPLACEABLE, IN-FILL FLAGSHIP LOCATION

THE SOUTHEASTâ&#x20AC;&#x2122;S FASTEST GROWING SUBMARKET V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 8

THE MOST SECURE RETAIL INVESTMENT IN THE COUNTRY ME TRICS SINCE ACQUISITION

65.5%

AMAZON SALES INCREASE SINCE WHOLE FOODS ACQUISITION

Q4 2018 sales rose 65.5% from Q4 2016. In addition to being the fastest rate of sales growth in 2 years, the figures outperformed Wall Street expectations.

THE HIGHEST PERFORMING GROCER $1,000

Sales PSF

$800 $600 $400

6,000 647,500

NEW HIRES NATIONWIDE TOTAL EMPLOYEES

62%

OF SHOPPERS ARE PRIME MEMBERS

Amazon plans to give additional benefits to Prime members in the form of discounts and cash-back benefits.

W H O L E F O O D S - N E C E S S I T Y R E TA I L E R CORE GROCERY OFFERING WITH NEARLY

$874 $645

20 YEARS OF TERM REMAINING $611

$579

$501

$455

CONTRACTUAL RENT BUMPS TOTALING A

27% INCREASE

DURING WHOLE FOODS INITIAL TERM

$200 $0

NEWLY CONSTRUCTED WHOLE FOODS WITH LIMITED NEAR TERM CAPEX

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 9

MOST LUXURIOUS RESIDENCE AND EXPERIENTIAL GROCER ICON Midtown is the most luxurious multi-family complex in Atlanta and is located in the most highly sought after submarket in the Southeast. Touring investors through model apartments and the extensive amenity base will help create the story for the asset.

Whole Foods at ICON Midtown benefits from a captive customer base, comprised mainly of Millennials, the grocer’s ideal demographic. As the flagship location, Whole Foods at ICON Midtown will offer more than the traditional specialty grocery experience with multiple restaurants, a rooftop terrace, brewpub, cooking school, coffee shop, bakery and more.

VIBRANT LIVING AREA

BEST IN CLASS AMENITIES

LIVE IN ATLANTA’S ELECTRIFYING EPICENTER

MIDTOWN HAS GROWN INTO THE IDEAL WHOLE FOODS DEMOGRAPHIC (2-mile radius)

AVERAGE HH INCOME

$1.91 B

BUYING POWER

45% Increase

66% Increase

$116,784

AVERAGE HH INCOME

$5.68 B

BUYING POWER

12% Increase

19% Increase

2024

$63,851

2019

2000

Daytime population exceeds 241,908 within a 2-mile radius.

$132,005

AVERAGE HH INCOME

$6.99 B

BUYING POWER

WALK SCORE

1,000

75%

OF RESIDENTS IN THE MIDTOWN CORE ARE MILLENNIALS OR GEN-XERS

FEET

(Buying Power = Avg. HH Income x # of Households) V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 0

MIDTOWN DEVELOPMENT PIPELINE MF Units

SF Office

SF Retail

Hotel Keys

SCAD Student Housing

106

Ascent Midtown

323

3,000

165

Midtown Union

350

605,000

99,500

255

No. 2 Opus Place

235

Vireo

310

1125 Peachtree

207,100

6,000

253

1138 Peachtree

323

21,500

SLS Hotel & Residences

214

40 West 12

14th & Spring

338

250,000

5,500

903 Peachtree

417

12,000

Hanover Midtown

350

43,000

11,000

Juniper & 5th

150

The Mark

281

7,500

Alexan 880

356

10,000

The Standard

280

10,000

Spring at Third

320

8,500

T3 West Midtown

230,000

Atlantic Yards

500,000

Boundary

150,000

10,000

Campanile

13,600

42,500

1105 West Peachtree

770,000

7,500

NCR Headquarters Phase 2

516,000

8th at West

472,000

4,500

Coda

720,000

42,270

Anthem Headquarters

352,000

712 West Peachtree

335,000

5,000

Norfolk Southern Headquarters

996,870

3,000

Hampton Inn and Suites

186

Dual Hotel

282

40 West 12

180

6,182,070

287,770

1,535

4,334

Property Name

R EC E N T LY DELIV E R ED / 2 01 6 - PR E S EN T

PROP OSE D / U N DER C ONS TRUC TIO N

Property Name

MF Units

SF Office

SF Retail

Hotel Keys

The Local On 14th

360

Spectrum on Spring

256

13,500

AMLI Arts Center

350

3,261

Atlantic House

400

11,500

YOO on the Park

245

Piedmont House

198

Azure on the Park

327

3,200

Sixty 11th

319

14,000

Post Midtown Millenium

332

Hanover West Peachtree

332

13,000

Modera Midtown

450

13,000

Nine 15 Midtown

343

19,000

Broadstone Midtown

218

Trace Midtown

294

6,300

lilli Midtown

147

Anthem on Ashley

244

Windsor Old Fourth Ward

268

881 Peachtree

350

44,000

11,200

Northside Hospital Medical Office

154,207

NCR Headquarters Phase 1

516,000

AC Hotel / Moxy Hotel

288

Springhill Suites

170

5,433

714,207

107,961

458

T H E S O U T H E AS T ’ S M O S T P R O M I N E N T D E V E L O P M E N T P I P E L I N E PROPOSED / UNDER CONSTRUCTION

AT&T MIDTOWN I & II *HFF IA Transaction $260.0 Million BUYER: CBRE Global Investors / Korea Post SELLER: Macfarian Capital Partners / VEREIT

MULTI FAMILY

OFFICE

RETAIL

HOTEL

(UNITS)

(SQUARE FOOTAGE)

(KEYS)

4,334

6,182,070

287,770

1,535

RECENTLY DELIVERED / 2016 - PRESENT COLONY SQUARE *HFF Debt Transaction $278.4 Million CLIENT: North American Properties

MULTI FAMILY

OFFICE

RETAIL

HOTEL

(UNITS)

(SQUARE FOOTAGE)

(KEYS)

5,433

714,207

107,961

458

M I DT OWN ’ S F O RT I F I E D D E N S I T Y TOTAL MIDTOWN STATISTICS MULTI FAMILY

OFFICE

RETAIL

HOTEL

(UNITS)

(SQUARE FOOTAGE)

(KEYS)

16,770

24,800,000

2,700,000

4,877

24 1, 90 8

DAYTIME EMPLOYEES (2-MILE RADIUS)

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 2

MULTI FAMILY 5 6 22 23 24 25

21 19

4 26

7 29 28 35

16 17

13 30

32 33

PROPERTY NAME

UNITS

PROPERTY NAME

The Local On 14th

360

Sixty 11th

Spectrum on Spring

256

AMLI Arts Center

Atlantic House

UNITS 1

PROPERTY NAME

UNITS

PROPERTY NAME

UNITS

PROPERTY NAME

UNITS

319

15 lilli Midtown

147

22 Vireo

310

29 Hanover Midtown

350

Post Midtown Millenium

332

16 Anthem on Ashley

244

23 1125 Peachtree

30 Juniper & 5th

150

350

10 Hanover West Peachtree

332

17 Windsor Old Fourth Ward 268

24 1138 Peachtree

323

31 The Mark

281

400

Modera Midtown

450

18 SCAD Student Housing

106

25 SLS Hotel & Residences

32 Alexan 880

356

5 YOO on the Park

245

12 Nine 15 Midtown

343

19 Ascent Midtown

323

26 40 West 12

33 The Standard

280

Piedmont House

198

13 Broadstone Midtown

218

20 Midtown Union

350

27 14th & Spring

338

34 Spring at Third

320

Azure on the Park

327

14 Trace Midtown

294

21 No. 2 Opus Place

235

28 903 Peachtree

417

35 881 Peachtree

350

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 3

OFFICE 8

12 19

10 1

13 2

16 15 17 18

PROPERTY NAME

Northside Hospital Medical Office

154,207

Midtown Union

605,000

14th & Spring

250,000

16 Anthem Headquarters

352,000

NCR Headquarters Phase 1

516,000

1125 Peachtree

207,100

Hanover Midtown

43,000

17 712 West Peachtree

335,000

T3 West Midtown

230,000

Campanile

13,600

13 NCR Headquarters Phase 2

516,000

18 Norfolk Southern Headquarters

996,870

Atlantic Yards

500,000

1138 Peachtree

21,500

14 8th at West

472,000

19 881 Peachtree

44,000

Boundary

150,000

10 1105 West Peachtree

770,000

15 Coda

720,000

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 4

HOSPITALITY & MARTA 6 7

1 3

PROPERTY NAME

KEYS

AC Hotel / Moxy Hotel

288

SpringHill Suites

PROPERTY NAME

KEYS

MARTA STATION

1125 Peachtree

253

Arts Center

170

SLS Hotel & Residences

214

Midtown

Ascent Midtown

165

Dual Hotel

282

North Avenue

Midtown Union

255

40 West 12

180

Civic Center

Hampton Inn & Suites

186

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 5

ACC ES S ING

AGGRESSIVE CAPITAL

C OMPE T IT IVE

MARKETING PROCESS

CREATING THE ALLURE OF EXCLUSIVITY HFF WOULD LIKE TO HOST A “COMING SOON” COCKTAIL PARTY AT THE GRAND OPENING OF WHOLE FOODS FOR A SELECT NUMBER OF TARGET INVESTORS. THIS EVENT WILL BE DESIGNED TO CREATE AN EMOTIONAL CONNECTION BETWEEN INVESTORS AND THE ASSET, WHICH WILL PROMOTE INCREASED COMPETITION AND MAXIMUM PRICING.

P L E A S E J O I N H F F F O R C O C K TA I L S A N D A N E X C L U S I V E T O U R AT T H E

GRA ND OPE NIN G OF

C O M I N G

S O O N

Whole Foods Market at Icon

W HO LE FO OD S MA RK ET AT IC ON

ATL ANT A’S NEW WH OLE FOO DS FLA GSH IP LOC ATI ON IN THE HEART OF MIDTOWN ATLAN TA

PLEA SE JOIN THE HFF FOR COCK TAILS AND AN EXCL USIV E TOUR AT

GRA ND OPE NIN G OF

WH OL E FO OD S MA RK ET AT ICO N ATLA NTA’S NEW WHOL E FOOD S FLAG SHIP LOCA TION IN THE

Heart of Midtown A tlanta V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 7

HIGHLY CHOREOGRAPHED TOUR PROCESS MARKETING SUITE IN AN ICON APARTMENT Showcase ICON Midtown - the most luxurious multi-family community in Atlanta with an un-matched amenity base, hand-picked, high end finishes and an irreplaceable, urban location in the heart of Midtown Atlanta.

HIGHLIGHT DEMAND & DENSITY DRIVERS HFF will produce life-size poster board aerials and maps, similar to those shown on pages 11 - 15, and set up them in the “Marketing Room” to illustrate to Investors the explosive growth, density and strength of Midtown Atlanta - the fastest growing submarket in the Southeast.

SENIOR MANAGEMENT LED MARKETING TOURS HFF’s Senior Team Leadership will host carefully scripted marketing tours of the Midtown Atlanta submarket, the ICON Midtown, and Whole Food’s New Flagship Store.

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 8

ACCESSING CAPITAL:

UNDERSTANDING THE STATE OF THE MARKE T

Whole Foods at ICON Midtown checks all the boxes for Institutional Investors

High preference for incomedriven returns (durable cash flow & low capital expenditures)

Focus on permanence and value preservation

HFF is able to understand in real-time what investors are looking for through our proprietary information sharing software, CapTrack.

28+ YEARS OF HISTORICAL DATA

15,100+ TERM SHEETS (2018) Best Pricing

74 INVESTOR MEMOS PER WEEK

Real-time Pricing & terms

Deal Certainty

Optimal Execution

26,460+ CLOSED DEALS SINCE 1998

Market Leading Terms

Investors aware of peak cycle pricing, yet are willing to stretch pricing for generational opportunities

Long duration Investors seeking assets designed to perform in perpetuity across market cycles

LIVE INVESTOR CRITERIA

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 1 9

SOURCING GLOBAL CAPITAL HFF expects Whole Foods at ICON Midtown to generate significant interest amongst International Investors. HFF’s Global Capital Team will be fully briefed on the asset so that they can ensure the most active International Investors are aware of the opportunity in real-time.

HFF’S APPROACH TO GLOBAL CAPITAL SINCE 2012, HFF HAS CLOSED $100 BILLION OF GROSS REAL ESTATE VALUE IN OVER 900+ TRANSACTIONS INVOLVING GLOBAL CAPITAL

FOCUS ON IMPORTING CAPITAL INTO THE U.S. DEVELOP AND MAINTAIN CLOSE RELATIONSHIPS ENGAGE, INFORM AND EDUCATE FACE-TO-FACE MEETINGS ON PERPETUAL GLOBAL ROADSHOW WORLDWIDE REPUTATION AS A TRUSTED CAPITAL MARKETS INTERMEDIARY

HFF 2018 GLOBAL CAPITAL ACTIVITY

COUNTRIES VISITED

106

319

DAYS ABROAD

MEETINGS ABROAD

CANADA $44.2B

ASIA $17.7B

EUROPE $22.1B MIDDLE EAST $3.3B

AUSTRALIA $0.8B

302

DEALS SOURCED 2017 - YTD 2018

LATIN AMERICA $0.6B

$24.8 B

TOTAL VOLUME 2017 - 2018

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2 0

BREAKTHROUGH PRICING THE EXCHANGE AT HAMMOND A REAL-TIME EXAMPLE

Through our carefully managed marketing process, HFF is able to generate the deepest buyer pool possible and push pricing from a position of strength.

OFFERS

RAN GE

M EDI AN

$75.5 M - $87.1 M

$85.0 M

2ND ROUND

OFFERS

RAN GE

M EDI AN

$75.8 M - $93.1 M

$89.25 M

BUYER INTERVIEW

OFFERS

RAN GE

M EDI AN

$91.25 - $93.5 M

$92.175 M

FINAL BID

OFFERS

WI N N I N G BI D

$93.85 M

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2 1

10% INCREASE

1ST ROUND

APPENDIX

CLIENT REFERENCES

INVESTORS WE HAVE RECENTLY TRANSACTED WITH

LEE SCHAFFLER (212) 648-2129 lee.s.schaffler@jpmorgan.com

RYAN BOAN (704) 988-4961 ryan.boan@nuveen.com

MIKE LEWANDOWSKI (312) 897-4009 mike.lewandowski@lasalle.com

LAUREN HOLDEN (212) 883-2577 lauren.holden@clarionpartners.com

ROSS COOPER (516) 869-2611 rcooper@kimcorealty.com

ERIC METZUNG (216) 755-5847 emetzung@sitecenters.com

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2 3

MARKETING TIMELINE HFF believes a selective marketing strategy with compelling marketing materials, a curated market tour, and multiple financing solutions will yield the highest price for Whole Foods at ICON Midtown.

PRE-DD / PACKAGING & PRE-MARKETING

SALES PROCESS

DUAL TRACK DEBT

• Pre-Marketing “Kick Off” Event at Whole Foods Grand Opening

• Collaborative Branding -

• Simultaneously market to

• Investor Road Show (Domestic & International) in conjunction with HFF Global Capital Team • Detailed underwriting, due diligence review and valuation • Prepare preliminary marketing materials

distribute comprehensive marketing package and video to targeted investors

• Soft launch and preview tour • Begin cultivating buyer pool • Conduct fully scripted property

MATERIALS PREPARATION

INITIAL OFFERS / BEST & FINAL

lenders to qualify multiple financing options in order to provide Buyers with the full spectrum of financing options available to push underwriting and maximize proceeds.

• Collect initial offers • Evaluate offers • Best and final bid • Conduct a 3rd round of bidding if warranted

CONTRACT

CLOSING PROCESS

• Prepare and negotiate

Purchase and Sale Agreement

• Open escrow upon delivery of

• Facilitate waiving of

contingencies and deposit going non-refundable

contract and deposit

• Buyer’s Due Diligence

concurrent with contract negotiations in an effort to expedite timing

• Set up weekly conference calls

Reduce Buyer’s due diligence and potential for re-trade

2019

& market tours

• Full Investor due diligence identify and qualify likely Investors and determine which have immediate capital deployment needs

Mar. / April

6 WEEKS

and marketing updates

Create Competition

April / May

2019

MARKETING & PROPERTY TOURS

Provide Optionality

4 WEEKS

May

2019 INITIAL OFFERS DUE

Maximize Value

1 WEEK

June

2019 BUYER SELECTION & CONTRACT

Seller controls terms of transaction to minimize its risk

Successful transition to new Ownership

July

August

4 WEEKS

2019 DUE DILIGENCE

4 WEEKS

2019 CLOSING

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2 4

SALES COMPS HFF TRANSACTION

Mult-Tenant

HFF TRANSACTION

Multi-Tenant / New Construction

Mult-Tenant / New Construction

HFF DEBT TRANSACTION

Mult-Tenant / New Construction

HFF TRANSACTION

Single-Tenant / New 15-Year Lease

Sale Date

Oct-18

Jun-18

Mar-18

Dec-17

Sep-17

Property Name

Exchange at Hammond

Stonewall Station

Shops at MacArthur Hills

Peachtree Station

Whole Foods Tampa

Address

5920 & 5930 Roswell Rd. Sandy Spings, GA 30328

400 E Stonewall St. Charlotte, NC 28202

6731 M MacArthur Blvd Irving, TX 75063

5001 Peachtree Blvd Chamblee, Georgia 30341

3802 Northdale Blvd Tampa, FL 33642

Submarket

Sandy Springs

Uptown

Las Colinas

Buckhead / Brookhaven

Tampa

Square Feet

334,787

47,000

75,387

105,720

36,900

Purchase Price

$93,850,000

$34,100,000

$45,000,000

$67,000,000

$15,500,000

Price / SF

$280

$726

$597

$657

$420

Unlevered IRR

7.60%

N/A

5.76%

N/A

5.70%

Cap Rate

5.10%

4.75%

5.25%

4.90%

5.00%

Occupancy

99%

81%

100%

Buyer

Jamestown

Asana Partners

Clarion Partners

Sarofim Realty Advisors

Prime Estates

Seller

Mimms Enterprises

Crescent Communities

Leon Capital

SJ Collins

Weingarten Realty V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2 5

ASSUMPTIONS REAL ESTATE TAX BREAKDOWN

GENERAL ASSUMPTIONS Tax Expenses

Millage Rate

Net Tax

Fulton Bonds

0.00023

$4,232.00

Fulton Operations

0.0102

$187,680.00

$5,000 per annum

Atlanta Bonds

0.00188

$34,592.00

Operating Expenses:

Utilized the projected operating expenses provided by Ownership

Atlanta General

0.00785

$144,440.00

Atlanta Parks

0.0005

$9,200.00

Credit & Collection Loss:

N/A

Atlanta School

0.02074

$381,616.00

Management Fee:

1.5% of Effective Gross Revenue

Midtown CID

0.005

$92,000.00

Reimbursements:

In accordance with Whole Foods Lease

Total Estimated 2020 Tax Liability

Leasing Costs:

N/A

Analysis Period:

10 Years, beginning May 1, 2019

Inflation:

Reimbursements: 3.0% annual increase Expenses: 3.0% annual increase Cap Reserves: 0.0%

Capital Reserves:

ADDITIONAL ASSUMPTIONS 1. Phase I Insurance: For the purpose of this Analysis, we have estimated that the Phase II Owner’s prorata share of Phase I Insurance will be $2,000 per annum with 3% annual escalations. 2. Phase I Real Estate Taxes: For the purpose of this Analysis, we have assumed that the portion of Whole Food’s premises that is located in Phase I will be separately parceled prior to a sale and that Whole Food’s will be responsible for reimbursing 100% of this expense. 3. Real Estate Tax Reassessment: For the purpose of this Analysis, we have assumed Phase II’s Real Estate Taxes will be re-assessed at the full sales price in 2020 and will be discounted for the following nine years in accordance with the Memorandum of Agreement between Owner and The Development Authority of Fulton County.

Whole Foods 50% Reimbursement of Annual Tax Savings

$853,760.00

Year

City of Atlanta & Fulton County Tax Estimates

Tax Abatement

Net Taxes

Estimated Annual Tax Savings

$181,150.80

2020

$853,760.00

50%

$426,880.00

$163,262.16

2021

$879,372.80

55%

$483,655.04

$395,717.76

2022

$905,753.98

60%

$543,452.39

$362,301.59

2023

$932,926.60

65%

$606,402.29

$326,524.31

$78,751.28

2024

$960,914.40

70%

$672,640.08

$288,274.32

$54,075.88

2025

$989,741.83

75%

$742,306.38

$247,435.46

Total Estimated Tax Savings Paid to Landlord $1,258,337.30

2026

$1,019,434.09

80%

$815,547.27

$203,886.82

2027

$1,050,017.11

85%

$892,514.54

$157,502.57

2028

$1,081,517.62

90%

$973,365.86

$108,151.76

Total Estimated Tax Savings

$2,516,674.59

$213,440.00 $197,858.88

$144,137.16 $123,717.73 $101,943.41

NPV @ 5.7% Discount Rate $1,013,704.94

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2 6

CASH FLOW FO R T H E YEAR EN D IN G Apr-20

Apr-21

Apr-22

Apr-23

Apr-24

Apr-25

Apr-26

Apr-27

Apr-28

Apr-29

Apr-30

2,048,093

2,150,794

2,365,695

2,048,093

2,150,794

2,365,695

Common Area Maintenance

158,890

163,631

168,517

173,550

178,737

184,232

189,740

195,414

201,261

207,368

213,806

Real Estate Taxes

426,880

483,655

543,452

606,402

672,640

742,306

815,547

892,515

973,366

1,113,963

1,147,383

Phase II Insurance

16,236

16,748

17,275

17,815

18,369

18,787

19,370

19,969

20,583

21,132

21,549

602,006

664,035

729,243

797,767

869,746

945,325

1,024,657

1,107,898

1,195,210

1,342,463

1,382,738

2,650,099

2,712,127

2,777,336

2,845,859

2,917,838

3,096,119

3,175,451

3,258,692

3,346,004

3,493,257

3,748,433

2,650,099

2,712,127

2,777,336

2,845,859

2,917,838

3,096,119

3,175,451

3,258,692

3,346,004

3,493,257

3,748,433

111,000

114,330

117,760

121,293

124,931

128,679

132,540

136,516

140,611

144,830

149,175

426,880

483,655

543,452

606,402

672,640

742,306

815,547

892,515

973,366

1,113,963

1,147,383

Whole Foods Market Base Rental Revenue Absorption & Turnover Vacancy Total Base Rental Revenue

Total Expense Recovery Revenue TOTAL POTENTIAL GROSS REVENUE Vacancy Loss EFFECTIVE GROSS REVENUE Common Area Maintenance Real Estate Taxes Phase II - Insurance & Est. PRS of Phase I Insurance

17,404

17,926

18,464

19,018

19,588

20,176

20,781

21,405

22,047

22,708

23,390

Management Fee

39,751

40,682

41,660

42,688

43,768

46,442

47,632

48,880

50,190

52,399

56,226

595,035

656,593

721,336

789,400

860,927

937,603

1,016,500

1,099,316

1,186,214

1,333,900

1,376,174

2,055,063

2,055,534

2,056,000

2,056,459

2,056,911

2,158,516

2,158,951

2,159,376

2,159,790

2,159,357

2,372,259

Tenant Improvements

Leasing Costs

5,000

Total Operating Expenses NET OPERATING INCOME

Capital Reserves Total Capital Costs

5,000

NET CASH FLOWS

2,050,063

2,050,534

2,051,000

2,051,459

2,051,911

2,153,516

2,153,951

2,154,376

2,154,790

2,154,357

V A L U A T I O N & A N A LY S I S F E B R U A R Y 2 0 1 9 | 2 7

INVESTMENT ADVISORY

Atlanta

New Jersey

JIM HAMILTON Sr. Managing Director 404.942.2212 jhamilton@hfflp.com

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BRAD BUCHANAN Director 404.942.3192 bbuchanan@hfflp.com MIKE ALLISON Director 404.942.3195 mallison@hfflp.com ANDREW KAHN Analyst 404.942.2220 akahn@hfflp.com TAYLOR CALLAWAY Analyst 404.942.3193 tcallaway@hfflp.com ANDREW MICHOLS Analyst 404.942.2223 amichols@hfflp.com DEBT CONTACT ED COCO Sr. Managing Director Co-Office Head 404.942.2207 ecoco@hfflp.com

Holliday Fenoglio Fowler, L.P. (“HFF”) a Georgia licensed real estate broker.

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