INVESTMENT STRATEGY –BUILD TO CORE URBAN DEVELOPMENTPRESENTED BY – BRENDON SULLIVAN & KEL FRAZIER, BERKSHIRE PROPERTY ADVISORS

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INVESTMENT STRATEGY RATIONALE:  BUILD TO CORE URBAN DEVELOPMENT 

• Seek opportunities in core markets (Gateway Cities).

• Selectively focus on the best urban micro locations within these markets.

• Build to core with long term investment horizon.

• Partner with developers who have strong local expertise.

• Use in‐house development expertise to actively improve the design and executionprocess.

• Limit pre‐development exposure, “risk mitigated development”.

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South Boston Waterfront“Innovation District”

South Boston

East Boston

Charlestown

North EndWest End

Beacon Hill

Back Bay

Financial District

South End

Fenway Chinatown

Bay VillageLeatherDistrict

Mission Hill

Roxbury

DorchesterJamaica Plain

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South Boston Waterfront“Innovation District”

South Boston

East Boston

Charlestown

North EndWest End

Beacon Hill

Back Bay

Financial District

South End

Fenway Chinatown

Bay VillageLeatherDistrict

Mission Hill

Roxbury

DorchesterJamaica Plain

Seaport Square – 6.6 million SF & 23 acres

• 2.9m SF of Residential (2,000 rent, 700 condo)

• 1.3m SF of Office

• 1.3m SF of Retail

• 850,000 SF of Hotel

• 250,000 SF of Cultural/Civic

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Blocks B & C• 790,000 SF of Residential - 832 units

• 260,000 SF of Retail - Developed & Owned by Retail Partner

• 3 levels of below grade parking - 775 stalls – 430 resi, 345 retail

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Project Summary

Completion Date 4Q 2016

Units 832

Rentable Square Feet 643,968

Parking Ratio 0.52

COST, TIMING & UNIT MIX

Total Project Costs: $416.9m

Current NOI: $23.7m

Stabilized NOI: $27.1m

Type Units Size Rent PSF

Studio 203 479 $2,519 $5.26

1 BR / 1 BA 364 769 $3,465 $4.51

2 BR / 2 BA 120 1,046 $3,846 $3.68

3 BR / 2 BA 46 1,307 $6,089 $4.66

Affordable 99 816 $1,058 $1.30

Totals 832 774 $3,148 $4.07

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OPERATING PROJECTIONS / PROJECTED RETURNS

Major Assumptions Detail

Timing / Lease‐up:

First Unit Delivery 30 Months

Stabilization 56 Months

Leasing Pace (units / month per bldg) 20 units

Lease‐up Concessions 1 Month

Stab. Economic Occupancy 94.5%

Income & Expense:

Apartment Rent PSF $4.07

5‐Yr Avg. Rent Growth 3.0%

Parking / Other Income Per Unit $4,500

OpEx & Reserves Per Unit $11,840

Residual Valuation:

Hold Period (build ‐ stabilize ‐ sell) 56 Months

Exit Cap Rate 4.5%

Projected Returns Summary

Current Levered Return on Cost  5.7%

Current Unlevered Return on Cost  6.0%

Trended Levered Return on Cost 6.5%

Trended  Unlevered Return on Cost 6.9%

Unlevered Project‐Level IRR 15.4%

Levered Project‐Level IRR 21.1%

Equity Multiple 2.1x

Total Profit $196,000,000

Project Capitalization Amount % Total

Total Equity $166,800,000 40%

Total Debt $250,100,000 60%

Total Capitalization $416,900,000 100%

Financing Assumptions

Loan to Cost 60%

Interest Rate 5.50%

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• Market Strong global demand for Boston real estate investments.

• Micro Location Will serve as gateway to 13 MM SF redevelopment of the Seaport District will create amodern live work play environment.

• Demand for Product Type – Lack of core urban in‐fill multifamily assets, plus lack of retail will drive premiumpricing and act as an investment hedge in a down market.

• Partners Experienced residential developer and best in class retail developer.

Strengths:

Risks / Weaknesses:• Pipeline There are 8,500 units scheduled to be delivered in Boston over the next 3 years which will provide

increased rental competition.

• Sale Price The size and value of the asset will limit the buyer pool upon reversion.

• Lease‐up Risk 832 unit is a large number of units to deliver into the market and could result in the need tooffer lease‐up specials.

BUILD TO CORE URBAN DEVELOPMENT : SEAPORT DISTRICT