CoreNet Case StudyBoeing Realty Corporation

March 13, 2006

2

Run healthy core businessesLeverage strengths into new products and servicesOpen new frontiers

Detailed customer knowledge and focusLarge-scale systems integrationLean enterprise

LeadershipIntegrityQualityCustomer satisfactionPeople working togetherA diverse and involved teamGood corporate citizenshipEnhancing shareholder value

3

Boeing’s Management Model

FinancialObjectives

Growth

Productivity

Financial Performance

StockPrice

Performance to Plan§ Move Toward

World-Class: Margins, Earnings, Cash

CHARTS THE COURSE

INS

PIR

ES

OT

HE

RS

LIVES BOEING VALUES

DE

LIV

ER

S R

ES

UL

TS

Attaining World-Class Growth and Productivity:• Committed, performance-driven management

• Maximize learning across the enterprise and from outside• Adapt and apply learnings in clearly defined businesses

Initiative Toolkit

§ Customer Satisfaction

§ Competitiveness

§ Economic Profit

Stakeholders

§ Employees§ Customers§ Shareholders§ Communities§ Employee

Accountability

SETS HIGH EXPECTATIONS

FINDS A WAY

4

Enterprise Financial Drivers Economic Profit

Focus on RONA Drivers – Assets and Operating Expenses

5

Boeing Portfolio

Portfolio - Owned vs. Leased

Leased17%

Owned83%

Portfolio - Business Unit

WHQ/SSG/Other4%

IDS46%

BCA50%

National International Total

140 64 204

126 50 176

Owned Leased Total Owned Leased Total

IDS 33,237,933 11,016,842 44,254,775 5,930 3,834 9,764

BCA 38,174,042 2,702,221 40,876,263 6,932 263 7,195

WHQ/SSG/Other 2,239,181 1,347,278 3,586,459 67 1 67

Boeing Total 73,651,156 15,066,341 88,717,497 12,929 4,098 17,026

Southern California 12,366,270 3,509,489 15,875,759 2,673 203 2,876

Puget Sound 37,751,537 1,487,517 39,239,054 2,801 238 3,039

National 72,033,241 13,714,790 85,748,031 12,652 4,058 16,710

International 1,617,915 1,351,551 2,969,466 277 40 317

Number of Boeing Owned or Leased Sites: A site is defined as a single building or multiple buildings in a contiguous geographic location (i.e., a campus)

Region/BusinessBuilding Space (Square Feet) Land (Acres)

Number of Cities Containing Boeing Owned or Leased Sites:

6

And all of those square feet sit on 14,290 acres

That’s roughly the size of Manhattan!!!

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Shared Services Group

Real Property

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Real Property Management Colette Temmink

Real PropertyReal PropertySteve Barker

•Planning and Governance

•Portfolio Strategy

•Future of Work

• Redevelopment and disposition of surplus

• Execute transactions that align with current and future BU needs

BOEING LIMITED

MISSION: to provide highly effective real estate strategies and services in support of the goals and objectives of The Boeing Company.

Boeing Realty Corporation Alan DeFrancis

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RPM: The Journey…

• Efficient, agile infrastructure• Distributed workforce• Competitive advantage

• Work → people• Innovative workplace solutions• Virtual Workplaces / Hotels

• People → workFuture

of Work

• Improve forecast accuracy• Planned vs. reactive• Optimize renewal funding• BU strategy alignment

• 5–10 yr regional/enterprise plan• Horizontal integration• Lifecycle management

• 2–3 year site plan• Vertical integration

Strategy

• Integrated decisions• Standard and collaborative• Enables a LEAN enterprise

• Merged enterprise focus• Sustainable process• Competitive Intelligence

• Site focus• Pre-mergers

Mgmt. System

Benefit of changeCurrent structurePast structureRPM

Evolving with the Businesses We Support

10

BRC Strategy

• Disposition of property that Boeing no longer needs

• Redevelop or prepare space for market by mitigation of issues that limit value

• Manage shareholder interests that include financial impacts, corporate citizenship, and ongoing operations

• Alignment of occupancy with current and future core business strategies

• Asset management – creating agile workplaces that support the increasing pace of change

• Make Boeing more competitive by improving the utilization and cost structure of real estate occupancy

The Past and the Future of Boeing

Disposition of surplus Space needs of the future

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RP Acquisition Process

No

No

<Threshold?SSG-Business Unit

Customer FocalYes

Yes

Approved? Yes

Yes

Sites RouteApproved Forms

to BRC

AlternativesBRC

Provide NeededData

Site ServicesLeader Approves

A/R Forms

Yes

InApproved

Plan?

No

BRCExecute

User PreparesRequirements

Document (URF)

No

Yes

Approved?Yes

=>threshold?B/U Finance

(=>threshold)WHQ TreasuryApproved? Yes Yes

No No

User Prepares& Routes AR Form

No

No

RPM RegionalReview &Support

Site Services/Region Leader

Approval

= URF-Requirements Documents

= Appropriation Request Documents

Boeing Realty Corporation

4P062000

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StrategicRelationship ManagementPolicies and ProceduresMaximize ValueMatch Structure with Corp Goals

CriticalTransaction ManagementManage Service DeliveryStandardized ProcessesIncreased Depth of Services

CommodityService DeliveryField ExecutionData ManagementTargeted Skill Sets

Functional Hierarchy

BR

C

Ser

vice

Par

tner

VendorMgmt

ProcessMgmt

TransactionMgmt

Value

PortfolioManagement

DueDiligence

ProjectMgmt

ServiceDelivery

MarketData

LeaseAdmin

Ven

do

r

Strategic Focus

Corporate Real Estate

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2005 Fun Facts

Dispositions (Sale)

• 10 Sales - 561K SF and 193 acres – $90M

Acquisitions (Purchase)

• 1 Purchase – 770K SF, 1.6 acres - CHQ

Lease Expirations/Terminations

• 69 - 138 acres, 3.1M SF

Lease Acquisitions/Renewals

• 161 – 276 acres, 3.7 M SF

BRC Development

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Disposition of surplus properties

Risk Mitigation

• Marketable asset

• No entitlement or delivery issues

• Viable market

• Acceptable accounting event

Good – sell now Bad – fixable then selln Issue are solvable but… n Normal exit options have

undesirable accountingn Revisit reuse potential,

thenn Reposition for long term

hold. Interim cash flow from leases or reuse

n FAS-144 ok-Held for Use

Ugly – fix and hold n Not marketable in current

state but…n Issues are solvable and

executable and…n Viable market for the end

result with…n Acceptable accounting

event for the ultimate sale

What factors should drive the analysis…earnings… redevelopment or long term hold strategy reduces risk

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DisposeOwned Surplus Property

Objectives

• Flexible exit strategies

• Participate in the market

• Highest and best use

• Positive Boeing legacy

Considerations

• Financial

• Environmental

• On-going business operations

• Community issues

• Political factors

Value variables

• Entitlements

• Infrastructure

• Remediation

• Timing: BU and map

• Market and risk based view of alternatives

Balance the best interests of shareholders

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$0

$5

$10

$15

$20

$25

$30

$35

$40

Bulk

Sale

Raw La

ndBu

lk Sa

le En

titled

Land

Bulk

Sale

Impro

ved L

and

Finish

ed Lo

t Sale

s

Build

to S

uitSp

ecula

tive B

uildin

g

Leas

ed In

vestm

ent

Long

Term

Hold

$/Sq

.Ft. L

and

Revenue Cost

Land Appreciation Curve

LandDeveloper

Users/Developers

Investors

Target range

20

Puget Sound Area Development Activities

Everett

SeattleRenton

Kent

BOEING LIMITED

Kent

Harbour Pointe

Longacres

Renton

LongacresAuburn

Phone \ Data HubPhone \ Data Hub

Lakeshore LandingPhase I

46 acres

Lakeshore LandingPhase I

46 acres

Renton Project OverviewLakeshore Landing

Description•Entitlements in 2003 with City to fund $35M in infrastructure

•Phase I (46 acres) sold 4th Q 04 to Harvest Partners

•Phase II (21 acres) Buildings 10-80/90 & Lot 10

•Phase III (5 acres) Buildings 10-71/72

Status•Phase II & III Conceptual Plan approved by City

•Master Plan to City for approval – 2nd Q 06

•Infrastructure Construction Start – 3rd Q 06

•City approval of Binding Site Plan- 3rd Q 06

•Phone\ Data Hub complete 3rd Q 06

•Phase II Delivery 1st Q 07

•Phase III Delivery 2nd Q 07

Lakeshore LandingPhase II21 acres

Lakeshore LandingPhase II21 acres

Lakeshore LandingPhase III5 acres

Lakeshore LandingPhase III5 acres

Lakeshore Landing Phase IConceptual Plan

Lakeshore Landing Phase IConceptual Plan

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California Development Activities

Seal Beach

Anaheim

Torrance

Long Beach

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Long Beach Project Overview

Description

• 261 acre site

• 50+/- acre Boeing enclave

• Extensive soil and groundwater remediation

Status

• Entitlements approved 12/04, Challenged

• Demo complete

• Infrastructure underway

• Environmental ongoing

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Long Beach – 2000

25

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Seal Beach Project Overview

Ph X

Retail & HotelDescription

• 107 acre site

• 57 acres surplus

• Approvals by City/CCC

• 5 acres retail/hotel site under contract

Status

• Sold to Overton Moore Properties 4th qtr 05

• Infrastructure Underway

• OMP Phase 1 Bldg Construction underway

27

Seal Beach Surplus Land at Full Build-out

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Description

• 155 net acre site (former C-6 facility)

• 148 net acres sold through December 2003

§ Spec construction of a 153,000 SF industrial/warehouse building

üMaximize control and cleanup of environmental conditions

Status

• Building construction began 4th Qtr 2004

• Remediation systems installed on site

• Completion 4th Qtr 2005

• 10 yr lease to CTSI Logistics

Torrance DevelopmentProject Overview

29

Anaheim Project Overview

Description

• 109 acre (1.6M SF) campus

• BRC spec buildings built/sold in 2003

• 6 +/- acres (Bldg 241) identified as surplus

Status

• Comprehensive Master plan complete

• Infrastructure design complete

• Demo and utilities to start 2nd qtr 06

• Lot sale opportunity

Surplus Boeing Owned Boeing Leased

Spec Bldgs

Q&A?

4P062000