The Harold E. Eisenberg Midwest Real Estate Challenge 2016

Phoenix Landing Development Proposal

Ben Beussink, Cole Cameron, Meghan Carnot, Trent Keal, & Josh

Vaslie

Site Analysis

Site ASite B and the Berms

Site D

Accessibility and Visibility Halstead Street - Approximately

13,200 Vehicles a Day

63rd Street - Approximately 8,000

Vehicles a Day

Dan Ryan/I-94 Expressway – 3/4th of

a Mile East

CTA Green Station Half a Block South

Site A Proposal

Site A Proposal

Approximately 106 Parking Spots

Available

Over 600 Storage Units Available

Accommodates Up To Seven Retail Spaces

Gym Situated on the Top

Floor

Site B and the Berms Proposal

Site B and the Berms Proposal

46 Parking Spots Available

Renovation of the Firehouse into a Multi-Purpose Facility Productive Food

Gardens Behind the Firehouse

Beautification Gardens on the Berms

Local Sustainability Initiatives Supported

Site D Proposal

Site D Proposal

20,000 Sq. Ft. Structure Suited for a Single, Large Retail Tenant

Approximately 106 Parking Spots Available

Facing Halstead

Street

Green Healthy Neighborhood

s

Englewood: Making a Difference

Chicago Neighborhood

s 2015 – Assets, Plans,

& Trends

Community Objectives

Strategic Partnerships

Financial AnalysisInitial Project Costs = $27 million

Total land cost $5 million

Total Construction Costs $21 million

Pre-Development Budget $1 million

Project Valuation = $40 millionCap Rate: $40 million Discounted NOI + Reversion: $38 million

Value Created = $13 million

Net Operating Income Projections ($ millions)

2015 2020 2025 2030 2035 20400.01,000,000.02,000,000.03,000,000.04,000,000.05,000,000.0

$3.2 million

$4.5 million

*All figures are based on comparable developments

City of Chicago Return on Investment

TIF investment of $12 million

• $10 million initially• $2 million for our project

Our development will generate $2.6 million per year

• $2 million in property taxes every year• $0.6 million in sales taxes every year

Five Year Payback

1 2 3 4 5 6 7 8$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

Cumulative Economic Activity Generated Per Dollar Invested

Quarters Post Investment

Economic Analysis- Over $100

Million of Economic

Activity Created in the Proceeding

Two to Three Years

-Over $400 Million of Economic

Activity Created, in Perpetuity

Capital Leaving Englewood-Food and Beverage Stores                                      

$22,375,375-Food Service and Drinking Establishments                           $10,938,587-Health and Personal Care Stores                                  

$15,656,330-General Merchandise Stores                                     $45,806,375-Electronics and Appliance Stores                                  

$5,987,950-Clothing and Clothing Accessories Stores               $12,825,559-Furniture and Home Furnishing Stores                   $3,959,217-Miscellaneous Store Retailers                                           

$6,535,753-Sporting Goods, Hobby, Book and Music Stores              $4,697,578-Building Material, Garden Equipment and Supply Dealers      $20,643,408

Total Opportunity Dollars                          $127,234,049  

*Greater Englewood CDC & Chicago Metropolitan Committee for Planning

Detroit, Mi. – Midtown

New Orleans, La. – Broad

StreetNewark, Nj. – Hahne & Co.

Building

Economically Comparable Sites

Municipal Incentives

Englewood Mall TIF

Chicago Community Loan Fund

Historic Incentives

Zoning

Site A

Zoning

Site A Site B Site D

Zoning

Entitlement TimelineStep 1: Hire a Zoning and Land Use AttorneyStep 2: Speak to Englewood Community Groups, Alderman, and the Chicago Zoning Administration about our proposed development Step 3: Draft a Site Plan for the Zoning Administrator’s review (§17-13-0800)Step 4: Planned Development review and approval process (§17-13-0600)Step 5: Make necessary revisions to Site PlanStep 6: AppealsBudget: $95,000

Nine Months

Development Phasing

- Total Length of Construction – 24 to

30 Months

-Site A Storage Facility-Interior of Firehouse-Site B Gardens and Berm Landscaping-Approximately 12 to 18 Months

-Site A Retail Structure-Site D Structure-Exterior of Firehouse-Approximately 12 to 18 Months

-Gain Entitlements for Site-Entitlement Timeline – Nine Months

Entitlements Phase 1

Phase 2

Sustainability

Recycled Benches and Community

GardensNatural Prairie Grass

Landscaping

Marketing

Groundbreaking Ceremony

Vet and Assign a Broker to the Development

Public Relations Representative

Summary

Augments and Supports

Multiple Area Initiatives

Revitalizes a Historic

Municipal District

Generates Millions of Dollars of Economic Activity

Creates Value for

Shareholders

Thank You

Questions & Answers

AppendixSlide DeckCoverSite AnalysisAccessibility & VisibilitySite A ProposalSite B & Berms ProposalSite D ProposalCommunity ObjectivesStrategic PartnershipsFinancial AnalysisNOI ProjectionsCity of Chicago ROIEconomic Analysis

Capital Leaving EnglewoodComparable SitesMunicipal IncentivesZoningEntitlement TimelineDevelopment PhasingSustainabilityMarketingSummaryThank You

Exhibits1. Cost of Capital2. Projected Lease Revenues3. Development Costs Per Sq. Ft.4. Cost of Land5. Pre-Development Budget6. Discounted Cash Flow Model7. DCF Key Assumptions8. City of Chicago ROI9. Keynes Economic Model10. Development Summary11. 2015 TOD Ordinance

Exhibit 1 – Cost of CapitalTarget Capital StructureDebt to Total Capitalization 50.00%Equity to Total Capitalization 50.00%Debt to Equity Ratio 100.00%

Cost of EquityCost of Equity 15.00%

Cost of Debt30-day LIBOR 0.41%Spread 4.00%Cost of Debt 4.41%

Taxes 20.00%After Tax Cost of Debt 3.53%

WACC 9.26%

Exhibit 2 – Projected Lease Revenues Building Sq Ft Rate ($) / SF Source In ServiceStorage - A 87,500 18.00 Banner Storage Group J 2017Retail - A

Suite 101 5,411 21.00 REIS Inc. Comps J 2017Suite 102 1,956 22.00 REIS Inc. Comps J 2017Suite 103 3,423 23.00 REIS Inc. Comps J 2017Suite 104 3,912 23.00 REIS Inc. Comps J 2017Suite 105 2,934 23.00 REIS Inc. Comps J 2017Suite 106 2,445 22.00 REIS Inc. Comps J 2017Suite 107 4,890 21.00 REIS Inc. Comps J 2017

Gym - A 24,977 18.00 Retro Fitness J 2017Fire House - B 9,000 25.00 REIS Inc. Comps 2018Gardens - B 87,000 Sprout NOLARetail - D 24,000 31.00 REIS Inc. Comps J 2017

Exhibit 3 – Development Costs Per Square Foot

Parcel Comp/Source Square Feet Comp Sq Ft Comp Cost ($) / Sq Ft Adjusted Cost / Sq Ft Total CostStorage Gary Delaney 87,750 70 77 6,756,750 Retail - A In-Line Retail Build 31,670 12,450 185 200 6,334,000 Gym Retail Health Club 41,000 144 200 - Firehouse Advisors 9,000 18,000 150 2,700,000 Gardens Sprout NOLA - 100,000 Retail - D In-Line Retail Build 24,971 12,450 185 204 5,087,500

Parking Discussion with Advisors 82,166 300,000 Total Construction Costs 21,278,250

Exhibit 4 – Cost of LandPaid ($) Inferred ($) Additional Allocation ($) Acres

Phoenix Landing - 4,170,909 2,661,871 7.4Whole Foods 3,100,000 - 1,978,417 5.5Other - 563,636 359,712 1.0

3,100,000 4,734,545 5,000,000 13.9

Gross Cost ($) Incentives ($) Net Cost ($)6,832,780 1,991,381 4,841,399

Phoenix Landing Cost of Land

Exhibit 5 – Pre-Development BudgetList of ExpensesArchitect Services 276,500$ Municipal Incentives 95,000 Zoning 75,000 Permits 45,750 Signage 150,000 Miscellaneous 100,000 Construction Management 45,000 Insurance 100,000 Legal Fees 90,000 Entitlement Fees 5,000 Total Pre-Develoment Budget 982,250

6. Discounted Cash Flow Model 2016 - 2022Building Sq Ft Rate ($) / SF 2016 2017 2018 2019 2020 2021 2022Storage - A 87,500 18.00 - 787,500 1,575,000 1,606,500 1,638,630 1,671,403 1,704,831 Retail - A - - - - - - -

Suite 101 5,411 21.00 - 56,816 113,631 115,904 118,222 120,586 122,998 Suite 102 1,956 22.00 - 21,516 43,032 43,893 44,770 45,666 46,579 Suite 103 3,423 23.00 - 39,365 78,729 80,304 81,910 83,548 85,219 Suite 104 3,912 23.00 - 44,988 89,976 91,776 93,611 95,483 97,393 Suite 105 2,934 23.00 - 33,741 67,482 68,832 70,208 71,612 73,045 Suite 106 2,445 22.00 - 26,895 53,790 54,866 55,963 57,082 58,224 Suite 107 4,890 21.00 - 51,345 102,690 104,744 106,839 108,975 111,155

Gym - A 24,977 18.00 - 224,793 449,586 458,578 467,749 477,104 486,646 Fire House - B 9,000 25.00 - 112,500 225,000 229,500 234,090 238,772 243,547 Gardens - B 87,000 - - - - - - - Retail - D 24,000 31.00 - 372,000 744,000 758,880 774,058 789,539 805,330

Gross Receipts - 1,771,458 3,542,916 3,613,774 3,686,050 3,759,771 3,834,966 Vacancy Allowance (5%) - (88,573) (177,146) (180,689) (184,302) (187,989) (191,748) Net Receipts - 1,682,885 3,365,770 3,433,086 3,501,747 3,571,782 3,643,218

Operating ExpensesBuilding Improvements - - - 50,000 51,000 52,020 53,060 Broker Commissions - 289,882 - - - - 357,635 Property Management - 50,487 100,973 102,993 105,052 107,153 109,297 Pre-Development Budget 982,250 - - - - - - Marketing Expenses 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Other Operating Expenses 50,000 50,000 50,000 50,000 50,000 50,000 50,000

Total Operating Expenses 1,057,250 415,368 175,973 227,993 231,052 234,173 594,992

Net Operating Income (1,057,250) 1,267,517 3,189,797 3,205,093 3,270,695 3,337,609 3,048,226

Net Operating Income (1,057,250) 1,267,517 3,189,797 3,205,093 3,270,695 3,337,609 3,048,226 Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%Property Value (13,215,625) 15,843,961 39,872,464 40,063,663 40,883,686 41,720,110 38,102,819

Present Value of NOI (1,057,250) 1,160,050 2,671,830 2,457,024 2,294,730 2,143,137 1,791,367

Exhibit 6 – Discounted Cash Flow Model

6. Discounted Cash Flow Model 2023 - 2029Building Sq Ft Rate ($) / SF 2023 2024 2025 2026 2027 2028 2029Storage - A 87,500 18.00 1,738,927 1,773,706 1,809,180 1,845,364 1,882,271 1,919,916 1,958,315 Retail - A - - - - - - -

Suite 101 5,411 21.00 125,458 127,967 130,526 133,137 135,800 138,516 141,286 Suite 102 1,956 22.00 47,511 48,461 49,430 50,419 51,427 52,456 53,505 Suite 103 3,423 23.00 86,923 88,662 90,435 92,244 94,088 95,970 97,890 Suite 104 3,912 23.00 99,341 101,328 103,354 105,421 107,530 109,680 111,874 Suite 105 2,934 23.00 74,506 75,996 77,516 79,066 80,647 82,260 83,905 Suite 106 2,445 22.00 59,389 60,576 61,788 63,024 64,284 65,570 66,881 Suite 107 4,890 21.00 113,378 115,646 117,959 120,318 122,724 125,179 127,682

Gym - A 24,977 18.00 496,379 506,307 516,433 526,762 537,297 548,043 559,004 Fire House - B 9,000 25.00 248,418 253,387 258,454 263,623 268,896 274,274 279,759 Gardens - B 87,000 - - - - - - - Retail - D 24,000 31.00 821,436 837,865 854,622 871,715 889,149 906,932 925,070

Gross Receipts 3,911,666 3,989,899 4,069,697 4,151,091 4,234,113 4,318,795 4,405,171 Vacancy Allowance (5%) (195,583) (199,495) (203,485) (207,555) (211,706) (215,940) (220,259) Net Receipts 3,716,082 3,790,404 3,866,212 3,943,536 4,022,407 4,102,855 4,184,912

Operating ExpensesBuilding Improvements 54,122 55,204 56,308 57,434 58,583 59,755 60,950 Broker Commissions - - - - 394,858 - - Property Management 111,482 113,712 115,986 118,306 120,672 123,086 125,547 Pre-Development Budget - - - - - - - Marketing Expenses 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Other Operating Expenses 50,000 50,000 50,000 50,000 50,000 50,000 50,000

Total Operating Expenses 240,604 243,916 247,294 250,740 649,114 257,840 261,497

Net Operating Income 3,475,478 3,546,488 3,618,918 3,692,796 3,373,293 3,845,015 3,923,415

Net Operating Income 3,475,478 3,546,488 3,618,918 3,692,796 3,373,293 3,845,015 3,923,415 Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%Property Value 43,443,477 44,331,097 45,236,469 46,159,948 42,166,167 48,062,685 49,042,689

Present Value of NOI 1,869,282 1,745,749 1,630,365 1,522,595 1,272,935 1,327,923 1,240,115

Exhibit 6 – Discounted Cash Flow Model

6. Discounted Cash Flow Model 2030 - 2036Building Sq Ft Rate ($) / SF 2030 2031 2032 2033 2034 2035 2036Storage - A 87,500 18.00 1,997,481 2,037,430 2,078,179 2,119,743 2,162,137 2,205,380 2,249,488 Retail - A - - - - - - -

Suite 101 5,411 21.00 144,112 146,994 149,934 152,932 155,991 159,111 162,293 Suite 102 1,956 22.00 54,575 55,666 56,780 57,915 59,074 60,255 61,460 Suite 103 3,423 23.00 99,847 101,844 103,881 105,959 108,078 110,240 112,444 Suite 104 3,912 23.00 114,111 116,394 118,721 121,096 123,518 125,988 128,508 Suite 105 2,934 23.00 85,583 87,295 89,041 90,822 92,638 94,491 96,381 Suite 106 2,445 22.00 68,219 69,583 70,975 72,394 73,842 75,319 76,825 Suite 107 4,890 21.00 130,236 132,840 135,497 138,207 140,971 143,791 146,667

Gym - A 24,977 18.00 570,184 581,587 593,219 605,084 617,185 629,529 642,120 Fire House - B 9,000 25.00 285,354 291,061 296,883 302,820 308,877 315,054 321,355 Gardens - B 87,000 - - - - - - - Retail - D 24,000 31.00 943,572 962,443 981,692 1,001,326 1,021,353 1,041,780 1,062,615

Gross Receipts 4,493,274 4,583,140 4,674,802 4,768,298 4,863,664 4,960,938 5,060,156 Vacancy Allowance (5%) (224,664) (229,157) (233,740) (238,415) (243,183) (248,047) (253,008) Net Receipts 4,268,610 4,353,983 4,441,062 4,529,884 4,620,481 4,712,891 4,807,149

Operating ExpensesBuilding Improvements 62,169 63,412 64,680 65,974 67,293 68,639 70,012 Broker Commissions - - 435,956 - - - - Property Management 128,058 130,619 133,232 135,897 138,614 141,387 144,214 Pre-Development Budget - - - - - - - Marketing Expenses 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Other Operating Expenses 50,000 50,000 50,000 50,000 50,000 50,000 50,000

Total Operating Expenses 265,227 269,032 708,868 276,870 280,908 285,026 289,227

Net Operating Income 4,003,383 4,084,951 3,732,194 4,253,013 4,339,573 4,427,865 4,517,922

Net Operating Income 4,003,383 4,084,951 3,732,194 4,253,013 4,339,573 4,427,865 4,517,922 Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%Property Value 50,042,293 51,061,888 46,652,431 53,162,664 54,244,667 55,348,310 56,474,027

Present Value of NOI 1,158,105 1,081,510 904,338 943,162 880,764 822,488 768,063 PV Reversion 9,600,787

PV Discounted NOI + Value in 2036 38,229,067

Exhibit 6 – Discounted Cash Flow Model

Exhibit 7 – DCF Key AssumptionsVacancy Allowance 5.0%Broker Commissions 2.0%Income Tax Rate 20.0%Maintenance Cost Increase 2.0%Yearly Rental Rate Increase 2.0%Property Management (% of EGI) 3.0%Cap Rate 8.0%WACC 9.3%

Exhibit 8 – City of Chicago Return on Investment

City TIF InvestmentsTIF Expenditures - WF 10,000,000TIF Expenditures - Phoenix 2,000,000Total City Investment 12,000,000

Total Tax Receipts 2,574,000 Payback Period for Investment (Yrs) 5

Sales ProjectionRetail Building - Lot A 1,500,000 Fire House 500,000 Retail Building - Lot D 3,600,000

Total Sales 5,600,000

Sales Tax Rate 10.25%Sales Tax Receipts 574,000

Property TaxesApproximate Property Value 40,000,000 Real Estate Tax Rate 5.00%Real Estate Tax Receipts 2,000,000

Exhibit 9 – Keynes Economic Model

Exhibit 10 – Development Summary

Exhibit 11 – 2015 TOD Ordinance