Merritt I-66 proposal (10 20 14)

MERRITT I-66 BUSINESS PARKLight Industrial/Bulk Development, Manassas, VA

Our PHILOSOPHY. We believe if you do the

right thing, your business will prosper. Leroy

Merritt, who founded our company more than

four decades ago, often completed deals on a

handshake and that level of trust and respect

continues at our company today.

TABLE OF CONTENTS

Section 1 Executive Summary

Section 2 Site Plan and Location

Section 3 Building Types

Section 4 Manassas Market Overview

Section 5 Zoning Summary

Section 6 Project Pro Forma

410 298 2600 | www.MerrittProperties.com

PROJECT OVERVIEWMerritt Properties is under contract to purchase 49.55 acres zoned Heavy Industrial in Manassas, Virginia. Merritt is considering an equity investor to partner with in the acquisition and development of the light-industrial/bulk business park.

PROPERTY ADDRESS Intersection of Balls Ford Road and Groveton Road, Manassas, Virginia 20109

LOCATION Located in Prince William County, 28 miles south of Washington, DC, Merritt I-66 Business Park sits just east of the intersection of I-66 & Prince William Parkway (Route 234 Bypass) with approximately 1,500 feet of frontage along I-66. The property is bordered to the north by I-66, east by Groveton Road, south by Balls Ford Road.

LAND PURCHASE PRICE $7,900,000 $13.24/FAR $3.66/DIRT SF

ACREAGE +/- 49.55 acres

ZONING M-1 Zoning – Heavy Industrial LAND

EXISTING CONDITIONS Raw Land with Site Plan Approval. A Site Plan Amendment is anticipated to revise the building layout for Merritt’s Development Plan.

DEVELOPMENT PLAN +/- 596,720 SF in six (6) light industrial/bulk tilt-up buildings. Buildings vary in height from 20ft to 32ft clear and in size from 30,420 SF to 137,350 SF.

UTILITIES Sanitary sewer will be available via a pump station that is under construction and anticipated to be completed in November 2014. Water is available at the site via Balls Ford Road.

SITE VISIBILITY Approximately 1,500 feet of frontage on I-66 with a 2012 estimated Average Daily Traffic Count of 112,000 vehicles per day (VDOT).

EXECUTIVE SUMMARY


Project Location Map - Manassas, VA


Prince William Parkway

Cushing Road

Balls F

ord Road

Balls F

ord

Road

SITE+/- 49.55 Acres

Balls Ford Road

+/- 44 miles to I-81

+/- 20 miles to DC Beltway

Gro

veto

n RoadFreedom I-66

Business Center(WestDulles)

PremierBusiness Park

(Chalmers)

Patriot Business Center (FRP)

Site Aerial - Manassas, VA


Barrett Piece(Not For Sale)

+/- 8 acresFuture NOVEC

power sub-station

Existing power

sub-station

+/- 42 Acres

PlannedInterchange

SouthpointBusinessCenter

FedEx+/- 31 acres


Site Plan

Balls Ford Road

(Route 621)

Gro

veto

n Ro

ad(R

oute

622

)

Pump Station Lot

Building 2 - 97,200 SF

24’ Clear Height

Build

ing

5 - 1

37,3

50 S

F

32’ C

lear

Hei

ght

Build

ing

6 - 1

37,3

50 S

F

32’ C

lear

Hei

ght

Build

ing

1 - 3

0,42

0 SF

24’ C

lear

Hei

ght


24’ Clear Height


24’ Clear Height

SWM Pond

Truck Court

Interstate 66

540’

135’

40’

40’

50’60’40’

100’160’

160’

60’

60’

180’

540’18

0’

540’

90’

180’

205’

670’

205’

670’

338’

Truck Court

Truck Court

Truc

k Co

urt

Truc

k Co

urt

Truc

k Co

urt

Merritt I-66 Business Park

Total GFA - 596,720 SFFAR - 0.28Total Parking - 681 Spaces

Square Footage Typ. BayBuilding 1 - 30,420 SF 30’ x 30’Building 2 - 97,200 SF 40’ x 40’Building 3 - 97,200 SF 40’ x 40’Building 4 - 97,200 SF 40’ x 40’Building 5 - 137,350 SF 40’ x 50’Building 6 - 137,350 SF 40’ x 50’

Merritt I-66 Business Park

N 30’40’40’40’50’50’


BUILDINGS I - IV

Product Classification: Light Industrial

Area: +/- 30,420 SF to +/- 97,200 SF

Clear Height: 20’ to 24’

Building Depth: 100’ to 180’

Column Spacing: 30’ x 30’ in 90’ deep building, 40’ x 40’ in 180’ deep buildings

Truck Court Depth: +/- 100’ to 135’ for dedicated truck courts and +/- 175’ for shared truck courts

Loading: Dock - High Loading with drive-ins

BUILDING V

Product Classification: Bulk

Area: +/- 270,700 SF

Clear Height: 32’

Building Depth: 205’

Column Spacing: 50’ (typical)

Truck Court Depth: +/- 160’ (adequate area for outdoor storage and trailer parking)

Loading: Dock - High Loading

BUILDING TYPES


Based on market information obtained from a survey of 65 functional warehouse buildings within the

Manassas/I-29/Route 234 market segment of Prince William County, the following snapshot was derived:

WAREHOUSE/BULK (+/- 20’ CLEAR AND ABOVE)

Note: The average annual net absorption over the past 7 years is +/- 150,000 square feet.

The inventory of Class A, tilt-up, Warehouse/Bulk consists of +/- 2,309,419 square feet

(26 buildings) and has a vacancy rate of only 4%.

Market Activity/Competition:

There are several industrial projects planned

along Balls Ford Road, near I-66. These

projects consist of the 82-acre parcel known as

Freedom I-66 Business Center (West Dulles)

with frontage along I-66, Merritt I-66 Business

Park (Merritt), Premier Business Park

(Chalmers), Patriot Business Park (Florida Rock

Properties -FRP), and Southpoint Business

Center (Hazel Pruitt) that is located along

Wellington Road. The construction timing of

these projects remains uncertain as there has

been no development activity at these sites

over the past seven years with the exception of

Florida Rock Properties and Hazel Pruitt near

Manassas Airport. Florida Rock Properties

pre-leased three (3) of their warehouse tilt-up

buildings to Amazon.com. Hazel Pruitt has been the only developer to construct warehouse on a speculative

basis and has been successful in their leasing efforts.

MARKET OVERVIEW

# Buildings Total SF Available SF Direct Vacancy (%)

Under Construction (SF)

65 4,884,757 247,546 5.1% 129,526 (100% pre-leased)


These projects along Balls Ford Road and Wellington Road, when combined, comprise more than 2.9 million

square feet of industrial space. Many buildings in this market are comprised of service-oriented (furniture

suppliers, tire suppliers, food distributors, waste/recycling disposal, etc) companies or manufacturers who

desire to be near the retail and housing developments in Prince William, Fairfax and Loudoun counties.

Recent Data Center Activity: Powerloft (now called COPT DC-6) built a data center building within the west

side of Innovation Park a few years ago and has not fully leased out their space. However, Amazon has

leased and occupied four (4) buildings along Balls Ford Road and is under lease on its fifth building within

FRP’s project along Balls Ford Road. Amazon.com continues to pursue other opportunities within this

market.

The main competitors for warehouse product will be Hazel Pruitt’s Airport Business Center, Hazel Pruitt’s

Southpoint Business Center, WestDulles’ Freedom I-66 Business Center, and FRP’s Patriot Business Center.

These projects are detailed below.

Airport Business Center - Hazel Pruitt (No Additional Land Holdings):

The first flex/warehouse building totaling 118,000 square feet was leased back in 2006/2007, shortly after its

delivery in August 2006, by several users including Home and Hearth. The building can accommodate users

as small as 4,400 square feet. The adjacent 160,000-square-foot building is 100% leased. Their newest

124,000-square-foot warehouse building was delivered in 2011 and was leased in its entirety by American

Tire Distributors. The entire project consists of six (6) warehouse buildings.

Project Statistics:

Owner/Developer: Hazel Pruitt

Zoning: M-1

Asking rate: $7.25 NNN, warm/lit shell with single restroom

Clear Height: 24’

Depths: 110’ – 220’

Availability: .08% - 4,800 SF available within an approximate total build out of 557,629 SF

MARKET OVERVIEW (CONTINUED...)


Southpoint Business Center - Hazel Pruitt:

Four (4) warehouse buildings totaling approximately 410,000 square feet. Construction on the first

100,000-square-foot building has not commenced and reliable market sources have confirmed that Amazon.

com has a verbal agreement with Pruitt to purchase the entire site. This project is located along Wellington

Road, just west of Route 234 Bypass. Market sources

Project Statistics:

Owner/Developer: Hazel Pruitt

Zoning: M-2

Asking rate: $6.95. NNN, warm/lit shell with single restroom

Clear Height: 24’

Depths: 160’

Availability: 0% - an approximate maximum build-out of 410,000 SF

(Not under construction as of 9/20/2014)

Patriot Business Center - Florida Rock Properties (FRP):

Five (5) warehouse buildings totaling approximately 653,541 square feet on 72 acres. Three (3) warehouse

buildings were pre-leased by Amazon.com. The third building that was pre-leased is 129,526 SF and is under

construction. Approximately 10 acres in the rear of the site were sold to an indoor gun range group and

their 65,000 SF building is nearing completion. FRP recently sold approximately 15 acres at the rear of the

park to PRTC for +/- $7.22 per dirt SF . Two (2) additional buildings, comprising 202,669 square feet, at the

rear of the park are pad-ready and we are being told by reliable market sources that these two buildings will

likely be leased to Amazon.com.

Project Statistics:

Owner/Developer: Florida Rock Properties (FRP)

Zoning: M-1

Asking rate: $7.00 NNN, demised, warm/lit shell with a restroom

Clear Height: 24’ – 32’

Depths: +/- 150’

Availability: 0% (+/- 202,669 SF proposed - 2 warehouse buildings that are not under

construction as of 9/20/2014)



Freedom I-66 Business Center - WestDulles Properties:

Eleven (11) warehouse buildings totaling approximately one million square feet on 82 acres. This project is

adjacent to the McLane Foods. WestDulles Properties has closed on the purchase of the entire 62 acre site

from Prologis in addition to the 22-acre Alban site. This site still needs to be mass-graded. The project is site

plan approved, and it is presumed that WestDulles will commence construction on two (2) warehouse

buildings totaling +/- 180,000 square feet within the next 8 months. West Dulles is currently in negotiations

with NOVEC on a proposed power substation on approximately 8 acres of the site. It is being speculated

that this entire site could be leased by data center providers. WestDulles has not yet obtained an easement

from Chalmers to connect to the sanitary sewer pumping station. That easement and connection is

necessary for their development.

Project Statistics:

Owner/Developer: WestDulles Properties (Eric Wells)

Zoning: M-1

Asking rate: $7.25 NNN

Clear Height: 24’-32’

Depths: +/- 170’

Availability: 0% - an approximate maximum build-out of 1,100,000 SF

(no buildings under construction as of 9/20/2014)

Premier Business Park - Chalmers:

Site plan approved for three (3) warehouse buildings totaling approximately 455,000 square feet on 54

acres. This site is adjacent to the Prologis project along Balls Ford Road. This site has been marketed for

years with no activity to date. Chalmers has planned to construct 2 buildings but has not commenced with

grading or any construction activity.

Project Statistics:

Owner/Developer: Chalmers

Zoning: M-1

Asking rate: $6.75 NNN

Clear Height: 24’

Depths: +/- 150’

Availability: 0% - an approximate maximum build-out of +/- 455,000 SF

(no buildings under construction as of 9/20/2014)



Based on market information obtained from a survey of 56 functional light industrial buildings within the

Manassas/I-29/Route 234 market segment of Prince William County, the following snapshot was derived:

LIGHT INDUSTRIAL (Under 20’ Clear)

Competition:

The competitors for light industrial product will be Innovation Business Center (New Boston Fund),

Wellington Business Center (Bavar), and Gateway Business Center (Buchanan Partners) on Limestone Road

in Gainesville (all drive-in) where only 7,977 is currently available. Wellington Business Center consists of

three (3) light industrial buildings with dock and drive-in loading totaling around 135,000 square feet. There

is 30,000 SF (20,140 SF and 10,220 SF) available in shell condition, and this space has been available since

2007. This project is adjacent to an abundance of existing retail amenities within The Peterson Companies’

Virginia Gateway Center.

Innovation Business Center - New Boston Fund:

Project Statistics:

Owner/Developer: New Boston Fund

Asking rate: $8.00 - $9.00 NNN, partial HVAC and lighting. Office $13.00 NNN

Clear Height: 18’

Depths: 80’ – 100’

Availability: 0% - The flex buildings in this park total +/- 186,577 SF

This project is for sale

Gateway Business Center - Buchanan Partners:

Project Statistics:

Owner/Developer: Condo/Buchanan Partners

Asking rate: $8.00 NNN, partial HVAC and lighting. Office $12.00 NNN

Clear Height: 18’

Depths: +/- 100’

Availability: 4% - Approximately 7,977 SF


# Buildings Total SF Available SF Vacancy (%) Under Construction (SF)

Pre-leasing of Space Under Construction

(%)

56 2,189,960 273,655 12.5% 0 0%


Wellington Center - Bavar:

Project Statistics:

Owner/Developer: Bavar

Asking rate: $8.00 N- $9.00 NNN, warm/lit shell

Clear Height: 18’

Depths: 100’ – 120’

Availability: 22.6% - Approximately 30,360 SF

LEASE COMPARABLES

Warehouse:


Address Tenant Sq. Ft. NNN Rate

Sign Date

Term (mo.)

Clear Hgt.

Esc. Notes:

14241 John Marshall Hwy

HD Supply 44,307 $6.60 7/2014 60 28’ 2.5% Metal building. 1,500 SF of old, existing

office. 3 months free.

6894 Wellington Road

Diaz Foods 100,337 $6.95 8/2014 98 26’ 3% Specialized food processing facility

with refrigeration. 2 months free.

7360 Gallagher Road

Rival Inc. 3,880 $7.73 4/2014 36 24’ 3% As is. Metal building.

7600 Doane Road

Amazon 129,850 $6.60 7/2014 120 24’ 3% Shell deal with upgraded roof

7000 Gateway Court

Albert Tire 49,392 $6.95 7/2013 78 24’ 2.5% 10% office - +/- $3.25 in TI. 6 months free.

7959 Wellington Road

Potomac eScrap

21,857 $6.00 4/2013 36 18’ 3% +/- 7% office. As-is. Some very minimal

(+/-1,500 SF) existing, junky office. Landlord added new T-5 light-ing. Older building that is tucked away.

8433 Euclid Ave Ferguson 12,000 $8.00 2/2013 60 21’ 3% 33% office. Full building.

2 months free.

7000 Gateway Court

Creative Touch

Interiors

37,023 $7.75 11/2012 60 24’ 3% 10% office$2.00 in TI.


Light Industrial:



Sign Date

Term (mo.)

Esc. Clear Hgt.

Notes:

13525 Welling-ton Road

Jumping Jimmy’s

10,540 $12.00 1/2014 120 16’ 3% $25 in TI from Shell.

10110 Bat-tleview Parkway

Traffic Sys-tems and

Technology

10,088 $9.75 11/2013 63 18’ 3% 3 months free. Approximately 50%

office.

10679-10699 Wakeman Court

CACI 3,600 $7.50 10/2013 12 18’ 3% All warehouse. Shell with bathrooms. Ex-

pansion.

7679 Limestone Road

Gainesville Construction

4,330 $7.00 9/2013 39 24’ 3% Shell condition. 3 months free.

7669 Limestone Road

NCS Tech 8,000 $13.00 9/2013 84 16’ 3% 33% office. Expan-sion. Turnkey. 1/3

office, 2/3 warehouse and storage. Condi-

tioned.

7679 Limestone Road

Bounce Mania

8,757 $7.00 6/2013 66 24’ 3% Shell condition. 6 months free.

8970 Mike Gar-cia Drive

Action Tank & Drain

4,200 $10.00 4/2013 12 22’ 3% 25% office (existing).

7201 Gateway Ct.

Lennox 10,356 $8.75 4/2013 60 18’ 3% 33% office/show-room (existing). 4 months free. +/- $8.00 psf in TI.


Sign Date Term (mo.)

Clear Hgt.

Esc. Notes:

10642 Wakeman Court

NEC Corp 27,085 $7.50 10/2012 65 20’ 3% 35% office existing. $0.50 in TI. 5 months

free.

7000 Gateway Court

IIF Data Solutions

25,863 $7.50 9/2012 84 24’ 2.5% +/- 8% office.

11801 Brewers Spring Road

Amazon 117,600 $8.11 4/2012 10 24’ 3% Shell deal with upgrad-ed roof

9022 Euclid Ave Cintas 25,900 $7.00 11/2011 6 18’ 3% 8% office. Town of Manassas. renewal

10231 Harry Parrish Drive

American Tire

Distributors

124,000 $7.00 5/25/2011 7 24’ 2% 5% office. Approxi-mately $2 psf in TI.

LEASE COMPARABLES (continued...)

Warehouse:


Sec. 32-403.10. M-1, Heavy Industrial District; Purpose and Intent.

The M-1 district is intended to implement the industrial employment land use classification of the

comprehensive plan. The purpose of this district is to also promote employment opportunities and to

enhance the tax base of Prince William County. It is designed to provide areas for and to encourage

development of heavy and intensive industrial processing, manufacturing and storage with limited retail and

service uses. Retail or residential and low intensity employment uses are generally incompatible with the

nature of uses contemplated in the M-1 district.

(Ord. No. 09-30, 5-19-09)

Sec. 32-403.11. Uses permitted by right.

The following uses shall be permitted by right in the M-1 district:

1. Alarm systems operations, office.

2. Ambulance service, commercial.

3. Ambulance service maintenance facility.

4. Animal shelter.

5. Assembly (non-HAZMAT).

6. Bakery, industrial.

7. Blacksmith, welding, or machine shop.

8. Boat building and repair yard.

9. Brewery and bottling facility.

10. Building materials sales yard.

11. Catalog sales, contractor; tradesman, and industrial equipment (with or without showroom).

12. Catering, commercial (off premises).

13. Coal, wood, and lumber yards.

14. Cold storage.

15. Company vehicle service facility.

16. Contractor or tradesman’s shop (limited), no trash or refuse removal service.

17. Contractor or tradesman’s shop, no trash or refuse removal service.

18. Data and computer services.

19. Dry cleaning/garment processing plant, wholesale facility.

20. Dry cleaning/garment processing facility, retail, greater than 3,000 square feet.

21. Electronic equipment and component manufacturing, assembly, processing, and distribution.

22. Equipment and material storage yard; no trash or refuse removal service.

23. Feed and grain storage and distribution center.

M-1 ZONING (Heavy IndustrIal)


24. Flea market.

25. Food service, institutional.

26. Furniture repair, dipping and stripping, upholstery.

27. Greenhouse or nursery, wholesale (not more than 20 percent of lot area may be devoted to

garden center uses).

28. Gunsmith shop.

29. Janitorial service.

30. Kennel, commercial.

31. Laundry, industrial.

32. Manufacture and fabrication of signs.

33. Manufacturing, candy/confectioners.

34. Manufacturing, cosmetics and perfume.

35. Manufacturing, electronic components.

36. Manufacturing, fabricated metal.

37. Manufacturing, musical instruments and toys.

38. Manufacturing, pharmaceuticals (non-HAZMAT process).

39. Manufacturing, pottery, ceramics.

40. Marble/tile, processing, cutting and polishing.

41. Masonry and stoneworking.

42. Medical or dental laboratory.

43. Motor vehicle repair.

44. Motor vehicle sales, rental or lease (unlimited), excluding passenger motor vehicles less than

7,500 pounds gross vehicle weight. Floor area devoted to storage of parts inventory used for

service and repair shall not be included in secondary retail sales floor area calculations.

45. Motor vehicle service.

46. Moving and storage.

47. Office.

48. Package, telecommunication, and courier service (unlimited storage of equipment, supplies

and vehicles).

49. Parking, commercial.

50. Photographic processing laboratory.

51. Publishing and printing.

52. Radio or TV broadcasting station.

53. Railroad freight depot.

54. Railroad passenger station.

55. Recording studio.

M-1 ZONING (Heavy IndustrIal) (continued...)


56. Recyclable materials separation facility.

57. Recycling collection points, subject to the standards in section 32-250.84

58. Research and development (non-HAZMAT).

59. Self-storage center, in accordance with the provisions of section 32-400.14

60. Sheet metal fabrication.

61. Taxi or limousine operations and service facility.

62. Tool and equipment rental, service and repair, heavy and minor.

63. Trade, technical or vocational school.

64. Trailer sales (retail), lease, storage, repair and maintenance.

65. Veterinary hospital.

66. Warehouse (non-HAZMAT).

67. Waterfront or maritime uses.

68. Wholesaling (non-HAZMAT).

Except for retail dry cleaning/garment processing facilities greater than 3,000 square feet, no more than 20

percent of the gross floor area of the principal use may be used for accessory retail sales of products made

or stored on the premises. The square footage devoted to such accessory retail sales shall be included in

calculating the limit on secondary uses permitted by section 32-403.12, below.

(Ord. No. 92-50, 5-5-92; Ord. No. 94-1, 1-11-94; Ord. No. 95-6, 1-3-95; Ord. No. 99-13, 2-16-99; Ord. No. 00-77,

10-17-00; Ord. No. 03-52, 7-1-03; Ord. No. 04-78, 12-21-04; Ord. No. 09-30, 5-19-09)

Sec. 32-403.12. Secondary uses.

The following uses shall be permitted by right in the M-1 district, but only in conjunction with, and

secondary to, a permitted principal use, either existing or proposed for concurrent construction, in

accordance with the provisions of section 32-400.13.

1. Locksmith.

2. Quick service food store.

3. Motor vehicle fuel station (limited to vehicles associated with the primary business or use).

4. Recreation facility, commercial (indoor).

5. Restaurant.

6. Restaurant, carry-out.

7. Retail store.

(Ord. No. 04-78, 12-21-04; Ord. No. 06-77, 9-5-06; Ord. No. 09-30, 5-19-09)



Sec. 32-403.13. Special uses.

The following uses shall be permitted in the M-1 district with a special use permit, including any other

manufacturing, processing or wholesaling use not otherwise permitted by this chapter; including any use

involving the storage of petroleum, propane or natural gas products or hazardous materials.

1. Asphalt/concrete plant.

2. Assembly (HAZMAT).

3. Day care center.

4. Extraction of mineral resources and related industrial/ wholesaling operations, including

operation of crushers and sorting equipment customarily accessory thereto.

5. Heliport.

6. Manufacturing and processing, other (HAZMAT or non-HAZMAT).

7. Marina.

8. Motor vehicle auction (wholesale).

9. Motor vehicle fuel station.

10. Motor vehicle graveyard.

11. Motor vehicle impoundment yard.

12. Motor vehicle sales, secondary to motor vehicle repair.

13. Motor vehicle storage yard.

14. Motor vehicle towing.

15. Range, shooting, indoor or outdoor.

16. Recycling plant.

17. Research and development (HAZMAT).

18. Sawmill.

19. Stadium, arena, or amphitheater, indoor or outdoor.

20. Storage facility (HAZMAT).

21. Testing/experimental laboratories (HAZMAT).

22. Warehouse (HAZMAT).

23. Water transportation facility.

24. Wholesaling/storage and processing (HAZMAT).

(Ord. No. 94-1, 1-11-94; Ord. No. 95-6, 1-3-95; Ord. No. 04-78, 12-21-04; Ord. No. 06-77, 9-5-06; Ord. No. 09-30,

5-19-09)



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3 MILE RADIUS

Project Site

3 Mile and 5 Mile Radius Around LibertyBusiness Park, Manassas, Virginia

Zoning Districts


PRO FORMA BASED ON 572,250 SF

Merritt I-66 Business Park Last Modified 10/20/2014Investment Analysis GSF 596,720CONSOLIDATED PROFORMA RSF 596,7206 buildings, 20'-32' clear Acres 49.55

Dirt 2,158,398

Development Costs: Total Per SF Design and Dvlpmt 2,506,255$ 4.20$ Offsite Infrastructure 326,885$ 0.55$ Proffers -$ -$ Sitework 13,113,252$ 21.98$ Includes $600k for pump station Building costs 19,920,882$ 33.38$ 4% construction fee for Building and Site Contingency 1,793,364$ 3.01$ 5% of DD, Offisite, Sitework, & Building Cost Developers Fee 1,725,000$ 2.89$ 4% of all costs but Land Value Finance, Legal, Soft 843,977$ 1.41$ Construction Carry 793,500$ 1.33$ 5% for 6 months on 60% of Total Cost Lease up carry 1,895,000$ 3.18$ 5% for 9 months on all cost but commissions Commissions 2,237,012$ 3.75$ 7% based on 6 yr leases Land value 7,900,000$ 13.24$ Subtotal 53,055,127$ 88.91$

Tenant improvements: Flex/ Industrial Building 94,240 Office % 15.8% Office per bldg Office cost 5,654,400$ 9.48$ Bldgs 1-4 @ 25% office Electric Services 530,000$ 0.89$ Bldg 5-6 @ 5% office Heat and Lights 1,381,820$ 2.32$ Demising walls 450,000$ 0.75$ Plumbing- Bathrooms 396,000$ 0.66$ Subtotal 8,412,220$ 14.10 Tenants per Bldg

Bldgs 1-4 @ 4 tenants Total development cost 61,467,347$ 103.01$ Bldg 5-6 @ 3 tenants

Pro Forma Income Statement:Rental income Rental Revenue 5,326,220$ 8.93$ Rents Expense Reimbursement 1,298,846$ 2.18$ Bldg 1 @ $8.25 shell plus office TI @$60psf Less: Vacancy (5%) (331,253)$ (0.56)$ Bldgs 2-4 @ $7.50 shell plus office TI @ $60psf Net rental income 6,293,812$ 10.55$ Bldg 5-6 @ 7.25 shell plus office TI @ $60psf

Expenses: Property taxes 602,652$ 1.01$ Insurance 53,705$ 0.09$ Utilities 84,487$ 0.14$ Maintenance 301,402$ 0.51$ Management (4%) 256,600$ 0.43$ Subtotal 1,298,846$ 2.18$

Net operating income less 5% of Op. Ex. 4,994,966$ 8.37$

Financial analysis: Cap rate 7.25% Value 68,896,089 115.46$ Acqusition Summary Proposed LTV 70% Land Price $7,900,000 Proposed debt 48,227,262 80.82$ Site Acreage 49.55 Interest rate 4.50% Dirt SF 2,158,398 Period 30 FAR 596,720 Debt service (2,932,325) (4.91)$ FAR Ratio 27.6% Cash flow 2,062,641 3.46$ Land Price per FAR $13.24Return on costs 8.13% Land Price Per Dirt SF $3.66Equity Required 13,240,084 22.19$ Return on Equity 15.58%


SCHEDULE OF PROSPECTIVE CASH FLOWIn Inflated Dollars

Assumptions:• Build two buildings (buildings 1 and 5) in the first year, and then one building each year thereafter• 4% construction interest (six month build) = 2% adjusted• Lease-up – over 9 months – ¼ at start, ¼ Q1, ¼ Q2, ¼ Q3• Rents, TI ($14.96/SF) & LC (6%) coincide with all individual proforma – 6 year terms• Rent increases 2.5% annually• Going-in cap rate = 7.25%• Exit cap rate = 7.25%• Market Assumptions – 75% renewal probability ($.50/SF TI renewal). Release: 6 month downtime, $1.50/SF TI for market release.

1-4% LC, 6 year terms for renewal and release.Last Modified:

10/20/2014

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10For the Years Ending Dec-2015 Dec-2016 Dec-2017 Dec-2018 Dec-2019 Dec-2020 Dec-2021 Dec-2022 Dec-2023 Dec-2024

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Potential Gross Revenue Base Rental Revenue $2,566,811 $5,600,255 $5,433,384 $5,541,441 $5,679,976 $5,821,977 $6,010,319 $6,385,908 $6,681,374 $6,705,790 Absorption & Turnover Vacancy (2,127,045) (2,830,012) (245,682) (558,197)

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ Scheduled Base Rental Revenue $439,766 $2,770,243 $5,224,433 $5,541,441 $5,679,976 $5,821,977 $5,764,637 $5,827,711 $6,367,619 $6,705,790

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ Total Reimbursement Revenue 46,958 604,110 1,281,086 1,356,180 1,384,410 1,413,214 1,385,340 1,348,713 1,443,679 1,545,664

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Potential Gross Revenue 486,724 3,374,353 6,505,519 6,897,621 7,064,386 7,235,191 7,149,977 7,176,424 7,811,298 8,251,454 General Vacancy (534) (150,390) (344,882) (353,220) (361,759) (205,040) 0 (182,894) (412,573)

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Effective Gross Revenue 486,724 3,373,819 6,355,129 6,552,739 6,711,166 6,873,432 6,944,937 7,176,424 7,628,404 7,838,881

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Operating Expenses 250,438 896,340 1,326,848 1,356,204 1,384,425 1,413,235 1,438,861 1,471,343 1,513,111 1,545,690

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Operating Income 236,286 2,477,479 5,028,281 5,196,535 5,326,741 5,460,197 5,506,076 5,705,081 6,115,293 6,293,191

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Leasing & Capital Costs Tenant Improvements 1,804,447 4,206,616 2,402,169 111,899 254,240 Leasing Commissions 487,459 1,144,210 666,777 154,779 351,662

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Leasing & Capital Costs 2,291,906 5,350,826 266,678 605,902

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Cash Flow Before Debt Service (2,055,620) (2,873,347) 1,959,335 5,196,535 5,326,741 5,460,197 5,239,398 5,099,179 5,774,723 6,293,191

Development Costs

Design and Dvlpmt 1,102,130 1,404,125 Offsite Infrastructure 145,151 181,734 Sitework 5,822,862 7,290,390 Building costs 8,987,048 10,933,834 Contingency 802,860 990,504 Developers Fee 771,000 954,000 Finance, Legal, Soft 371,495 472,482 Construction Carry 354,500 439,000

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Development Costs 18,357,046 22,666,068

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Cash Flow Before Debt Service (20,412,666) (25,539,415) 1,959,335 5,196,535 5,326,741 5,460,197 5,239,398 5,099,179 5,774,723 6,293,191

Construction Interest 367,141 453,321Permanent Debt 645,364 2,084,237 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Debt Service 1,012,505 2,537,559 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325 2,932,325

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Cash Flow (21,425,172) (28,076,974) (972,990) 2,264,210 2,394,416 2,527,872 2,307,073 2,166,854 2,842,398 3,360,866

Equity Required (Land Purchase 7/1/14) 7,900,000 2,566,890 2,773,194Debt Funding 18,449,203 25,697,021 3,068,946Net Proceeds from Building Resale 72,481,575Cost of Sale (1,449,632)

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Project Cash Flow (7,900,000) (2,581,042) (2,379,953) 2,095,956 2,264,210 2,394,416 2,527,872 2,307,073 2,166,854 2,842,398 74,392,809

Net Project IRR 26.56%

Cash Flow Analysis

Merritt I-66 Business ParkSchedule Of Prospective Cash Flow

In Inflated Dollars for the Fiscal Year Beginning 1/1/2015


SCHEDULE OF PROSPECTIVE CASH FLOW (CONTINUED...)In Inflated Dollars Last Modified:

10/20/2014


___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________











Development Costs






___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Cash Flow (21,425,172) (28,076,974) (972,990) 2,264,210 2,394,416 2,527,872 2,307,073 2,166,854 2,842,398 3,360,866




Cash Flow Analysis



Last Modified:10/20/2014


___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________











Development Costs






___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Cash Flow (21,425,172) (28,076,974) (972,990) 2,264,210 2,394,416 2,527,872 2,307,073 2,166,854 2,842,398 3,360,866




Cash Flow Analysis



FOR ADDITIONAL INFORMATION CALL 410.298.2600 OR EMAIL:

Stephen Shaw | [email protected]

CORPORATE OFFICE 2066 Lord Baltimore Drive

Baltimore, MD 21244 410 298 2600 phone

410 298 9644 fax

VIRGINIA OFFICE 20098 Ashbrook Place, Suite 160

Ashburn, VA 20147 703 858 2725 phone

703 858 7239 fax

www.MerrittProperties.com

Documents

Merritt I-66 proposal (10 20 14)