1400 EYE STREET, NW - Transwestern · of the remaining vacancy. ClASS “A+” lOCATION 1400 Eye...

OfferingMeMOranduM1400 EYE STREET, NW

washingtOn, dc

DEAL CONTACTS

Gerald P. Trainorexecutive Managing [email protected]

James V. CardellicchioManaging [email protected]

Paul H. Kornsfinancial [email protected]

CAPITAL MARKETS

Patricia A. EarnestManaging [email protected]

COMMERCIAL LEASING

Mark S. Richardsonsenior Vice [email protected]

Institutional Commercial Group www.transwestern-icg.net

Gerald P. Trainor202.775.7091

James V. Cardellicchio202.775.7094

Robert J. Filley202.775.7045

Patricia A. Earnest202.775.7055

Paul H. Korns202.775.7038

I. Executive Summary

executive Overview ................................................................... 2

summary of terms..................................................................... 2

Market snapshot ....................................................................... 4

II. Property Overview

BuildingSpecifications ............................................................... 5

site Plan .................................................................................... 10

floor Plans ................................................................................ 11

III. Tenancy

stacking Plan ............................................................................. 20

expiration schedule ................................................................... 21

tenant Overviews ...................................................................... 22

rent roll summary ................................................................... 24

IV. Financial Analysis

cash flow summary ................................................................. 28

argus assumptions ................................................................... 30

historical Operating expenses .................................................. 30

Loan summary .......................................................................... 31

ground Lease abstract .............................................................. 31

sale & Lease comparables ....................................................... 32

Supporting Documents on Disc

Lease abstracts

tax summary

washington area economy

DistrictofColumbiaOfficeMarket

argus Model

2

ExECuTIVE OVERVIEW

transwestern’s institutional commercial group, as exclusive representative for the Owner, is pleased to present this investment offering for the leasehold interest in 1400EyeStreet,NW,afreestanding12-storymulti-tenantofficebuildingtotaling175,127squarefeet(the“Property”).SituatedintheEastEndatthecornerof14thandEyeStreets,justfourblocksfromtheWhiteHouse,thisfirstclassofficebuildingis81%leased.Thisisauniqueopportunitytoownanofficebuildingononeofthebestcornerlocationsinthecityatabasisthatisbelowreplacementcosts.Furthermore,thepropertyprovidesstablecashflowwithupsidethroughthelease-upof the remaining vacancy.

ClASS “A+” lOCATION

1400EyeStreetsitsabovetheMcPhersonSquareMetrorailStationintheheartofWashington,DConscenicFranklinPark.Thisprimecornerlocationprovidestenantswithincredibleparkviews,directaccesstotheOrange/BluelinesatMcPhersonSquare,andon-siteparking.

The combination of park views, enclosed Metrorail access, corner frontage along a major arterial (14th Street), and underground parking gives 1400 Eye a competitive advantage in the extremely sought after East End submarket.

lEASE-uP & CAPITAl IMPROVEMENTS

TheownerhasrepositionedthePropertythroughanextensivecapitalimprovementandlease-upprogramsincetheyacquiredthePropertyin2006.Aplazarenovationwas completed in 2008 which included the expansion and repositioning of the building’s retail area, a new front entrance and entrance to the lower level. the entrance to the lower level makes it accessible from street level and has resulted in it being leased as retail space. Other capital improvements include: a renovated lobby, a new tenantfitnesscenter,enhancementstothecommonareasandrestroomsonseveralfloors,andrefurbishmentoftheelevatorcabs.AdditionalcapitalhasalsobeenspentonthebuildingsystemswhichincludestheelevatorequipmentandHVACsystem.

1400 EYE STREET AT A GlANCE

Year Built: 1983

Year Renovated: 1995, 2009

Stories: 12 above grade 4 below grade - retail, garage, andMcPhersonSquareMetrorailconcourse

Square Feet: 175,127netrentablesquarefeet

Typical Floor Size: 14,100–15,500netrentablesquarefeet

On-Site Parking approx. 100 cars

Occupancy: 81%

Stabilized NOI (Yr 2) $4,291,472

SuMMARY OF TERMS

Interest Offered: Leasehold interest

Asking Price: no asking price

Offer Due Date: January 20, 2011

3

INVESTMENT HIGHlIGHTS

Core Investment: Stablerollover(nomorethan11%inanyofthefirstnineyears) »diverse tenant mix »credit tenancy »new Lobby, front entrance, retail façade, common areas »Class“A+”Location »

upside in Value: Value creation through lease-up of vacancy »Prime space remains to be leased »in-place rents are below market »Opportunity to further enhance buildings image through minor upgrades »

Existing Debt: Debtmaybeassumedorprepaid(Defeasanceis$8.3millionapprox.) »Balance - $37 million »Rate-5.942%(I/Othrough6/13;then30yramortization) »Maturity: May 2016 »

Ground lease: GroundLeasewithWMATA(theMetrorailAuthority) »68yearsremainonthegroundlease(maturity:August17,2079) »wMata ’s interest is to preserve access to the station, not to own the building »

MARKET FuNDAMENTAlS PROPERTY HIGHlIGHTS

The East End enjoys the lowest direct vacancy rate in the city 6.3% »concessions are drying up and rents have started to rise »Projected rent spikes in the near future »Limited ground breakings: »

» Over 4 million s.f. of absorption in washington, dc in 2010 »Lessthan2millions.f.underconstructionwith50%preleasing

Quality Asset with Commanding Views Over Franklin Park: Free-standingcornerbuildingwithglasslineonallfoursides(extremelyrareinDC) »Excellentglass-to-floor-ratiowithincredibleparkviews »Prominent corner building with visibility »DirectMetrorailaccessviaMcPhersonSquareStation »Recentlyrenovatedlobby,retailplaza,selectcommonareasandsystems »Center-corebuildingprovidesforfunctionalfloorplates »existing build-outs are very nice – low tis for re-let »Newtenant-onlyfitnesscenter »On-site food services: »

» five guys » Osaka sushi express

Below grade parking »

View of Franklin Park from 1400 Eye Street, NW

2.5%4.5% 4.6% 5.0%

4.7% 7.1%

15.7%22.9%

27.4%32.0%

43.0%

51.9%

59.2%

64.2%

81.3%

100.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ Vacant

(as a percentage of NRA per calendar year)Annual Expirations Cumulative Expirations

8. 6% 7. 2%11.0%

9. 0% 7. 3%

17. 1% 18.7%

4

district of columbia Q3 ‘09 Q4 ‘09 Q1 ‘10 Q2 ‘10 nov. 2010 trend direct Vacancy rate 8.8% 9.2% 9.4% 8.8% 7.1%

Overall Vacancy rate 10.2% 10.5% 10.5% 10.0% 8.1%

NetAbsorption(qtrly) +202,000 +1,017,000 +714,000 +1,639,000 +1,727,000

MARKET SNAPSHOT

Overview: » dc sales market is very active – prices will rise with increased rents » The East End enjoys the lowest direct vacancy rate in the city 6.3%

» Limited ground breakings Positive Job growth » Just 206,000 s.f. under construction in east end

Lack of construction » construction is down to 2 million s.f. in dc from 6 million s.f. in sep-09 declining Vacancy » Over 4 million s.f. of absorption in washington, dc in 2010 + Positive net absorption » Market is tightening = Rent Spikes » Vacancy rates falling

» concessions are drying up » Rent spikes are in the near future

east end submarket Q3 ‘09 Q4 ‘09 Q1 ‘10 Q2 ‘10 nov. 2010 trend direct Vacancy rate 8.0% 7.6% 7.5% 7.0% 6.3%

Overall Vacancy rate 9.7% 9.2% 9.1% 8.5% 7.6%

NetAbsorption(qtrly) +64,000 +177,000 +44,000 +221,000 +516,000

Metro Area’s Economy: » 41,800newjobs(12monthsendingJuly2010) (20-yearaverageis37,000peryear) » Jobgrowthreflectsa1.4%increase;nationallyjust0.1% » Unemploymentis5.8%(Oct.2010);lowestinnation(nationwide9.0%)

Federal Government: » 19,700newFederaljobs(12monthsendingJuly2010)1/3rd of area’s grP » 7%increaseinprocurementspendingfor2010

Economic Outlook: » Jobgrowthwillleadtofurtherconsumerconfidence

» 2011and2012jobgrowth:+37,300and+44,300 » 5-year projected job growth: 42,900 vs. historical average of 37,000

$20

$30

$40

$50

$60

$70

$80

$90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010**

$ in

Bill

ions

Source: Dr. Stephen Fuller, Delta Associates; September 2010. *Estimate; **Projected

Source: Dr. Stephen Fuller and Delta Associates; September 2010.

-60

-40

-20

0

20

40

60

80

100

120

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

District Sub. MD No. Virginia

20-Year Annual Average = 37,000/Year

5-Year Projected Average = 42,900/Year

(Annual Average)Thousands of N

ew Payroll Jobs

FEDERAl PROCuREMENT SPENDINGWASHINGTON METRO AREA

PAYROll JOB GROWTH WASHINGTON METRO AREA 2000 - 2014

5

PROPERTY OVERVIEW

Building Specifications

Property Name and Address: 1400 eye street, nw, washington, dc

Year Built: 1983 and renovated in 1995 and 2009

Developer: the Lenkin companies

Site: Thelandareais17,710squarefeet(0.41acres).OwnershipleasesthelandfromWMATA. 68yearsremainonthegroundlease(August17,2079).

Building Area: 175,127netrentablesquarefeet *Inplaceleasesreflect174,934netrentablesquarefeet.Asthetenants’leasesexpire, thenewBOMAsquarefootagesareincorporatedintothefinancialmodel.

Number of Floors: above grade 12 Levels Below grade 4 Levels

Typical Floor Size: Size(approximate) 14,100-15,500 netrentablesquarefeet FinishedCeilingHeight 8’-2” upperfloors 12’-6’’ lobby

Tenant Reception Area

6

Tenant conference room

Available eleventh floor suite with premium park views

7

Restrooms: Therearetwoonfloors2-12.ThereisaunisexADArestroomonthe4thfloor.The3rd,10th,11thand12thfloorrestroomswererenovated within the past three years.

Parking: there are approximately 55 parking spaces. however, the garage is valet parked and can hold in excess of 100 cars. Vehicular access to the parking garage is provided via the alleys of 14th, 15th and eye streets.

Zoning: C-4(CentralBusinessDistrict)

CONSTRuCTION

Foundation: Concreteslabwithreinforcedconcretepylonsandfootings.Constructioniscast-in-placereinforcedconcretefloorsandcolumns. floors 9-12 are post-tensioned on the front of the building permitting a column free environment.

Exterior Walls: Limestonefacingontheupperfloorsandbrickfacingonthelowerfloors.

Interior Columns: column spacing varies throughout. floors 9-12 are column free on front side of building.

Windows: Graytinted,doublepaneinanodizedframes

Roof: Replacedin1997,theroofconsistsoftwo-plySBSmodifiedbituminousroofingsystemoveranasphaltmembrane

Building Height: 12stories;130feettomainroof

MECHANICAl SYSTEMS

Elevators: four full-service Otis elevators with a maximum load capacity of 3,000 pounds, one of which is designated as the freight elevator. Twooftheelevatorstravelfromthelobbyleveltothe12thfloor,whiletwoservetheB-3levelto12thfloor.Anextensiveelevatormodernizationprojectwascompletedin2002,followedby2008cabinteriorimprovementswhichincludedreplacementofallinteriorfinishes.

Water & Sewer: the Property’s water & sewer services are served by the public system

Electric: Eachfloorisservedbytwoelectricalriserswhichfeeda200amp277/4803phaseG.E.electricalpanel

HVAC: TheHVACsystemconsistsofanelectronicVAVsystemwithtwo25-tonTraneunitsoneachfloor.ThesystemismonitoredandcontrolledviaanINET2000EMSsystem.TheTranepackageunitsonthe11thand12thfloorshavebeenrefurbishedandVAVcontrollers have been replaced as areas have been renovated over the years.

Energy Management System: the inet 2000 eMs system, installed in 1999, is controlled by the electronic building manager which allows tenants access by phone to schedule after hours hVac.

FIRE/lIFE SAFETY

Fire Safety: Updatedin2006,anautomaticfireprotectionsprinklersystemisprovidedinthegarageandbuilding,aswellasanalarmandsmokedetectorsystem,asrequiredbylaw.

Thebuildingisequippedwitha75KVAemergencygeneratordrivenbyanAllisChalmersDieselEngine.Thisgeneratorwillsupplypowertostairwelllighting,emergencylightingintenantandcorridorspaces,garage,oneelevatorcabandthemanagementofficetelephones.

Security: Datawatchcardreadersarelocatedatthe14thStreetplazaentrance,B-2garagelevelentrance,andtheB-3Metrorailconcourseentrance, as well as on every elevator for after hours building access.

8

MISCEllANEOuS

Directions: Traveling from Ronald Reagan Washington National Airport: route 1 north to the 14th street Bridge. continue north on 14th street to eye street. the Property is situated on the southwest corner of 14th and eye street, nw. the Property’s parking garage is accessed from the alley between h and eye streets.

Public Transportation: The Property is located above the McPherson Square Metrorail station. Washington’s Metrorail system is one ofthe nation’s premier mass transit systems. The McPherson Square station serves the Orange/Blue Lines which connect downtown to the suburbs in northern Virginia and Maryland. 1400 eye is also just one stop from the Metro center station, the hub of the city’s Metrorail system.

Capital Improvements: capital improvements By current Ownership 2006-20102006 fire alarm system – main system upgrade2007 caulking façade – re-caulking all exterior joints2008 column re-painting – all columns on 14th and eye facades2008 RetailPlaza-newstorefront,aluminumcanopyandmullions2008 LobbyRenovation-newwoodfinishes,floor,ceiling,lights,HVAC2009 Restrooms–renovationof3rd,10th,11th,12thfloors2009 ElevatorLandings–renovationof3rd,9th,11thfloorcommonareafinishes2010 HVAC&VAV–renovationof11th,12thfloorA/Cunits&VAVBoxesTotal Improvements $3,357,000

9

1400 Eye Street main entrance

Osaka Sushi Express

10

SITE PlAN

DOWNTOWN DC lOCATION

Mmetro

I ST NW

H ST NW

ZEI ALLEY NW

15TH

ST

NW

14TH

ST

NW

1400 Eye Street NW

FranklinPark

ArlingtonHouse

KennedyGraves

ArlingtonCemetary

VisitorCenter

FortMyer

Iwo JimaMemorial

NetherlandsCarillon

Rosslyn

Potomac

River

TheodoreRoosevelt

Island

Arlingto

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Fairf

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36th

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35th

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33rd

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32n

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M St.

T Je

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26th

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Pennsylvania Ave

25th

St.

24th

St.

23rd

St.

22n

d S

t.

New

Ham

pshire

Ave

H St.

G St.

23rd

St.

WashingtonCircle

F St.

E St.

D St.

C St.

Constitution Ave

17th

St.

Re�ecting Pool

Vietnam VeteransWar Memorial

Lincoln Memorial

Ohio Drive

WestPotomac

Park

FranklinDelano

RooseveltMemorial

Je�erson Memorial

Tidal Basin

Washington Momument

TheEllipse

White House

LafayetteSquare

George WashingtonUniversity

National Geographic

Society

Connecticut Ave

Massachusetts Ave

M St.

E St.

G St.

H St.

I St.

K St.

17th

St.

16th

St.

15th

St.

18th

St.

L St.

19th

St.

20th

St.

21st

St.

Dupont

Circle

Kutz Bridge

15th

St.

12th

St.

C St.

D St.

Verm

ont A

ve

14th

St

FarragutSquare

FranklinSquare

M St.13th

St.

11th

St.

10th

St.

9th

St.

8th

St.

7th

St.

L St.

K St.

I St.

New York Ave

MetroCenter

G St.

F St.

E St.

Old PostO�ce

FederalTriangle

6th

St.

5th

St.

M St.

O St.

N St.

H St.

I St.

6th

St.

5th

St.

H St.

F St.

E St.

Archives-NavyMemorial

Constitution Ave

Pennsylvania Ave

JudiciarySquare

Nat ’l Museumof American

HistoryNat.Museum

of Natural History

National Gallery of Art

Madison Drive

Je�erson Drive

TheMall

L’En

fan

t Pr

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BannekerCircle

Independence Ave

7th

St.

Maryland Ave

6th

St.

4th

St.

FederalCenter

SW

Virginia Ave

Virginia AveL’Enfant

Plaza

H St.

G St.

BotanicGarden

United States

Capitol

Southwest Frwy

Maryland Ave

Massachusetts Ave

Del

awar

e A

ve

Louisiana A

ve

New

Jersey Ave

2nd

St.

1st

St.

F St.

H St.

I St.

New

Jersey Ave

G St.

1st

St.

BusStation

M St.

1st

St.

D St.

E St.

CapitolSouth

2nd

St.

3rd

St.

D St.New

Jersey Ave

1st

St.

C St.

L of CMadisonBuilding

Library ofCongress

SupremeCourt

Senate O�ceBuildings

UnionStation

2nd

St.

3rd

St.

A St.

C St.

D St.

E St.

Canal St.

VerizonSportsArena

Gallery Place-Chinatown

Nat.Museum

of Am. Art

WashingtonConvention

Center

Mt. VernonSquare

Mt. VernonSq.-UDC

S M I T H S O N I A N

Theo. Roosevelt Mem. Bridge

Arlington Mem. Bridge

Arlin

gto

n R

idg

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Kent St.

Mo

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Fort M

yer Dr. Wilson Blvd

Lynn St.

Washington

George

Mem

orial Pwky

Central Business District

GeorgetownEast End

NoMa

Southwest

West End

Capitol Hill

Capitol Riverfront

1400 Eye St, NW

11

FlOOR PlANS

Parking Garage

Mech. Equip.

Stair 1

Up

14TH STREET

EY

E S

TRE

ET

B-3 Metrorail Concourse level

Parking Garage

Mech. Equip.

Stair 1

P.E.

F.E.

Storage

Metro Variety635 SF11/2012

Up

Dn

14TH STREET

EY

E S

TRE

ET

B-4

12

FlOOR PlANS

Pump Room

Tel. CL.

Stair 1

P.E.

F.E.

UpUp

Dn

Parking Garage

Studio LoungeLL1

5,838 SF5/2021

B-1

B-2

Parking Garage

Mech. Equip.

Mech. Equip.

Stair 1

P.E.

F.E.

EngineeringOffice

Elec Room

Spklr Room

Up

Dn

14TH STREET

EY

E S

TRE

ET

13

FlOOR PlANS

W.C.

Parking Garage

RollerShutter

Storage

Office

Office

Stair2

Stair 1

FireCommand

Room

14TH STREET

EY

E S

TRE

ET

MailRoom

Five GuysPL 3

3,666 SF10/2019

Osaka Sushi ExpressPL 2

1,640 SF5/2019

P.E.

P.E. P.E.

F.E.Up

Up

Up

Dn

Stair 2

P.E.

P.E.

P.E.

P.E.

Stair 1

Mech. Room

Mech. Room

Stratos Government Services200

8,189 SF12/2011

The ONE Campaign250

4,909 SF12/2017

Men

14TH STREET

EY

E S

TRE

ET

Up

Up

Dn

Dn

Dn

J.C.

1st Floor

2nd Floor

14

FlOOR PlANS

Stair 1

Stair 2Women

F.E.

P.E.

J.C.

P.E.

P.E.

Mech. Room

Vacant300

5,671 SF

Stein McEwen301

8,735 SF4/2020

Mech. Room

Men

14TH STREET

EY

E S

TRE

ET

Up

Up

Dn

Dn

Women

Mech. Room

Regis & Associates425

2,820 SF4/2014

Regis & Associates415

1,395 SF4/2014

Citizens for Responsibility & Ethics

4503,452 SF7/2014

Thomas L. Bown Associates441

1,586 SF12/2013

Capital Concierge400

4,944 SF4/2014

Mech. Room

Men

14TH STREET

EY

E S

TRE

ET

J.C.

W.C.

P.E.

P.E.

P.E.

F.E.

Stair 1

Up

Up

Dn

Dn

Stair 2

3rd Floor

4th Floor

15

FlOOR PlANS

Mech. RoomMen

J.C.

P.E.

F.E.Women

P.E.

P.E.

Stair 2

Stair 1

Mech. Room

BCS510

1,877 SF11/2015

Vacant550

1,504 SF

Applied Materials540

2,906 SF6/2013

Sprenger & Lang500

5,964 SF5/2015

Tenant Fitness Center560

2,000 SF

14TH STREET

EY

E S

TRE

ET

UpDn

UpDn

Women

Men

F.E.

P.E.P.E.

P.E.Up

Up

Dn

Dn

Stair 1

Stair 2

Mech.Room

J.C.

Mech.Room

The ONE Campaign600

14,270 SF12/2017

14TH STREET

EY

E S

TRE

ET

5th Floor

6th Floor

16

Mech. Room

Bal

cony

Balcony

Bal

cony

Mech. Room

Stair 2

Stair 1

P.E.P.E.

CL.

P.E. P.E.

Up

Up

Dn

Dn

Men

J.C.

Women

Phelps-Stokes750

3,667 SF4/2012

DC Government700

10,591 SF2/2013

14TH STREET

EY

E S

TRE

ET

Stair 2

Stair 1

WomenF.E.

P.E.

J.C.

P.E.

P.E.

Mech. Room

Mech. Room

Vacant800

15,823 SF

Men

14TH STREET

EY

E S

TRE

ET

Up

Up

Dn

Dn

7th Floor

8th Floor

FlOOR PlANS

17

FlOOR PlANS

Mech.Room

NACHC902

7,443 SF9/2019

National Strategies901

8,020 SF9/2016 B

alco

ny

Men

J.C.

P.E.

F.E.Women

P.E.

P.E.

Stair 2

Stair 1

Mech. Room

14TH STREET

EY

E S

TRE

ET

UpDn

Up Dn

Stair 1

P.E.

P.E.

P.E.

P.E.

Stair 2Mech. Room

Mech. Room

African Development Foundation1000

15,705 SF5/2018

Men

Women

14TH STREET

EY

E S

TRE

ET

Up

Up

Dn

Dn

J.C.

9th Floor

10th Floor

18

FlOOR PlANS

Up

Stair 1

Stair 2Women

F.E.

P.E.

J.C.

P.E.

P.E.

Mech. Room

Vacant1100

9,633 SF

Campaign For Tobacco-Free Kids1101

6,212 SF6/2021

Mech. Room

Men

14TH STREET

EY

E S

TRE

ET

Up

Up

Dn

Dn

Mech. RoomMen

J.C.

P.E.

F.E.Women

P.E.

P.E.

Stair 1

Stair 2

Mech. Room

Dn

Campaign For Tobacco-Free Kids1200

15,839 SF6/2021

14TH STREET

EY

E S

TRE

ET

UpDn

Dn

11th Floor

12th Floor

19

Renovated main lobby

Tenant suite

20

STACKING PlAN

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020VacantGarage GT 2021

Floor SF

12

11

10

9

8

7

6

5

4

3

2

G

B1

B2

B3

B4

15,839

15,845

15,705

15,463

15,823

14,258

14,270

14,251

14,197

14,406

13,098

5,306

5,838

635

In Place SF 174,934*

Garage

Garage

Garage

Garage

300Vacant

5,671 SF

1101

Campaign For Tobacco-Free Kids

6,212 SF - 6/2021

1200

Campaign For Tobacco-Free Kids

15,839 SF - 6/2021

Private

Stairs

1100Vacant

9,633 SF

1000

African Development Federation

15,705 SF - 5/2018

902NACHC

7,443 SF - 9/2019

901

National Strategies

8,020 SF - 9/2016

800Vacant15,823

750Phelps Stokes

3,667 SF - 4/2012

700

DC Government (Police)

10,591 SF - 2/2013

600The ONE Campaign

14,270 SF - 12/2017

550Vacant

1,504 SF

560Tenant Fitness Center

2,000 SF

540Applied Materials2,906 SF - 6/2013

510BCS

1,877 SF - 11/2015

500Sprenger & Lang

5,964 SF - 5/2015

450Citizens For Resp Ethics

3,452 SF - 7/2014

441TL Brown Associates

1,586 SF - 12/2013

415Regis & Associates4,215 SF - 4/2014

301Stein McEwen

8,735 SF - 4/2020

250The ONE Campaign4,909 SF - 12/2017

200Stratos Government Services

8,189 SF - 12/2011

PL 3Five Guys

3,666 SF - 10/2019LoungeStairs

PL 2Osaka Sushi Express

1,640 SF - 5/2019 1400 Eye Entrance

LL 1Studio Lounge

5,838 SF - 5/2021

B 3Metro Variety635 SF - 11/2012

400Capital Concierge4,944 SF - 4/2014

* In-place leases total 174,934 SF.The building’s BOMA measurement is 175,127 SF. All leases are assumed to be remeasured to their respective BOMA measurements upon rollover.

TENANCY

21

Suite Expiration Date

Tenant CY2011

CY2012

CY2013

CY2014

CY2015

CY2016

CY2017

CY2018

CY2019

CY2020

CY2021+

Vacant

200 12/11 stratos gov. services 8,189 750 4/12 Phelps stokes 3,667 B3 11/12 Metro Variety 635 700 2/13 DCGov(police) 10,591 540 6/13 applied Materials 2,906 441 12/13 thomas L. Brown assoc. 1,586 400 4/14 capital concierge 4,944 415 4/14 regis & assoc 4,215 450 7/14 CitizensForResp.Ethics 3,452 500 5/15 sprenger & Lang 5,964 510 11/15 Bcs 1,877 901 9/16 national strategies 8,020 250 12/17 the One campaign 4,909 600 12/17 the One campaign 14,270 1000 5/18 african development

foundation 15,705

PL 2 5/19 Osaka sushi express 1,640 902 9/19 nachc 7,443 PL 3 10/19 five guys 3,666 301 4/20 stein Mcewen 8,735 LL 1 5/21 studio Lounge 5,838 1101 6/21 CmpgnTobacco-FreeKids 6,212 1200 6/21 CmpgnTobacco-FreeKids 15,839 560 tenant fitness center 2,000 300 spec tenant 5,671550 spec tenant 1,504800 spec tenant 15,8231100 spec tenant 9,633

BOMa adjustment 193

AnnualTotalSquareFeet 8,189 4,302 15,083 12,611 7,841 8,020 19,179 15,705 12,749 8,735 29,889 32,824%ofBuildingArea(175,127) 4.7% 2.5% 8.6% 7.2% 4.5% 4.6% 11.0% 9.0% 7.3% 5.0% 17.1% 18.7%

Cumulative%ofBuildingArea 4.7% 7.1% 15.7% 22.9% 27.4% 32.0% 43.0% 51.9% 59.2% 64.2% 81.3% 100.0%

lEASE ExPIRATION SCHEDulE

22

Below is a brief description of the Property’s largest tenants.

CAMPAIGN FOR TOBACCO-FREE KIDS22,051 SF 12.6% of NRA Expires 6/2021

TheCampaignforTobacco-FreeKidsisaleaderinthefighttoreducetobaccouseanditsdevastatingconsequencesintheUnitedStatesandaroundtheworld.TheCampaignisstrivingtopreventkidsfromsmoking,helpsmokersquit,andprotectothersfromsecondhandsmoke.

Headquartered at 1400 Eye Street, the campaign educates the public and policy makers of the dangers of tobacco through various means such as: exposing tobacco industry efforts that target children,advocateforprovensolutionsthatreducetobaccouse,mobilizeorganizationsandindividualstojointhefightagainsttobaccouseandshareprogramsandinformationwithinternationalpartners.

Asanon-profitorganization,theCampaignisfundedbycontributionsfromindividuals,philanthropicfoundations,corporationsandothernon-profitorganizations. For theyearendingMarch2009, thecampaign raised just over $28.5 million in donations and spent $17.5 million on program, contributing to its current net assets of $31.1 million.

TheCampaignhasmorethan130organizationalpartners,includingpublichealth,medical,education,civic,corporate,youthandreligiousorganizations.

http://www.tobaccofreekids.org

THE ONE CAMPAIGN (FORMERlY DATA FOuNDATION)19,179 SF 11.0% of NRA Expires 12/2017

TheONECampaign’soriginsgobackto2002withthefoundingoftheDATA(Debt,AIDS,Trade,Africa)Foundation,theanti-povertyadvocacyorganizationthatmergedwithONEin2008.

in 2002, Bono, Bob geldof, Bobby shriver, Jamie drummond and Lucy Matthew joined together to createanewadvocacyorganizationcalledDATA. DATAwascreated topress thegovernmentsofdevelopednationstodotheirpartinthefightagainstextremepovertyinAfrica,withafocusondebtrelief,AIDStreatmentandpreventionandthereformofunfairtraderules.DATAestablishedofficesinwashington, dc and London to advocate for its policy priorities at the top levels of government in the US,theUK,GermanyandacrosstheG8.

In2004,DATAandtenotherleadinganti-povertyorganizationsincludingBreadfortheWorldInstituteand the InternationalMedicalCorps joined together to createanewcampaign calledONE to fightagainst extreme poverty and preventable global disease.

In2008,ONEandDATAmergedintoaunitedglobalanti-povertyorganization.ThenewONEhasitsU.S.officeat1400EyeStreetandcombinesDATA’shigh-levelglobaladvocacyandpolicydepthwithONE’sgrassrootsmobilizationexpertise.

TheONECampaignisstrictlyanon-profitcharitableandeducationalorganizationandisbackedbytheBill & Melinda gates foundation.

http://www.one.org/us

TENANT OVERVIEWS

23

AFRICAN DEVElOPMENT FOuNDATION15,705 SF 9.0% of NRA Expires 5/2018

established by the african development foundation act of 1980, the u.s. african development Foundation (USADF) is a U.S. Government Agency established to support African designed andafrican driven solutions that address grassroots economic and social problems. usadf provides grants to under-served and marginalized community groups and enterprises that are not beingcurrently addressed by existing government programs, ngOs, or other international development efforts.Thegrantshelporganizations create tangiblebenefits suchas increasingor sustaining thenumber of jobs in a community, improving income levels, and addressing social development needs.

usadf measures grant success in terms of jobs, increased incomes levels, and improved social conditions. during fY 2010, usadf’s $30 million in u.s. government appropriations funded over $17 million for 200 projects in 20 countries. an additional $4.8 million was used to fund african directed partnerorganizations thatprovidedesignand implementationsupport for the foundation’sgrantees.

usadf operates in 21 african nations. Over the past 25 years, usadf has funded more than 1,500 projects representing in excess of $150 million in support of african enterprises and local african communities.

*As a U.S. Government Agency, the African Development Foundation enjoys the U.S. Government’s investment grade credit rating

http://www.adf.gov

THE DISTRICT OF COluMBIA (POlICE DEPARTMENT)10,591 SF 6.1% of NRA Expires 2/2013

A portion of the seventh floor at 1400 Eye Street serves the office and administrativeneeds of the dc Police department’s internal investigation center. this unit needs to be located separately from the dc police force, and is staffed by non-uniformed personnel.

*The Government of The District of Columbia enjoys an investment grade credit rating

http://dc.gov

STEIN MCEWEN llP8,735 SF 5.0% of NRA Expires 4/2020

Foundedin2004,SteinMcEwenLLPisafullserviceintellectualpropertylawfirmwithanemphasison intellectual property creation and maximization. With a diverse clientele, including largemultinational corporations, as well as small to midsize domestic and international companies, theattorneys of stein Mcewen LLP have worked with and counseled clients on the use of intellectual property as a tool for maximizing the protection of their research and development efforts.

With offices both at the subject property and in New York City, Stein McEwen has extensiveexperience in extracting intellectual property value through obtaining patents, copyrights, and trademarks, establishing protection and licensing regimes for existing patents, copyrights, trademarks and trade secrets, as well as meeting the individual needs of each client in general. http://smbiplaw.com

24

tenant namesuite numberexpiration date/term

tenantsf

annual rent rates Monthsto

abate

Percentto

abate

reimbursementsBaseYear+StopAmount(TaxStop/OEStop)

commentsPsf rent changes

annual on to(PSF)MetroVariety(YKang) retail, suite: B3 dec-1992 to nov-2012

635

$36.03 $22,879

dec-2011 $36.93 - - grOss: Pays no expense reimbursement

» suite resets to 640 BOMa sf upon expiration

studio Lounge retail, suite: LL 1 Jun-2011 to May-2021

5,838 $16.00

$93,408 Jun-2012

Jun-2013 Jun-2014 Jun-2015 Jun-2016 Jun-2017 Jun-2018 Jun-2019 Jun-2020

$16.48 $16.97 $17.48 $18.01 $18.55 $19.10 $19.68 $20.27 $20.88

1-12 13-24 25-36

60%40%30%

LL-1_nnn (<cln,util,contsrv)

» tenant has 5,632 sf in Lower Level and 215SFonPlazaLevelforVestibule

» tenant is submetered for electricity and water/sewer

» suite resets to 5,340 BOMa sf upon expiration » tenant has two 5-year options at fMV

Osaka sushi express retail, suite: PL 2 Jun-2009 to May-2019

1,640

$56.65 $92,906

Jun-2011 Jun-2012 Jun-2013 Jun-2014 Jun-2015 Jun-2016 Jun-2017 Jun-2018

$58.35 $60.10 $61.90 $64.40 $66.33 $68.32 $70.37 $72.48

- - P2_NNN(bldg’stax+oe) » tenant is submetered for electricity and water/sewer

» suite resets to 1,408 BOMa sf upon expiration

five guys retail, suite: PL 3 nov-2009 to Oct-2019

3,666

$61.80 $226,559

nov-2011 nov-2012 nov-2013 nov-2014 nov-2015 nov-2016 nov-2017 nov-2018

$63.65 $65.56 $67.53 $69.56 $71.64 $73.79 $76.01 $78.29

- - PL-3_nnn (tax,<cln,util,r+m)

» tenant is submetered for electricity and water/ sewer. tenant is responsible for its own trash and cleaning

» tenant has one 5-year option at fMV

stratos gov. services suite: 0200 nov-2006 to dec-2011

8,189 $42.77

$350,244 nov-2011 $44.05 - - 200_BY06_$718,525/

$1,719,520 » suite resets to 8,237 BOMa sf upon expiration

the One campaign suite: 0250 aug-2010 to dec-2017

4,909 $43.00

$211,087 aug-2011 aug-2012 aug-2013 aug-2014 aug-2015 aug-2016 aug-2017

$44.08 $45.18 $46.31 $47.46 $48.65 $49.87 $51.11

- - 250_BY10_$1,111,520/ $1,726,103


stein Mcewen suite: 0301 Jan-2010 to apr-2020

8,735

$44.08 $385,039

Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Jan-2020

$45.18 $46.31 $47.46 $49.71 $50.96 $52.23 $53.54 $54.87 $56.24

- - 301_BY10_$1,111,520/$1,726,103

» tenant has one 5-year option at fMV » tenant has one-time cancellation right at the endofthe6thLY(12/2015)with6mos.noticeandpaymentofunamortizedleasingcosts

» tenant has one-time right to lease balance of 3rdfloor(approx.5,690SF)duringthe6th/7thLY(1/2015–12/2016);termwillbecoterminouswith existing space and rent will be at fMV

» tenant has right to lease any space that is contiguoustoiton3rdfloorthrough5/1/2018.rent will be at fMV and tenant’s rights are subordinate to other tenants’ rights

RENT ROll SuMMARY

25


tenantsf


abate

Percentto

abate



annual on to(PSF) capital concierge suite: 0400 Jan-2009 to apr-2014

4,944

$47.28 $233,752

Jan-2012 Jan-2013 Jan-2014

$48.46 $49.67 $50.91

- - 400_BY09_$1,102,066/$1,925,717

» suite resets to 5,066 BOMa sf upon expiration» tenant has one 5-year option at fMV

regis & assoc suite: 0415 Jan-2009 to apr-2014

4,215

$46.75 $197,051

Jan-2012 Jan-2013 Jan-2014

$47.92 $49.12 $50.35

415_BY09_$1,102,066/$1,925,717


thomas L. Brown assoc suite: 0441 Oct-2008 to dec-2013

1,586 $49.86

$79,078

dec-2011 dec-2012 dec-2013

$51.36 $52.90 $54.49

- - 441_BY08?$1,098,020/$1,934,114


CitizensFor responsible ethics suite: 0450 apr-2006 to Jul-2014

3,452

$48.80 $168,458

apr-2012 apr-2013 apr-2014

$50.27 $51.77 $53.33

- - 450_BY09_$1,102,066/$1,925,717


sprenger & Lang suite: 0500 Jun-2005 to May-2015

5,964

$39.53 $235,757

Jun-2011 Jun-2012 Jun-2013 Jun-2014

$40.52 $41.53 $42.57 $43.63

- - 500_BY05_$712,233/$1,600,801


Bcs suite: 0510 sep-2010 to nov-2015

1,877

$43.00 $80,711

sep-2011 sep-2012 sep-2013 sep-2014 sep-2015

$44.08 $45.18 $46.31 $47.46 $48.65

- - 510_BY10_$1,111,520/$1,726,103


applied Materials suite: 0540 Jul-2010 to Jun-2013

2,906 $45.00

$130,770

Jul-2011 Jul-2012

$46.13 $47.28

- - 540_BY10_$1,111,520/$1,726,103


tenant fitness center suite: 0560 apr-2011 to Mar-2031

2,000 $45.00

$90,000 - - - - grOss: Pays no expense

reimbursement. » fitness center is leasable space that has been converted to a building amenity» rent will be included in Opex for all tenants.

the One campaign suite: 0600 feb-2007 to dec-2017

14,270 $42.22

$602,479

apr-2012 apr-2013 apr-2014 apr-2015 apr-2016 apr-2017 aug-2017

$44.22 $45.33 $46.46 $47.62 $48.81 $49.87 $51.11

- - 600_BY06_$718,525/$1,719,520


DCGov(police) suite: 0700 sep-2005 to feb-2013

10,591

$38.14 $403,941

Jan-2012 Jan-2013

$39.09 $40.07

- - 700_BY06_$718,825/$1,719,520


Phelps stokes suite: 0750 May-2006 to apr-2012

3,667 $38.08

$139,639 May-2011 $39.03 750_BY06_$718,525/

$1,719,520 » suite resets to 3,982 BOMa sf upon expiration

RENT ROll SuMMARY

26

RENT ROll SuMMARY


tenantsf


abate

Percentto

abate



annual on to(PSF) national strategies suite: 0901 Jun-2009 to sep-2016

8,020

$44.08 $353,522

Jul-2011 Jul-2012 Jul-2013 Jul-2014 Jul-2015 Jul-2016

$45.18 $46.31 $47.46 $48.65 $49.87 $51.11

- - 901_BY09_$1,075,555/ $1,644,879

» suite resets to 8,064 BOMa sf upon expiration » tenant has one 5-year option at fMV »Tenanthasrightoffirstoffertoleaseanyspace contiguoustoitonthe9thflooratFMV;right expires24monthspriortoexpiration(9/2013)

nachc suite: 0902 Oct-2009 to sep-2019

7,443

$44.08 $328,087

Oct-2011 Oct-2012 Oct-2013 Oct-2014 Oct-2015 Oct-2016 Oct-2017 Oct-2018

$45.18 $46.31 $47.46 $49.96 $51.21 $52.49 $53.81 $55.15

- - 902_BY10_$1,111,520/$1,726,103

» suite resets to 7,450 BOMa sf upon expiration » tenant has one 5-year option at greater of fMV or $56.53 » tenant has one-time cancellation right at end of 7thLY(9/2016)with12mos.noticeandpenalty ofunamortizedleasingcostscalculatedwith interestat8%perannum»Tenanthasrightoffirstoffertoleaseanyspace contiguoustoiton9thfloor.

african development fndtn suite: 1000 May-2008 to May-2018

15,705

$46.75 $734,209

Jun-2011 Jun-2012 Jun-2013 Jun-2014 Jun-2015 Jun-2016 Jun-2017

$47.92 $49.12 $51.37 $52.65 $53.97 $55.32 $56.70

1000_BY08_$1,098,020/$1,934,114

» suite resets to 15,848 BOMa sf upon expiration» tenant has one 5-year option at fMV» Lease is subject to appropriation of funds by congress

CmpgnTobacco-FreeKids suite: 1101 Jan-2011 to Jun-2021

6,212

$42.00 $260,904

Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Jan-2020 Jan-2021

$42.95 $43.91 $44.90 $45.91 $48.16 $49.24 $50.35 $51.48 $52.64 $53.83

1-6 100% 1100_see ste 1200 for reimb

» tax stop is dc fiscal Year 2010 » Oe stop is 2011 » tenant has one 5-year option at fMV » tenant has one-time cancellation right for the 11thfloorleaseatendofthe5thLYwith12 mos.noticeandpenaltyofunamortizedleasing costs and free rent calculated with interest at 8%perannumanda126-month amortizationperiod

CmpgnTobacco-FreeKids suite: 1200 Jan-2011 to Jun-2021

15,839

$42.00 $665,238

Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Jan-2020 Jan-2021

$42.95 $43.91 $44.90 $45.91 $48.16 $49.24 $50.35 $51.48 $52.64 $53.83

1-6 100% 1200_BY11_$1,102,325/$tBd

» tax stop is dc fiscal Year 2010» Oe stop is 2011» suite resets to 15,853 BOMa sf upon expiration» tenant has one 5-year option at fMV

27

Metro Variety - Metrorail Concourse

Enclosed Metrorail access from Ground Floor of 1400 Eye Street

28

CASH FlOW PROJECTIONS

for the Years ending Year 1 Year 2

Mar-2013 Year 3

Mar-2014 Year 4

Mar-2015 Year 5

Mar-2016 Year 6

Mar-2017 Year 7

Mar-2018 Year 8

Mar-2019 Year 9

Mar-2020 Year 10

Mar-2021 Year 11

Mar-2022 Psf Mar-2012 Potential Gross Revenue Base rental revenue $39.79 6,967,813 $7,851,682 $8,161,169 $8,404,361 $8,697,216 $8,961,164 $9,265,989 $9,662,352 $9,994,624 $10,377,758 $11,054,396

absorption & turnover Vacancy (0.36) (63,837) (76,893) (80,267) (113,721) (74,032) (145,726) (223,360) (204,981) (276,404) (262,898) (682,874)

Base rent abatements (3.79) (663,017) (41,411) (31,182) (4,954) 0 0 0 0 0 0 0 scheduled Base rental revenue 35.64 6,240,959 7,733,378 8,049,720 8,285,686 8,623,184 8,815,438 9,042,629 9,457,371 9,718,220 10,114,860 10,371,522

Base rental step revenue 0.00 0 0 0 0 12,403 83,003 115,484 118,244 121,069 123,962 47,563

expense reimbursement revenue 1.30 228,205 409,937 659,099 728,178 786,180 829,475 866,427 776,043 764,667 744,742 536,832

DirReimb:Trsh(2%ofcln) 0.04 6,782 6,985 7,195 7,411 7,633 7,862 8,098 8,341 8,591 8,849 9,114

DirReimb:Elec(7%ofutil) 0.34 59,309 61,088 62,921 64,808 66,752 68,755 70,818 72,942 75,130 77,384 79,706

Parking revenue 1.05 184,558 203,090 209,183 215,458 221,922 228,580 235,437 242,500 249,775 257,268 264,986

Total Potential Gross Revenue 38.37 6,719,813 8,414,478 8,988,118 9,301,541 9,718,074 10,033,113 10,338,893 10,675,441 10,937,452 11,327,065 11,309,723

Vacancy&CreditLoss(3%) (0.57) (100,283) (137,821) (165,645) (142,718) (192,787) (131,745) (64,638) (116,543) (60,012) (84,801) 0

Effective Gross Revenue 37.80 6,619,530 8,276,657 8,822,473 9,158,823 9,525,287 9,901,368 10,274,255 10,558,898 10,877,440 11,242,264 11,309,723

Operating Expenses

MgmtFee(1.5%) 0.57 99,293 124,150 132,337 137,382 142,879 148,521 154,114 158,383 163,162 168,634 169,646

Cleaning(98%passed-thru) 1.76 308,270 317,518 327,044 336,855 346,961 357,369 368,091 379,133 390,507 402,222 414,289

Utilities(93%passed-thru) 4.70 823,732 848,444 873,897 900,114 927,118 954,931 983,579 1,013,086 1,043,479 1,074,783 1,107,027

repair & Maintenance 1.32 230,854 237,780 244,913 252,260 259,828 267,623 275,652 283,921 292,439 301,212 310,248

Payroll 0.64 112,321 115,691 119,161 122,736 126,418 130,211 134,117 138,141 142,285 146,553 150,950

contract services 0.79 139,059 143,231 147,528 151,954 156,512 161,207 166,044 171,025 176,156 181,440 186,884

insurance 0.19 33,840 34,855 35,901 36,978 38,087 39,230 40,407 41,619 42,867 44,154 45,478

taxes 5.18 906,872 1,157,701 1,424,567 1,467,305 1,511,323 1,556,663 1,603,363 1,651,464 1,701,008 1,752,038 1,804,599

Admin(reimb) 0.38 66,164 68,149 70,193 72,299 74,468 76,702 79,003 81,373 83,815 86,329 88,919

GroundRent(non-reimb) 4.41 771,953 937,666 992,247 1,025,882 1,062,529 1,100,137 1,137,426 1,165,890 1,197,744 1,234,226 1,240,972

Total Operating Expenses 19.94 3,492,358 3,985,185 4,367,788 4,503,765 4,646,123 4,792,594 4,941,796 5,084,035 5,233,462 5,391,591 5,519,012

Net Operating Income 17.86 3,127,172 4,291,472 4,454,685 4,655,058 4,879,164 5,108,774 5,332,459 5,474,863 5,643,978 5,850,673 5,790,711

leasing & Capital Costs

tenant improvements 8.79 1,539,855 53,649 235,599 185,133 129,907 244,448 490,923 414,185 435,151 437,719 1,581,775

Leasing commissions 4.90 857,743 41,368 199,675 149,242 111,104 208,685 424,548 386,765 428,291 389,355 1,423,013

cap reserve 0.20 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641

Total leasing & Capital Costs 13.89 2,432,239 129,658 469,915 369,016 275,652 487,774 950,112 835,591 898,083 861,715 3,039,429

Cash Flow Before Debt Service 3.97 694,933 4,161,814 3,984,770 4,286,042 4,603,512 4,621,000 4,382,347 4,639,272 4,745,895 4,988,958 2,751,282

Debt Service

interest Payments 12.55 2,198,540 2,198,540 2,191,824 2,165,286 2,135,963 2,104,850 2,071,837 2,036,808 1,999,640 1,960,202 1,918,356

Principal Payments 0.00 0 0 341,914 480,185 509,507 540,620 573,633 608,663 645,831 685,268 727,115

Total Debt Service 12.55 2,198,540 2,198,540 2,533,738 2,645,471 2,645,470 2,645,470 2,645,470 $2,645,471 2,645,471 2,645,470 2,645,471

Cash Flow After Debt Service (8.59) (1,503,607) 1,963,274 1,451,032 1,640,571 1,958,042 1,975,530 1,736,877 1,993,801 2,100,424 2,343,488 105,811

FINANCIAl ANAlYSIS

29

for the Years ending Year 1 Year 2

Mar-2013 Year 3

Mar-2014 Year 4

Mar-2015 Year 5

Mar-2016 Year 6

Mar-2017 Year 7

Mar-2018 Year 8

Mar-2019 Year 9

Mar-2020 Year 10

Mar-2021 Year 11

Mar-2022 Psf Mar-2012 Potential Gross Revenue Base rental revenue $39.79 6,967,813 $7,851,682 $8,161,169 $8,404,361 $8,697,216 $8,961,164 $9,265,989 $9,662,352 $9,994,624 $10,377,758 $11,054,396

absorption & turnover Vacancy (0.36) (63,837) (76,893) (80,267) (113,721) (74,032) (145,726) (223,360) (204,981) (276,404) (262,898) (682,874)

Base rent abatements (3.79) (663,017) (41,411) (31,182) (4,954) 0 0 0 0 0 0 0 scheduled Base rental revenue 35.64 6,240,959 7,733,378 8,049,720 8,285,686 8,623,184 8,815,438 9,042,629 9,457,371 9,718,220 10,114,860 10,371,522

Base rental step revenue 0.00 0 0 0 0 12,403 83,003 115,484 118,244 121,069 123,962 47,563

expense reimbursement revenue 1.30 228,205 409,937 659,099 728,178 786,180 829,475 866,427 776,043 764,667 744,742 536,832

DirReimb:Trsh(2%ofcln) 0.04 6,782 6,985 7,195 7,411 7,633 7,862 8,098 8,341 8,591 8,849 9,114

DirReimb:Elec(7%ofutil) 0.34 59,309 61,088 62,921 64,808 66,752 68,755 70,818 72,942 75,130 77,384 79,706

Parking revenue 1.05 184,558 203,090 209,183 215,458 221,922 228,580 235,437 242,500 249,775 257,268 264,986

Total Potential Gross Revenue 38.37 6,719,813 8,414,478 8,988,118 9,301,541 9,718,074 10,033,113 10,338,893 10,675,441 10,937,452 11,327,065 11,309,723

Vacancy&CreditLoss(3%) (0.57) (100,283) (137,821) (165,645) (142,718) (192,787) (131,745) (64,638) (116,543) (60,012) (84,801) 0

Effective Gross Revenue 37.80 6,619,530 8,276,657 8,822,473 9,158,823 9,525,287 9,901,368 10,274,255 10,558,898 10,877,440 11,242,264 11,309,723

Operating Expenses

MgmtFee(1.5%) 0.57 99,293 124,150 132,337 137,382 142,879 148,521 154,114 158,383 163,162 168,634 169,646

Cleaning(98%passed-thru) 1.76 308,270 317,518 327,044 336,855 346,961 357,369 368,091 379,133 390,507 402,222 414,289

Utilities(93%passed-thru) 4.70 823,732 848,444 873,897 900,114 927,118 954,931 983,579 1,013,086 1,043,479 1,074,783 1,107,027

repair & Maintenance 1.32 230,854 237,780 244,913 252,260 259,828 267,623 275,652 283,921 292,439 301,212 310,248

Payroll 0.64 112,321 115,691 119,161 122,736 126,418 130,211 134,117 138,141 142,285 146,553 150,950

contract services 0.79 139,059 143,231 147,528 151,954 156,512 161,207 166,044 171,025 176,156 181,440 186,884

insurance 0.19 33,840 34,855 35,901 36,978 38,087 39,230 40,407 41,619 42,867 44,154 45,478

taxes 5.18 906,872 1,157,701 1,424,567 1,467,305 1,511,323 1,556,663 1,603,363 1,651,464 1,701,008 1,752,038 1,804,599

Admin(reimb) 0.38 66,164 68,149 70,193 72,299 74,468 76,702 79,003 81,373 83,815 86,329 88,919

GroundRent(non-reimb) 4.41 771,953 937,666 992,247 1,025,882 1,062,529 1,100,137 1,137,426 1,165,890 1,197,744 1,234,226 1,240,972

Total Operating Expenses 19.94 3,492,358 3,985,185 4,367,788 4,503,765 4,646,123 4,792,594 4,941,796 5,084,035 5,233,462 5,391,591 5,519,012

Net Operating Income 17.86 3,127,172 4,291,472 4,454,685 4,655,058 4,879,164 5,108,774 5,332,459 5,474,863 5,643,978 5,850,673 5,790,711

leasing & Capital Costs

tenant improvements 8.79 1,539,855 53,649 235,599 185,133 129,907 244,448 490,923 414,185 435,151 437,719 1,581,775

Leasing commissions 4.90 857,743 41,368 199,675 149,242 111,104 208,685 424,548 386,765 428,291 389,355 1,423,013

cap reserve 0.20 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641 34,641

Total leasing & Capital Costs 13.89 2,432,239 129,658 469,915 369,016 275,652 487,774 950,112 835,591 898,083 861,715 3,039,429

Cash Flow Before Debt Service 3.97 694,933 4,161,814 3,984,770 4,286,042 4,603,512 4,621,000 4,382,347 4,639,272 4,745,895 4,988,958 2,751,282

Debt Service

interest Payments 12.55 2,198,540 2,198,540 2,191,824 2,165,286 2,135,963 2,104,850 2,071,837 2,036,808 1,999,640 1,960,202 1,918,356

Principal Payments 0.00 0 0 341,914 480,185 509,507 540,620 573,633 608,663 645,831 685,268 727,115

Total Debt Service 12.55 2,198,540 2,198,540 2,533,738 2,645,471 2,645,470 2,645,470 2,645,470 $2,645,471 2,645,471 2,645,470 2,645,471

Cash Flow After Debt Service (8.59) (1,503,607) 1,963,274 1,451,032 1,640,571 1,958,042 1,975,530 1,736,877 1,993,801 2,100,424 2,343,488 105,811

in-Place note Matures 05/2016.Balance due: $35,580,501 for modeling purposes, the in-Place note has been extended thru the analysis end. no refinancing event has been assumed.

30

ARGuS ASSuMPTIONS

Analysis Start Date apr 01, 2011

Net Rentable Area OccupiedArea 142,303 81.3%Vacant 32,824 18.7%Total NRA 175,127 BOMa sf

Market leasing Assumptions

Newtenantsreceivefreerentoninitiallease-uponly(seeschedulebelow) Inflation Rates

GeneralInflation(CPI)MarketRentInflation

3%3%,5%,7%,3%……

Miscellaneous IncomeDirReimb:Trsh(2%ofcln)DirReimb:Elec(7%ofutil)

Parking revenue

PSF$0.04 $0.34 $1.05

Year 1$6,782

$59,309 $184,558

Commentstenants submetered for trash: Osaka sushi express tenants submetered for electricity: Metro Variety, Osaka sushi express, and five guys TheProperty includes98parkingspaces.Oncestabilized, it isassumedthat12%ofthespacesare used for transient parking and 88% formonthly contracts. The transient spaces turnover 3timesperdayat$10/ticket,gross,andthereisa10%oversellofmonthlycontractsat$220/contract/month,gross.Thegrossincomeissubjectto12%taxfromDCanda25%overheadcharge(garageoperatingcosts)and5%managementcost.

Vacancy & Credit loss 3% Percent of Potential gross revenue.*dc gov, african dev. foundation, and applied Materials are excluded from the calculation.

Operating Expenses OperatingexpensesreflectOwner’s2011BudgetadjustedforafiscalyearbeginningApril2011.TaxeshavebeenincreasedinYear3oftheproformatoreflectanewassessedvaluebasedona7.00%capratetoadjusted2012’sNOI(groundrenthasbeenexcludedfromtheassessedvaluetoderiveatafeesimplevalue).ThiswillreflecthowthePropertystoodasofJan1,2012whichwillbepayableduringTY2013(Oct-2012throughSep-2013).

Capital Expenses cap reserve

lease-up

PSF $0.20

Year 1$34,641

*Officerentsarefullservice,receive3monthsfree *5%commissions

Mrkt rent annual Leaseescalations

Lease type

Leaseterm

renewalProbability

downtime tenant improvements Leasing commissions

new renew new renewretail: Metro Level $40.00 3.0% gross 7 years 75% 6 mo $15.00 $5.00 5.0% 3.0%retail: Lower Level $20.00 3.0% nnn 7 years 75% 6 mo $15.00 $5.00 5.0% 3.0%Retail:PlazaLevel $65.00 3.0% nnn 7 years 75% 6 mo $15.00 $5.00 5.0% 3.0%

flrs 2 - 12: Base rate $45.00 3.0% full service 5 years 75% 6 mo $25.00 $7.50 5.0% 3.0%flrs 2 - 7: full floors $46.00 2.5%+$2.50y6 full service 10 years 75% 6 mo $40.00 $15.00 5.0% 3.0%

flrs 2 - 7: Park View Premium $46.50 3.0% full service 7 years 75% 6 mo $30.00 $10.00 5.0% 3.0%flrs 8 - 12: full floors $47.50 2.5%+$2.50y6 full service 10 years 75% 6 mo $40.00 $15.00 5.0% 3.0%

flrs 8 - 12: Park View Premium $48.00 3.0% full service 7 years 75% 6 mo $30.00 $10.00 5.0% 3.0%

HISTORICAl OPERATING ExPENSES2007 actual 2008 actual 2009 actual

$/Psf $ $/Psf $ $/Psf $Management fees 1.10 192,299 0.97 169,579 0.98 171,356 cleaning 1.47 258,254 1.57 275,269 1.50 263,372 utilities 4.88 854,320 4.44 777,759 3.98 696,713 repair & Maintenance 1.07 187,859 1.10 192,934 0.85 148,050 Payroll 0.63 110,791 0.65 113,995 0.60 105,128 contract services 0.88 153,364 0.72 125,296 0.77 134,120 insurance 0.22 38,276 0.19 33,592 0.21 37,633 taxes 5.73 1,002,834 6.27 1,098,020 6.25 1,094,492 Adminstration(reimb) 0.38 66,975 0.34 59,296 0.31 53,841 GroundRent(non-reimb) 4.17 730,948 3.88 680,287 3.88 679,158 Administrative(non-reimb) 0.83 145,983 1.58 276,668 0.77 135,128 Total Expenses 21.37 3,741,904 21.71 3,802,697 20.09 3,518,991

# sf start date rent/sf* terM inc. ti / sfsuite 300 5,671 May-11 $45.00 5 yrs 3.0% $20suite 550 1,504 Jul-11 $46.50 5 yrs 3.0% $20Suite800(fullfloor) 15,823 sep-11 $47.50 10 yrs 2.5%$2.50/sfbumpYr6 $50suite 1100 9,633 nov-11 $48.00 10 yrs 2.5%$2.50/sfbumpYr6 $50

31

lOAN SuMMARY

Borrower 1400 i street nY LLclender deutsche Banc Mortgage capital Document Date May 3, 2006loan Amount $37,000,000Current Principal Balance $37,000,000 Commencement Date May 2, 2006Maturity Date June 1, 2016Interest Rate 5.942%perannumAmortization Period

Monthly Payments

Prepayment

Defeasance Theloanmaybedefeasedattheearlierofi)2yearsafterthesaleoftheloan,orii)3yearsaftertheloancommencementdate. Owner is willing to defease loan but will take costs into account when evaluating pricing. as of december 2010, the defeasance cost was estimated to be approximately $8.3 million

Subordinate AnyandallmortgagesplacedonthefeetitletothePremisesaresubordinatetotheGroundLeaseSection10.5(r)ofMortgage deed of trust.

GROuND lEASE ABSTRACT

land Owner WashingtonMetropolitanAreaTransitAuthority(WMATA)

lease Date august 18, 1980

Premise 1400 i street, nw, washington, dc

17,710SquareFeet;Lot64,Square220-DistrictofColumbia

lease Term 99years(50-yearinitialterm,plus,49-yearautomaticrenewalterm)

Commencement Date august 18, 1980

Expiration August17,2079(50-yearinitialterm,plus,49-yearautomaticrenewalterm)

Base Rent $510,000.00(BaseRentdoesnotincreaseoverinitial50yearterm.)

Percentage Rent Tenpercent(10%)oftheyearlyGrossIncomeover$4,000,000forthepreviousyear.GrossincomeshallincludeBaserent and expense reimbursements paid by tenants. Payment is made annually on november 17th for the prior year.

Type Netlease(NNN)

Recoveries tenant is responsible for all real and personal property taxes, license and permit fees, charges for public utilities of any kind, assessments and improvements. Landlord is only responsible for paying taxes assessed against the Lower Level associated with the Metro.

Option to Renew tenant has one 49-year automatic renewal option under the same terms, except for the Minimum Base rental payment which will be adjusted to the then fair market rate. if tenant and Landlord cannot agree on the fair market rental rate, it will go to the three appraiser process.

Cancellation Option tenant may elect not to renew its 49-year renewal option by giving landlord 24 months notice.

Purchase Option none

Security Deposit none

Comments FirstAmendment(05/21/1981):IncorporateslanguagetoprotectMortgagee. SecondAmendment(11/09/1981):Documentationofpermanenteasements

Period Amortization05/02/2006 - 06/30/2013 none – interest Only07/01/2013 - 05/31/2016 30-yearAmortization

Period Monthly Payment05/02/2006 - 06/30/2013 $183,211.67 interest Only07/01/2013 - 05/31/2016 $220,455.88 Principal & interest

Period Prepayment consideration05/02/2006 - 05/01/2009 none – Lockout Period 05/02/2009 - 02/29/2016 defeasance Permitted – 30 days notice03/01/2016 - 05/31/2016 Prepayment allowed

32

1211 connecticut ave, nw 1140 connecticut ave, nwsubmarket cBd cBdrsf 125,119 184,249

class C+ Bseller harbor group VornadoBuyer first Potomac tBdPrice $49,200,000 $80,250,000Price Psf $393 $436going-in cap rate 6.45% 6.75%stabilizedyr.4close date dec-10 Jan-11Location inferior inferiorQuality inferior inferior

ClOSED SAlE COMPARABlES

1750 h st, nw 1111 Pennsylvania ave, nw 1225 connecticut avenue, nw 1501 M st, nw*submarket cBd east end cBd east endrsf 111,510 331,074 240,811 170,311class B a- a a-seller nat'l treasury employee union shorenstein Brookfield John Buck co.Buyer first Potomac inVescO world Bank JP MorganPrice $65,000,000 $220,000,000 $216,000,000 $79,200,000Price Psf $583 $665 $897 $465going-in cap rate 6.50% 4.86% 5.50% 6.00%close date Oct-10 Oct-10 dec-10 nov-10Location comparable comparable inferior inferiorQuality inferior superior superior superior

EAST END lEASE COMPARABlES

1250 eye st, nw 1030 15th st, nw 455 Mass ave, nw 1341 g st, nw 455 Mass ave, nw 1301 Pennsylvania ave, nw

tenant Burt staples & Maner, LLP

scribner, hall & thompson

nat'l democratic institute

rr donnelly/Browne & co.

assoc. of american Publishers

nat'l assoc. of Public housing

deal sf 7,216 8,228 9,400 11,191 5,947 7,684term 37 mos 96 mos 120 mos 84 mos 120 mos 68 mosYear 1 rent $47.50 fs $50.50 fs $49.75 fs $50.00 fs $48.75 fs $48.50 fsexecution Oct-10 Jun-10 aug-10 nov-10 May-10 apr-10free rent 1 mo 3 mos 3 mos n/a 7 mos 2 mosimprovements $8 /sf $70 /sf $80 /sf $50 /sf $80 /sf $25 /sfescalation 2.50% 2.25% 2.50% 2.50% 2.50% 2.00%

$2.50 Yr 6 bump

33

TRANSWESTERN (including their affiliates, subsidiaries, related parties,successors, and assigns, hereinafter referred to singly and collectively as “Transwestern”or“Agent”)havebeenengagedastheexclusiveagentbytheowner(“Owner”or“Seller”)fortheleaseholdsaleof1400EyeStreet,NW,atwelve-storyofficeproperty,locatedinWashington,DC(the“Property”).

ThePropertyisbeingofferedforsaleinan“as-is,where-is”conditionandtheseller and the agent make no representations or warranties as to the accuracy of the information contained in this Offering Memorandum. the enclosed materialsincludehighlyconfidentialinformationandarebeingfurnishedsolelyfor the purpose of review by prospective purchasers of the interest described herein. neither the enclosed materials, nor any information contained herein, are to be used for any other purpose, or made available to any other person without the express written consent of the seller. each recipient, as a prerequisite to receiving theenclosed information,shouldbe registeredwithTranswesternCommercialServicesasa“RegisteredPotentialInvestor”oras“Buyer’sAgent” foran identified “RegisteredPotential Investor”. Theuseofthis Offering Memorandum and the information provided herein, is subject to theterms,provisionsandlimitationsoftheConfidentialityAgreementfurnishedby the agent prior to delivery of this Offering Memorandum. the enclosed materials are being provided solely to facilitate the prospective investor’s due diligence for which it shall be fully and solely responsible. the material contained herein is based on information and sources deemed to be reliable, but no representation or warranty, express or implied, is being made bytheAgentortheSelleroranyoftheirrespectiverepresentatives,affiliates,officers,employees,shareholders,partnersanddirectors,astotheaccuracyor completeness of the information contained herein. summaries contained herein of any legal or other documents are not intended to be comprehensive statements of the terms of such documents, but rather only outlines of some of the principal provisions contained therein. neither the agent or the seller shall have any liability whatsoever for the accuracy or completeness of the information contained herein, or any other written or oral communications, or information transmitted, or made available, or any action taken, or decision made by the recipient with respect to the Property. interested parties are to make their own investigations, projections and conclusions without reliance upon the material contained herein. the seller reserves the right, at its sole and absolute discretion, to withdraw the Property from being marketed for sale at any time and for any reason. the seller and the agent each expressly reserve the right, at their sole and absolute discretion, to reject any and all expressions of interest or offers regarding the Property and/or to terminate discussions with any entity at any time, with or without notice. this Offering Memorandum is made subject to omissions, corrections or errors, change of price or other terms, prior sale or withdrawal from themarket without notice. TheAgent is not authorized tomake any representations or agreements on behalf of the seller.

the seller shall have no legal commitment or obligation to any interested party reviewing the enclosed materials, performing additional investigation and/or making an offer to purchase the Property unless and until a binding written agreement for the purchase of the Property has been fully executed, delivered and approved by the seller and any conditions to the seller’s obligations thereunderhavebeensatisfiedorwaived. By taking possession of and reviewing the information contained herein, the recipient agrees that (a) the enclosedmaterials and their contents are of ahighlyconfidentialnatureandwillbeheldandtreatedinthestrictestconfidenceandshallbereturnedtotheAgentortheSellerpromptlyuponrequest;and(b)the recipient shall not contact employees or tenants of the Property directly or indirectly regarding any aspect of the enclosed materials or the Property withoutthepriorwrittenapprovaloftheSellerortheAgent;and(c)noportionof the enclosed materials may be copied or otherwise reproduced without the priorwrittenauthorizationoftheSellerortheAgentorasotherwiseprovidedin the ConfidentialityAgreement executed and delivered by the recipient(s) to transwestern. the seller will be responsible for any commission due the agent in connection with a sale of the Property. each prospective purchaser will be responsible for any claims for commissions by any other broker or agent in connection with a sale of the Property if such claims arise from acts of such prospective purchaser or its broker/agent. any Buyer’s agent must provide a registration signed by the prospective investor acknowledging said agent’s authority to act on its behalf. if you have no interest in the Property at this time, please return this Offering Memorandumtotheaddressbelowifitisahardcopyordeletethefileifitisan electronic copy:

transwesterninstitutional commercial group1700KStreet,NW,Suite660washington, dc 20006 attention: gerald P. trainor, executive Managing director

Confidential Memorandum And Disclaimer

1700KStreet,NW TEL 202.775.7000 suite 660 faX 202.296.2647 washington, dc 20006 www.transwestern-icg.net

DEAL CONTACTS

Gerald P. Trainorexecutive Managing [email protected]

James V. CardellicchioManaging [email protected]

Paul H. Kornsfinancial [email protected]

CAPITAL MARKETS

Patricia A. EarnestManaging [email protected]

COMMERCIAL LEASING

Mark S. Richardsonsenior Vice [email protected]

Institutional Commercial Group www.transwestern-icg.net

Gerald P. Trainor202.775.7091

James V. Cardellicchio202.775.7094

Robert J. Filley202.775.7045

Patricia A. Earnest202.775.7055

Paul H. Korns202.775.7038

1400 EYE STREET, NW - Transwestern · of the remaining vacancy. ClASS “A+” lOCATION 1400 Eye...

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