Getting To Yes With The Country’s Largest Tenant

NAIOP Maryland/DC Chapter

The Public Sector Impact on Real Estate in 2010

February 24, 2010

Key Assumption

Site meets GSA’s criteria for: Location – delineated area Transit access – the closer the better Amenities – food, shopping Security - setback Land use - schedule

Government’s Objectives

To achieve a high level of certainty that the selected site can deliver: Time commitment People involvement Cost Public profile

The Government wants to procure the space once!

How Do You Win?

Four key ingredients: Development Team Capital certainty Schedule certainty Property management

Quality of the Development Team

Key members from the Government’s perspective: Developer Base building architect Interiors architect General contractor

All need to meet minimum criteria set forth in SFO Past experience working together Two more key members the Government will not ask about:

Broker Counsel

Certainty of Capital

GSA needs to know that the deal will close Equity in today’s market

Sufficient funds to get to closing. Plan on 35-40% equity at a minimum You can’t afford to be wrong

Debt in today’s market 60-65% is aggressive 50-55% is realistic

For now, leverage is the enemy Your lease will not be contingent on financing

Certainty of Schedule

Why this is critical to the Government Expiring leases Procurement of move-related items Efficiency of consolidation

Certainty of groundbreaking Zoning Site plan Building plans

Certainty of construction – team competence The Government holds the trump card – liquidated damages

Quality of Property Management

Who will handle: Move coordination Commissioning LEED Certification Energy Star Operations

Input in design Input in Form 1217 Client satisfaction