Consulting Proposalfor

Portfolio Financial Services Co.

Prepared For:

Jerry Hudspeth, PresidentBill Agnew, Chief Financial

Officer

Prepared By:

Mark Fraser SIOR

Brandon O’Leary

GVA Kidder Mathews

Key Issues and Objectives

Assignment TargetsMarketRelocation/Renewal

EconomicsProcessTeam Members

Project Team Members

GVA Kidder Mathews:

Mark D. Fraser, SIOR –

Project Manager and Negotiation

Brandon O’Leary

Project Coordinator

Monte Haynes – Construction Management

Project Team Members

Hills Design - Sheryl Johnson

Space Planning/Evaluation

PFSC – Bill Agnew

Assignment Objective

Reduce Rental Rate to market or belowNo PFSC Capital Expenditure Get Concession Package from Landlord/PDC Flexibility in Lease Term Free Parking Forever

Portland Office Market

Vacancy 1974-2007 (est)

(estimate)

Office VacancyPortland Metropolitan Area

0%

5%

10%

15%

20%

25%

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Portland Office Market

Portland Office Market 2000 vs. 2004

2000 Overall Vacancy 3.5% Rents peaking Class A Rents up to

$30 Class B/C rents > $20 Very little flexibility

for term, rent, capital exp.

2004 Overall Vacancy 14% Rents 40% off of

peak Class A Rents up to

$24 Class B/C in free fall Significant flexibility

for term, rent, capital exp.

Portland Office MarketMultnomah and Washington

Counties• 125 spaces in 74

building• 27% vacancy in large

vacancy properties• Average time on the

market 17 months

Portland Office MarketWeston/American Property

Management• 24% vacancy• Up from 18% Q1, 2003• Average time on the

market 13 months• PFSC is the second

largest tenant in the portfolio

The Process:

A Competitive Market Approach

The Process:

A Competitive Market Approach

Relocation Renewal Economics Tenant Costs

Physical Move $5.00/sf

IT Move $3.50/sf

Relocation Renewal Economics Landlord Costs

Marketing Time (9 months)

$15.00/sf

Leasing Fees $9.00/sf

Tenant Improvements $25.00/sf

Construction Time $5.00/sf

Free Rent $5.00/sf

Total Costs $59.00/sf or

3 years rent

The Process: A Competitive Market Approach

Establish a Real Estate Plan Definition of RequirementSurvey of the MarketSelection of Most Qualified PropertiesSolicitation of ProposalsAnalysis of ResponsesSelection of Appropriate Responses Negotiation of LeasePost Transaction Documentation

The Process:

Establishment of a Real Estate Plan

Conforms to and supports your 5 year planHas pre-approved timelineRoles and responsibilitiesAccountability and predictability

The Process:Definition of Requirement

LocationAmenitiesTransit

EconomicsRentTenant ImprovementsCapital CostsTerm

ParkingImage

Building FeaturesInternal ConfigurationAmenitiesSound AttenuationHVAC/LightTelecommunication StorageStructural Integrity

Term, Extension, Termination

The Process:Survey of the Market

597 spaces in 114 buildings within the freeway loop

The Process:Selection of Most

Qualified Properties

Tour

The Process:

Solicitation of ProposalsAnalysis of ResponsesSelection of Appropriate Responses

• “If you want to be considered further…” Negotiation Matrix

The Process:

Lease Negotiation, FinalizationPost Transaction Documentation

Unique Reasons to Retain Colliers

Experienced Team

Accountable Process

Warning:

Here comes the selling part.

Mark D. Fraser, SIOR

• 30 years experience in Portland Real Estate

• Management experience

• Top 20 North America in 2003

• Portland Office Broker of the Year 2001

Mark D. Fraser, SIOR• Clients:

– Willamette Week– Unico Properties – Specht Development – A.G.Edwards & Sons– C.E. John – ING – Foster Pepper & Tooze– TRW – Capital Pacific Bank – Harsch Investments – GemStone Systems– Pacific Interpreters– Portland Development Commission – Fujitsu – Prendergast & Associates – Northwest Power Planning Council– Three Oaks Development

Brandon O’ Leary

• Clients:– Unico Properties– Specht Development– Northwest Power and

Conservation Council– Homestead Capital– Yates Matthews & Morasch,

P.C.– Preston Bunnell & Stone, LLP– Pacific Interpreters– Patrick Lumber Company

Pre-approved timeline

Monthly written reports

Weekly Updates

Negotiation Matrix

Post transaction documentation

Accountable Process

Unique Reasons to RetainGVA Kidder Mathews

Experienced Team

Accountable Process