Recent Developments in Federal Facility Privatization

NCPPP P3 Connect July 2014

Marc WaddillSenior Vice President, Public InstitutionsJLL

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Introduction

• Federal Government owns or leases approximately 360,000 buildings and 3.3 billion square feet of space

• Major Real Estate Holding Agencies:− Department of Defense (Army, Air Force, Navy)− General Services Administration (GSA)− Department of Veterans Affairs (VA)− Department of Energy (DOE)

• Privatization Tools:− Fee Simple Disposal− Long-term Ground Lease (EUL, Section 111)− Exchange

Fee Simple Disposal

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• GSA Success Stories

Georgetown West Heating Plant

• Approximately 2 acres• Approximately 110’ tall

Bethesda Federal Building

• 10-story building

• Approximately 130K SF

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Fee Simple Disposal

• Pipeline:− Primarily residential single family houses− Non residential includes mainly USPS sites, small tracts of land,

SSA buildings, and small border patrol buildings− Unique Opportunities: Alan Bible Federal Building (Las Vegas)

Plum Island (NY)

• Issues to Consider:− Private Sector Market− As-is / Where-is− Entitlements− Other Environmental Constraints

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Enhanced Use Lease (EUL)

• Agencies with EUL Authority:− Department of Defense (Army, Air Force, Navy)− Department of Veterans Affairs (VA) − National Aeronautics and Space Administration (NASA)

• Issues to Consider & Recent Trends:− Asset versus Market− Acquisition versus Disposition− Development of Single Asset versus Multi-Phase Development− Cash Consideration versus In-Kind Consideration

EUL: VA Affordable Housing

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EUL Project Name Date Closed Total Number of Units1 Canandaigua, NY 9/17/2012 33

2 Dayton, OH 11/7/2013 55

3 Hines, IL 12/13/2013 122

4 Lyons, NJ 8/9/2012 61

5 Minneapolis, MN 5/12/2014 58

6 Newington, CT 9/7/2012 74

7 Roseburg, OR 10/5/2012 55

8 Tuscaloosa, AL 8/13/2013 50

• Asset: Individual Building or Parcel for Specific Purpose• Financing: Primarily Low Income Housing Tax Credits (LIHTC)• Veteran Preference as Primary Consideration

EUL: VA Fort Howard Existing

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Site Summary: Approximately 100 acres and 44 historic improvements (305k GSF) on the entire campus

EUL: VA Fort Howard Future State (Conceptual)

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EUL: Army EUL Projects

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Project Project Description

Aberdeen Proving Ground - Maryland Boulevard

2M square foot class A office development on 250 acres; includes supporting retail

Fort Detrick Central Utilities Plant, MD

Central Utility Plant providing steam, chilled water and conditioned electric supply to National Medical Biological Defense Interagency Campus

Fort Leonard Wood, MO 32-acre business and technology park

Picatinny Arsenal, NJ Potential development of 1M square feet on 120 acres; R&D, office and flex space

Redstone Arsenal, AL Mixed use development of 3-4M square feet on 400+ acre site. R&D, labs, hotel, academic space and retail

Yuma Proving Ground, AZ Automotive Test Facility on 2500+/- acres; Army has use of the GM facility, and GM has constructed an automotive test track for Army's use

EUL: Air Force EUL Projects

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Project Project DescriptionJoint Base San Antonio (Fort Sam Houston)

Developer leased 3 abandoned buildings and 10 acres of vacant land on Fort Sam Houston. Developer will develop additional office building on vacant land.

Eglin AFB Water Reclamation256 acres for maintaining an existing sewage effluent disposal field and construction of a 10M gallon per day wastewater treatment plant and a rapid infiltration basin effluent disposal system. Leased parcels are located outside gate.

Eglin AFB Airport108 acres to operate an existing airport terminal and construction, operation, and maintaining a fuel farm along with facilities for rental car agencies on an additional 23 acres. Leased parcels located outside gate.

Nellis AFB Wastewater Treatment Facility City of North Las Vegas developed wastewater treatment facility on 41 acres.

Hill AFB Office ParkMixed‐use commercial development on approximately 550 acres. The purpose of the project is to develop an aerospace research and technology park to benefit both the community and the AF. Potential to build up to 26 commercial buildings, 2 hotels, and 4 retail.

Eglin AFB Hotel17-acre parcel with 600 linear feet of beachfront. 152-room hotel to be constructed with development of retail pad. Provisions for second hotel if financial metrics met. Parcel located outside gate.

EUL: Navy EUL Projects

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Project Project Description

Moanalua Shopping Center, HI

Lessee constructed a 55,000-square-foot support services center for the Navy as in-kind consideration. The Navy pays no rent on the building, which was built for about $17 million

Lessee developed 30,000 square feet of commercial space for private-sector tenants

Port Hueneme, CA – GAPS Industrial (Global Auto Processing Services)

Use limited to storage & processing of motor vehicles

NB Point Loma, CA - ULA Industrial Lease (United Launch Alliance)

Leased for Production, Research and Development of Atlas Launch Vehicles and related components

NB San Diego, CA – NASSCO Industrial Lease Industrial space to aid in ship construction

NAS Key West, FL – Mole Pier Commercial Lease

Outer Mole Pier is currently outleased to the City of Key West and utilized for cruise ship berthing

EUL: NASA Ames Research Center (ARC)

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• ARC has over 50 EUL agreements • Tenants include Planetary Ventures (a subsidiary of Google, Inc.) and the

University of California• Received the 2003 GSA Achievement Award for Real Property Innovation

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Exchange for Services

Equity Investment ($608M)

Private Sector Ownership

Conveyance of Forrestal to Private Sector

Year

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Year 9 Year 10

Proj

ect T

imel

ine

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Services Period: Construction, Renovation, and Other Services

Value of Asset is Realized by Private Sector

Capital Investment

Private Sector Ownership

Conveyance to Private Sector

• Issues to Consider:− Timeline− Services (level of detail, timing, change orders…)− Ownership Risks (As-is / Where-is, Entitlement Risk, etc.