FINANCIAL ANALYSIS
DEA LABORATORY
BEACON LAKES BUSINESS PARK
Miami, Florida
SECTION II
FINANCIAL ANALYSIS
DEA LABORATORY
BEACON L AKES BUSINESS P ARK
FINANCIAL ANALYSIS
Miami, Florida
Stabilized Cash Flow Projections
For the Years Ending
Year 1
Assumptions
Year 1
Apr-2012
Year 2
Apr-2013
Year 3
Apr-2014
Year 4
Apr-2015
Year 5
Apr-2016
Year 6
Apr-2017
Year 7
Apr-2018
Year 8
Apr-2019
Year 9
Apr-2020
Year 10
Apr-2021
$ / PSF
$68.75
$0.00
$0.00
__________
$68.75
__________
$3,922,531
0
0
__________
3,922,531
__________
$3,922,531
8,045
12,769
__________
3,943,345
__________
$3,922,531
16,331
25,921
__________
3,964,783
__________
$3,922,531
24,866
39,467
__________
3,986,864
__________
$3,922,531
33,656
53,420
__________
4,009,608
__________
$3,922,531
42,711
67,792
__________
4,033,034
__________
$3,922,531
52,037
82,595
__________
4,057,163
__________
$3,922,531
61,643
97,841
__________
4,082,015
__________
$3,922,531
71,537
113,545
__________
4,107,613
__________
$3,922,531
81,728
129,721
__________
4,133,980
__________
$1.38
$1.36
$0.03
$1.35
$0.05
$1.69
$0.49
$2.10
$7.46
$0.07
$0.00
__________
$15.98
__________
$52.78
__________
78,451
77,595
1,712
77,024
2,853
96,423
27,957
119,816
425,630
3,994
0
__________
911,454
__________
3,011,078
__________
78,867
79,923
1,763
79,335
2,938
99,316
28,796
123,410
438,399
4,114
0
__________
936,860
__________
3,006,485
__________
79,296
82,320
1,816
81,715
3,026
102,295
29,660
127,112
451,551
4,237
0
__________
963,029
__________
3,001,754
__________
79,737
84,790
1,870
84,166
3,117
105,364
30,549
130,926
465,098
4,364
0
__________
989,982
__________
2,996,882
__________
80,192
87,334
1,926
86,691
3,211
108,525
31,466
134,853
479,051
4,495
0
__________
1,017,744
__________
2,991,864
__________
80,661
89,954
1,984
89,292
3,307
111,781
32,410
138,899
493,422
4,630
0
__________
1,046,339
__________
2,986,694
__________
81,143
92,652
2,044
91,971
3,406
115,134
33,382
143,066
508,225
4,769
0
__________
1,075,792
__________
2,981,370
__________
81,640
95,432
2,105
94,730
3,509
118,588
34,384
147,358
523,472
4,912
0
__________
1,106,129
__________
2,975,886
__________
82,152
98,295
2,168
97,572
3,614
122,146
35,415
151,779
539,176
5,059
0
__________
1,137,376
__________
2,970,238
__________
82,680
101,244
2,233
100,499
3,722
125,810
36,477
156,332
555,351
5,211
0
__________
1,169,560
__________
2,964,420
__________
Year 1
Per Sq Ft
POTENTIAL GROSS REVENUE
Base Rental Revenue
CPI Increase to Operating Cost Base
Real Estate Tax Increases
Sq Ftg
0.00%
$268,159
$425,630
__________
Inflation/Yr
Inflation/Yr
3.00% CPI
Base Amount
__________
EFFECTIVE GROSS REVENUE
__________ __________
OPERATING EXPENSES
Management Fee
Cleaning Costs
Exterior Electric & Water
Repairs & Maintenance
Exterior Security
Personnel
Business Park Fees
Insurance
Taxes
Professional Fees & Consultants
Contingency
2.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
__________
of EGR
Inflation/Yr
Inflation/Yr
Inflation/Yr
Inflation/Yr
Inflation/Yr
Inflation/Yr
Inflation/Yr
Inflation/Yr
Inflation/Yr
Inflation/Yr
__________
TOTAL OPERATING EXPENSES
__________ __________
NET OPERATING INCOME
__________ __________
CAPITAL COSTS
Painting (after every 5th year)
Capital Reserve
3.00% Inflation/Yr
3.00% Inflation/Yr
__________ __________
TOTAL CAPITAL COSTS
__________ __________
CASH FLOW BEFORE DEBT SERVICE
========= ==========
DEBT SERVICE
Principal
Interest
TOTAL DEBT SERVICE
30
6.25%
__________
7.39%
Year Amort
Interest
__________
loan constant
CASH FLOW AFTER DEBT SERVICE
========= ==========
198,427
$3.00
$0.10
__________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________
0
0
0
0
0
198,427
0
0
0
0
$0.00
__________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________
$52.78
3,011,078
3,006,485
3,001,754
2,996,882
2,991,864
2,788,267
2,981,370
2,975,886
2,970,238
2,964,420
======== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
$4.81
$25.50
__________
$30.30
274,200
1,454,734
__________
1,728,934
291,837
1,437,097
__________
1,728,934
310,609
1,418,325
__________
1,728,934
330,588
1,398,346
__________
1,728,934
351,852
1,377,082
__________
1,728,934
374,483
1,354,451
__________
1,728,934
398,571
1,330,363
__________
1,728,934
424,208
1,304,726
__________
1,728,934
451,493
1,277,440
__________
1,728,934
480,534
1,248,400
__________
1,728,934
1,282,144
1,277,551
1,272,821
1,267,948
1,262,930
1,059,333
1,252,436
1,246,952
1,241,304
1,235,486
$22.47
======== ========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
6
DEA LABORATORY
BEACON LAKES BUSINESS PARK
FINANCIAL ANALYSIS
Miami, Florida
Financial Assumptions
Introduction
The following assumptions outline a stabilized proforma effective April 2011 and
continuing for a 10-year term. In general, the Property will generate base rent of
$3,922,531, or $68.75 psf, which is the maximum annual rental rate that can be
charged to the U.S. Government per the Solicitation For Offers dated October 9, 2008.
The lease is a modified full service lease whereby the tenant reimburses landlord for
real estate taxes that exceed its base year stop amount and also pays to landlord the
annual CPI increases to its annual operating costs. The lease is net of interior utilities
and security (landlord is responsible for exterior utilities and exterior security).
Revenue
Base Rental Revenue
Effective upon delivery of the premises to tenant, tenant will pay to landlord a base
rental rate of $68.75 psf. Said base rent amount does not escalate during the lease
term.
CPI Increase to
Base Operating Costs
Effective Year 2 of the lease, tenant will pay to landlord the CPI increase to its base
operating expenses ($268,158.50) per the Lessor’s Annual Cost Statement dated April
16, 2009.
Real Estate Tax Increases
Effective Year 2 of the lease, the tenant will reimburse the landlord for increases in real
estate taxes that exceed its base year stop amount.
Miscellaneous Income
Miscellaneous Income has been excluded from this analysis; however, the DEA
Laboratory in Sterling, Virginia periodically engages landlord to perform special
projects on an as needed basis. Thus, it is likely that the facility will generate some
miscellaneous income in the future.
Operating Expenses
Operating Expenses are in accordance with the Sponsor’s estimates to operate the
Property. The Property’s Operating Costs, excluding Taxes, are not reimbursed by the
tenant. In lieu of reimbursing landlord for actual operating costs, the U.S.
Government pays the CPI increases to its base operating costs per the amount
specified in the Lessor’s Annual Cost Statement dated April 16, 2009 ($268,158.50). In
regard to Taxes, the tenant reimburses landlord the increase in taxes that exceed its
base year stop amount.
Operating Expenses have primarily been underwritten based on the actual costs to
operate the Sterling, Virginia facility. Operating Expenses were then adjusted by
inflation (3% per annum) to reflect the anticipated start of the lease. Effective Year 2
of the proforma, operating expenses increase annually by 3.0% per year. On the
following page, please find a comparison chart illustrating the actual operating
expenses at the Sterling, Virginia facility and those included in the subject Property’s
proforma. Below is a brief description of several property specific expenses at the
subject Property.
Management Fees
2% of Effective Gross Revenue
Business Park Fees
Business Park Fees are specific to the Miami, Florida facility. The association fees are
for the Beacon Lakes Business Park and reflect $0.07 per gross square foot of land.
Insurance
Insurance has been underwritten based on preliminary estimates for the Miami-Dade
County area.
7
DEA LABORATORY
BEACON LAKES BUSINESS PARK
FINANCIAL ANALYSIS
Miami, Florida
Taxes
Taxes are based the 2008 Tax Rate of $18.62 / $1,000 of assessed value times an
assumed 2011 Property assessment of $23 million. The assumed property assessment
is a conservative estimate that reflects replacement cost of the base building and
excludes the specialty equipment that the project includes that approximates the sale
price. This estimate equates to $403.12/psf in comparison to the Sterling Property at
$408.50/psf. Furthermore, the average assessed value in the Beacon Business Park is
$150-200/ psf. Taxes are assessed as of August 1 each year and sent to the property
owners by November 1.
The subject Property is taxed by Miami-Dade County. Miami-Dade County’s tax year
is January to December. Each August, assessment notices are mailed to each property
owner reflecting the property’s value as of January 1 of that year. Actual tax bills are
mailed to property owners no later than November 1 of each year. Taxes are collected
on an annual basis no later than April 1. A graduated discount payment schedule is
available for those that pay early; from November (4% discount) to February (1%).
Real property taxes are ad valorem assessments on parcels of land, buildings and
improvements to land and buildings within Miami-Dade County. The real property
tax notice also includes non-ad valorem assessments levied against the property. Nonad valorem assessments are fees for services such as Solid Waste, Fire, Lighting, Guard
and other special assessments.
Capital Expense
Painting every 5 years estimated at $3/ psf.
Operating Expense Analysis
Base Analysis 1
Sterling, VA Miami, FL
Expenses
(PSF)
(PSF)
Management Fee * (2%)
$1.59
$1.38
Cleaning
$1.41
$1.21
Exterior Electric & Water 3
$0.03
$0.03
Repairs & Maintenance
$1.29
$1.20
Exterior Security
$0.04
$0.04
Personnel
$1.67
$1.50
Business Park Fees *
$0.49
Insurance *
$0.20
$2.10
Taxes *
$5.18
$7.46
Professional Fees & Consultants
$0.06
$0.06
1
Proforma 2
Miami, FL
(PSF)
$1.38
$1.36
$0.03
$1.35
$0.05
$1.69
$0.49
$2.10
$7.46
$0.07
Base Analysis reflects the actual operating costs at the DEA laboratory located in Sterling,
Virginia for FY 2008. The Miami, Florida facility has primarily been underwritten based on
the Sterling, Virginia facility’s actual operating costs.
2
Proforma reflects the non-highlighted Base Analysis costs increased by inflation through
April 2011. * The highlighted costs are specific to the Miami, Florida facility and have been
underwritten separately.
3
Exterior Electric & Water represent the cost to operate all exterior electric (parking lot
lights) and water services (lawn sprinkler system). The tenant is responsible for all interior
utilities (electric and water) and will contract directly with the service providers.
8
DEA LABORATORY
BEACON LAKES BUSINESS PARK
FINANCIAL ANALYSIS
Miami, Florida
Lease Abstract
Tenant
United States of America (Lease No. GS-04B-59824)
Lease Date
June 9, 2009
Rentable Area
57,055
Proportionate Share
100%
Lease Term
20-years
Commencement Date
April 7, 2011 (Anticipated Term) (upon CO)
Expiration
April 6, 2031 (Anticipated Term)
Base Rent
TBD
Type
Recoveries
Rentable Square Feet
TERM
20 years
$ / RSF
$68.75
MONTHLY
$326,877.60
ANNUAL
$3,922,531.25
Modified Gross Lease
Real Estate Taxes Tenant pays its prorata share of Real Estate Taxes that exceed its
Base Year Stop amount of $TBD.
Tenant’s Base Year Stop amount will reflect: (i) the real estate taxes for the first 12-months of
the lease or (ii) a negotiated amount between the parties. The Base Year Stop amount shall
reflect full assessment.
Operating Costs
Tenant pays the annual CPI increase to the Base Rate of
$268,158.50, as stated in the Lessor’s Annual Cost Statement
dated April 16, 2009.
Beginning in Year 2 of the lease and continuing each year thereafter, the Base Rate is
multiplied by the percent of change in CPI.
Utilities:
Tenant will be responsible for all indoor utilities (elect & water)
Landlord will be responsible for all outdoor utilities (elect &
water)
Separate meters are required as part of initial build-out.
Option to Renew
Cancellation Option
Right of First Option
Security Deposit
Comments
None.
None.
None.
None.
Parking: 194 parking spaces (none for general public). However, the DEA has
need for only 90 spaces and this may be reduced by a variance.
Painting: All painted surfaces, including partitioning, must be painted every 5
years at landlord’s expense.
Solicitation For Offers (SFO No. 7FL2034)
dated: 10/09/2008
Lessor’s Annual Cost Statement
dated: 04/16/2009
Establishes the Base Rate for Operating Costs ($268,158.50)
Amendment Number 1 to SFO No. 7FL2034
dated: 06/08/2009
Re-establishes bid due date and alternative bid forms that are allowed
Lease Status Report
dated: 07/07/2009
Re-affirms the basic terms of the lease.
9
DEA LABORATORY
BEACON LAKES BUSINESS PARK
FINANCIAL ANALYSIS
Miami, Florida
Tenant Description- DEA
Below is a brief description of the Property’s tenant that represents 100% of the
Property’s net rentable area.
The Drug Enforcement Agency (DEA)
57,077 SF
100.00% NRA
Exp 2031
The Drug Enforcement Agency (DEA) will occupy the entire 57,055 square foot
mission critical laboratory for drug testing, office and administrative uses in Beacon
Lakes Business Park. The 80 employee on-site staff will be performing forensic analysis
from the Property. The build-to-suit Property is being specifically designed and built
out for the DEA. The extensive build-out will include evidence rooms, computer labs,
organic and gas chronograph labs and library to name a few. The DEA’s commitment
to the site is evidenced by the 20 year lease it signed.
9
9
9
The DEA objective is to enforce controlled substance laws and regulations of
the United States. In doing so they seek to reduce the availability of illicit
controlled substances on the domestic and international markets.
The DEA’s broad scope of responsibilities include: investigation and
preparation of major violators of controlled substances, management of
national drug intelligence program that works with federal, state, local level
officials to disseminate intelligence information, seizure and forfeiture of
assets intended to be used for illicit drug trafficking.
Former President Richard Nixon created the Drug Enforcement Agency
through a mandated executive order in 1973 to combat the rapid rise of drug
trafficking. Today, the DEA has 5,235 special agents, a budget of $2.3 billion
and 87 foreign offices in 63 different countries.
10