CONFIDENTIAL REQUEST FOR LAND LOAN - Trammell Crow

TRAMMELL CROW COMPANY ANDREW J. MELE, 300 Conshohocken State Road Principal Suite 250 West Conshohocken, PA 19428 MATTHEW T. NUNN, Senior Associate

CONFIDENTIAL REQUEST FOR LAND LOAN

EXECUTIVE SUMMARY 4 Financing Request, Project Summary, Project Attributes

PROJECT DESCRIPTION 11 Entitlements, Site Plans, Building Specs

LOCATION 16 Humboldt Industrial Park, Amenities, Major Tenants, Access to Northeast Cities, KOZ

MARKET OVERVIEW 23 Eastern Pennsylvania Market Overview, Northeast PA Market Overview, Development Pipeline, Lease/Land/Sales Comps

PROJECT FINANCIALS 44 Construction Budget, Projected Yields, Sources and Uses

PROJECT SPONSORSHIP 48 About Trammell Crow Company, Development Team, Current Industrial Projects, Completed Industrial Projects

TABLE OF CONTENTS

CONFIDENTIALLY & CONDITIONS

The information contained in this presentation is highly confidential and proprietary to Trammell Crow

Company. The Trammell Crow Company submits this presentation with the express understanding and

expectation that it will be held in strict confidence, will not be disclosed to any third party for any

purpose, and will not be duplicated or used, in whole or in part, for any purpose other than for the

evaluation of this presentation, without the prior written consent of Trammell Crow Company. Disclosure

of the information contained in this presentation would cause substantial competitive harm to Trammell

Crow Company.

3 EXECUTIVE SUMMARY Humboldt East Trade Center

EXECUTIVE SUMMARY

4

FINANCING REQUEST

BORROWER: TCNE Acquisition 1, LLC, a Delaware limited liability company.

LOAN TYPE: Land Loan

NAME OF SECURITY: Humboldt East Trade Center, 105 Commerce Drive, AKA Humboldt East

TYPE OF SECURITY: First mortgage on land approved for industrial development. Site totals 31 acres.

LOCATION: Commerce Drive, Hazle Township, PA

LOAN AMOUNT: $3,248,900, which equates to 50% of the improved land value

LOAN TERM: 36 months, with two 1-year extension options

RATE: Spread over LIBOR

REPAYMENT: Interest due monthly with all unpaid, accrued interest and principle due at maturity.

FEES: Quote all fees associated with the loan.

USE: Funds will be used to bring project to PAD Ready condition.

SCHEDULE: Provide a timeline of critical milestone events to close the loan, including issuance of loan documents, execution of loan documents, appraisal, investment committee approval, etc.

Trammell Crow Company (“TCC”) seeks a land loan for pre-development activities at Humboldt East Trade Center, a planned 455,000 square

foot warehouse/distribution project on 31 acres in Hazle Township, Luzerne County, PA. The planned project is located on a fully approved land

parcel in the Humboldt Industrial Park. Proceeds from the land loan will be used to bring the site to a “PAD Ready” condition commencing in the

spring of 2015. At that point, TCC will move forward with speculative construction or market the project to built-to-suit tenants. TCC owns the

property and there is no debt on the property at this time.

TCC requests financing under the following conditions:


PROPOSED PROJECT SUMMARY

PROJECT NAME: Humboldt East Trade Center

ADDRESS: 105 Commerce Drive, Hazle Township, PA 18202

ASSET TYPE: Front load, rail served industrial building

SITE SIZE: 31 acres

APPROVED RBA: 455,000 SF

ENTITLEMENT STATUS: Fully Approved

EST. SITE WORK START: March 2015

EST. SITE WORK COMP: May 2015


PROJECT SUMMARY

Superior Location • Humboldt East Trade Center is strategically located in the heart of the I-78/I-81 Corridor in eastern Pennsylvania. The I-78/I-81 Corridor is

highly sought after by users and investors alike and has become one of the most important distribution hubs in North America due to its proximity to Northeast consumer markets, low operating costs and deep, affordable labor pool. In addition, our site represents the last remaining entitled land parcel in the Humboldt Industrial Park, which contains more than 14 million square feet of industrial product and benefits from high-profile tenants such as American Eagle Outfitters, Coca-Cola, and Amazon.com. The park boasts a vacancy of under 5% and has only one availability over 25,000 SF amongst the 65 existing buildings.

Strong Market Demand • Demand for Class A, institutional product in Eastern Pennsylvania has severely outpaced new supply over the last several years. Since 2009,

over 15 million square feet of vacancy has been absorbed as developers struggle to keep up with growing demand. Vacancy and availability rates have reached historic lows creating strong upward pressure on rents.

Keystone Opportunity Zone (KOZ) • The site is located in a designated Keystone Opportunity Zone (KOZ) which offers a myriad of economic advantages including a full

abatement of real estate taxes and exemption from Pennsylvania state sales tax on material purchased and consumed within the Zone. More detail about the KOZ advantage and savings can be found later in the text.

Best-in-Class Design • The project incorporates high performance design features such as efficient building depths, multiple ingress/egress options, abundant car

and trailer parking. The building can be easily sub-divided for maximum leasing flexibility and enjoy great visibility from Interstate 81 that must be experienced firsthand to be fully understood and appreciated. The project is also one of only a handful of proposed developments over 250,000 square feet in Eastern Pennsylvania that can provide rail service to perspective tenants.

Sponsorship Experience • Trammell Crow Company’s development team is highly capable with a proven track record of success developing industrial buildings in the

Northeast United States. TCC’s Northeast Regional business unit currently has over 10 million square feet of industrial projects in process.


PROJECT ATTRIBUTES

USE OF FINANCING COST TO BRING PROJECT TO PAD READY

Estimated Loan Fees: (1.5%) $48,734

Accrued Interest: (3 years, 4%) 342,360

Site work:

Clearing $80,448

Erosion and Sediment Control $123,251

Earthwork $889,626

Stone Pad 54,600

Deep Dynamic Compaction 568,400

Storm $366,997

Landscaping $46,429

Retaining Wall $266,331

Misc. $126,806

Contingency $334,918

Total $3,248,900

BEFORE

AFTER

Example: TCC Site in Fredericksburg, PA


ADVANTAGES OF PAD READY SITE Shortened/Predictable Timeline • An existing speculative building has a large delivery/timing advantage over an unapproved development site. In general, it takes

5 months to design, permit, and fit-out a speculative warehouse for a prospective tenant. A fully designed and permitted building would take roughly 10 months to complete and would have greater variation in delivery time. By bringing our site to PAD ready condition, we can shave 3 months off that timeline and establish a more predictable construction schedule to help offset some of the timing advantage of a speculative building while maintaining flexibility to meet a tenant’s specific requirements.

Accurate Construction Costs • Many built-to-suit leases are signed based on a yield for the project. By bringing our site to PAD ready condition, we will eliminate

a large percentage of our contingency, which minimizes the risk of cost overruns for prospective tenants and allows us to be fairly aggressive on pricing/rents.

Marketability • An undeveloped site can be very difficult to market due to the timing/uncertainty of construction. Not only that, it is tough for a

tenant to envision his/her building on a site, which can make a built-to-suit project hard to sell. By completing most of the site work now, we minimize these challenges. Additionally, our site is located directly adjacent to I-81. The site work to create the building pad will generate much more interest than an undeveloped site for passersby.

Retained/Created Value • One of the most important features of a PAD ready site is the value that is created. The next page details two PAD ready sites that

were purchased in the second half of 2014. The selling price of these assets demonstrates that money invested in unimproved sites is easily retained and actually creates value in the parcel.


• DCT Industrial will purchase the site after upon reaching PAD ready condition.

• DCT is developing the building speculatively. The slab has been poured and vertical construction will begin shortly.

• Unimproved comparable sites in Lehigh Valley have traded from $12-14/sf.

DCT INDUSTRIAL SPEC

• Panattoni sold to Clarion after spending roughly $10 million or $5.38/sf in infrastructure and site work to bring land to PAD ready condition.

• Acquisition includes land to construct 2 of the 3 approved buildings. Master Plan contains 1.86M sf.

• Unimproved comparable sites in Central PA have traded from $9-13/sf.

GATEWAY LOGISTICS PARK

SALE DATE PROJECT NAME SITE ADDRESS SUBMARKET ACRES BUYER SELLER BLDG SF PRICE $/sf $/ACRE

Nov-14 DCT Industrial Spec Van Buren & Hollo Rd, Palmer Township, PA

LV 35.7 DCT Industrial Chrin

Companies 425,000 $9,350,000 $22.00 $261,905

Sept-14 Gateway Logistics Park 93 Bordentown Rd, Jonestown, PA

CPA 129 Clarion Panattoni 1,502,000 $26,485,000 $17.63 $205,657

VALUE OF BRINGING SITE TO PAD READY


PROJECT DESCRIPTION

11

ENTITLEMENTS CHECKLIST

APPROVAL STATUS EXPIRATION

Hazle Township

Final Major Site Plan Approval Received (5/14/12) 5/14/17

Preliminary Site Plan Approval Received (7/13/11) N/A

Luzerne County

NPDES Permit Received (12/12/13) 12/11/18

PPL Encroachment Agreement Received (9/18/12) No expiration

State of Pennsylvania

Wetlands General Permit - Project Received Extension (2/15/12) Extension Pending

Fish and Wildlife Service Compensation Given (3/16/11) No expiration

Utilities

CAN DO (Water and Sewer) Will Serve (4/6/11) N/A

PPL Utilities (Electric) Will Serve (3/23/11) N/A

UGI Utilities (Gas) Will Serve (3/24/11) N/A

DEVELOPMENT STATUS Trammell Crow Company currently has all the required entitlements for the proposed 455,000 square foot project.

ZONING The property is zoned L-1 (Light Manufacturing) allowing warehousing, distribution and manufacturing as permitted uses.

DUE DILIGENCE The following due diligence and design work has been completed. Reports and/or plans are available for review: • Boundary & Topographic Survey • Geotechnical Investigation • Phase I Environmental Site Assessment • Fully designed and engineered civil plan set

12 PROJECT DESCRIPTION Humboldt East Trade Center

ZONING AND ENTITLEMENT INFORMATION


AERIAL SITE PLAN


SITE PLAN

Building Size: 455,000 square feet

Land Area: 31 acres

Zoning: L-1 Industrial District

Building Dimensions: 325' x 1400'

Loading Configuration: Front Load

Building Height: up to 50' permitted

Truck Court: 140' deep + 60’ Trailer Storage

Trailer Storage: 55 spaces

Car Parking: 177 spaces

Dock Doors: 83 Doors

RSF per Door: 1 door per 5,482 square feet

Water Services: Pennsylvania American Water Company

Sewer Services: Wyoming Valley Sanitary Authority

Electric Services: PPL Electric Utilities

Gas Services: UGI Penn Services


BUILDING SPECIFICATIONS

LOCATION

16

Our site is located within the Humboldt Industrial Park (HIP) in Hazle Township, PA. The park consists of 3,000 acres, 65 buildings, and

over 14 million square feet of leased or owner-occupied industrial space. Over 50 industries and nearly 7,000 employees utilize the

park on a day-to-day basis.

With great access to I-81 and I-80, tenants can reach every major northeast city within a 5 ½ hour drive. The park is also characterized

by its great amenities, friendly/pro-business environment, and high-profile tenant base. It’s no surprise that HIP has enjoy a strong,

long-term tenant occupancy. In fact, over the last 20 years, the vacancy rate has never risen above 10% within the park.

Today, Humboldt East Trade Center represents the only fully entitled land parcel in the park. With current vacancy at roughly 4.2% and

one available building over 25,000 square feet, it is only a matter of time before a new requirement is needed.

17 LOCATION Humboldt East Trade Center

LOCATION

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

-

500

1,000

1,500

2,000

2,500

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Vacancy

Squa

re F

eet (

000s

)

Humboldt Industrial Park

Net Absorption Deliveries VacancySource - Costar

1

2 3 4 5

6

7

8

9

10


HUMBOLDT INDUSTRIAL PARK

MAJOR TENANTS 1. Office Max 2. Michael’s 3. AE Outfitters 4. Simmons 5. Amazon.com 6. The Hershey Company 7. AutoZone 8. Coca-Cola 9. Tootsie Roll 10. Trammell Crow Proposed Site

MAJOR TENANTS OVER 500,000 SF

Lowe’s (2 bldgs) 2,782,113

Sears (2 bldgs) 2,078,107

Wal-Mart (2 bldgs) 1,967,840

Procter & Gamble 1,578,393

Johnson & Johnson 1,369,000

Diapers.com 1,280,000

Big Lots 1,200,000

TJ Maxx 1,017,000

Dollar Tree 1,003,000

American Eagle Outfitters 1,208,400

Michael’s Handicrafts 750,000

Kimberly Clark 744,000

Wegman’s 736,541

Amazon.com 615,000

Pepsi 503,000

HUMBOLDT EAST TRADE CENTER


MAJOR TENANTS (NORTHEAST PA)


AMENITIES MAP

DISTANCE TO HIGHWAY ENTRANCE

<1 mile

26 miles

35 miles

3.5 miles

9 miles

49 miles

METROPOLITAN AREA POPULATION DISTANCE (MILES)

DRIVE TIME (HOURS)

Philadelphia 5,800,000 102 2

New York City/Ports 17,500,000 130 2.25

Baltimore 2,600,000 158 2.75

Washington DC 5,200,000 199 3.5

Pittsburgh 2,400,000 252 4.5

Boston 4,500,000 334 5.5

Cumulative Population 38,000,000


ACCESS TO NORTHEAST CITIES

KEYSTONE OPPORTUNITY ZONE ADVANTAGES

ESTIMATED TAX SAVINGS AT HUMBOLDT EAST TRADE CENTER

Real Estate Taxes - $1/SF year for 3 years $1,365,000

Sales Tax Abatement on Construction Materials-$5.9mm@6% $354,000

Savings for User FF&E Purchases-$2mm@6% $120,000

Total Tax Savings $1,839,000

Realizing the important role tax incentives play when competing for job creation projects,

Pennsylvania, in partnership with the local taxing bodies and economic development agencies, has

created an innovative tax abatement program; the Keystone Opportunity Zone.

This table demonstrates some of the tax savings available for occupiers and/or owners at Humboldt East Trade Center.

The Keystone Opportunity Zone (KOZ) Program represents one of the boldest economic development incentives in the nation

because it empowers local communities and has fostered unique state/local and public/private partnerships to authorize the

abatement of most state and local taxes for a designated period of time. Over the past 13 years, the program has spurred the

creation of more than 34,000 jobs and about $10.7 billion in business development.

Humboldt East Trade Center is located within a designated KOZ, offering a moratorium on most local and state taxes through

December 31, 2017. Some of the state and local taxes subject to exemption in KOZs include:

o Local property taxes

o State sales tax (6% in PA) on taxable property or services

that are used and consumed by the business in the zone.

o Local business privilege or mercantile taxes

o Pennsylvania’s Corporate Net Income Tax

o Pennsylvania’s Capital Stock & Franchise Tax


MARKET OVERVIEW

23

EASTERN PENNSYLVANIA INDUSTRIAL MARKET OVERVIEW

24 MARKET OVERVIEW Humboldt East Trade Center

EASTERN PA NORTHEAST PA HUMBOLDT

# of Buildings 7,233 1,398 65

Market Size 498,494,070 110,950,061 14,115,161

Vacancy 35,600,587 9,088,397 597,200

Vacancy Rate 7.1% 8.2% 4.2% Source - Costar

Eastern Pennsylvania or, I-78/I-81 Corridor, is the most active and fastest growing location in the Northeastern United States for warehousing,

repackaging and distributing manufactured goods. The I-78/I-81 Corridor encompasses several critical logistics markets including the Lehigh Valley (Allentown, Bethlehem and Easton), Central PA (Harrisburg, Mechanicsburg, Carlisle, York and Chambersburg), and Northeast PA (Scranton, Wilkes-

Barre and Hazleton) where our project is located. These three markets combine for over 7,000 buildings and nearly 500 million square feet of industrial space. The critical importance of the I-78/I-81 submarket is its unique ability to link logistics infrastructure to major population centers, which has

catalyzed the relocation and/or expansion of some of the largest and most prominent corporations and logistics companies in the world to this corridor.

Some of the location benefits of the I-78/I-81 Corridor, which have contributed to this robust growth, including its exceptional leasing and build-to-suit

activity include:

• Over 40% of the nation's population lives within a 600-miles radius of the I-78/I-81 Corridor Industrial Market, which links Humboldt East Trade

Center with over 130 million people.

• There’s a distinct and quantifiable benefit in operating costs compared to competing markets such as Central New Jersey (Exits 7A-8A), Northern NJ

and the I-95 Corridor from Philadelphia through Washington DC. Northeast PA has led the way in this regard given its extremely pro-business culture, logistics infrastructure, and cost-competitive labor.

• Proximity to, and investment in, critical transportation infrastructure including highways, seaports, rail intermodals, and air cargo has helped the I-78/I-81 Corridor grow rapidly

An obvious key to the I-78/I-81 Corridor’s preeminence as a regional distribution market is its proximity to large Northeast consumer markets.

Within a 400 miles radius is a population of over 82 million people, by far, the largest concentration around any major distribution hub in the country. The 400 miles radius is a meaningful distinction as it is typically considered to be the maximum distance serviceable by an over-the-road

vehicle in a single day, given federally mandated daily driving limits.




EASTERN PENNSYLVANIA SUBMARKET MAP


Submarket Inventory # of Buildings 5-Year Average

(Vacancy) 5-Year Average (Net Absorption)

5-Year Average (Deliveries)

Lehigh Valley 144,370,063 2,485 9.3% 3,015,887 1,737,626 Central PA 243,173,946 3,350 8.0% 2,838,867 1,314,126 Northeast PA 110,950,061 1,398 8.5% 670,899 493,190 Total 498,494,070 7,233 8.5% 6,525,653 3,544,942

Submarket Category YE 2010 YE 2011 YE 2012 YE 2013 Through Q3

2014

Lehigh Valley Vacancy 11.1% 9.2% 10.2% 8.7% 7.2% Net Absorption 3,168,940 2,934,094 907,461 2,645,035 5,423,903 Deliveries 734,503 452,520 2,572,023 1,396,590 3,532,495

Central PA Vacancy 8.6% 8.7% 8.2% 7.7% 6.5% Net Absorption 4,264,160 275,672 4,811,330 1,893,117 4,650,055 Deliveries 202,600 603,000 3,941,189 1,120,000 2,403,839

Northeast PA Vacancy 8.7% 8.1% 8.7% 8.5% 8.2% Net Absorption 1,072,985 671,550 (460,319) 133,641 1,936,640 Deliveries 469,000 0 209,939 11,969 1,775,043

Total Vacancy 9.3% 8.7% 8.9% 8.2% 7.1% Net Absorption 8,506,085 3,881,316 5,258,472 4,671,793 12,010,598 Deliveries 1,406,103 1,055,520 6,723,151 2,528,559 7,711,377

I-81/78 CORRIDOR MARKET SNAPSHOT (Q3-2014) – ALL INVENTORY

Source - Costar


Submarket Inventory # of Buildings 5-Year Average

(Vacancy) 5-Year Average (Net Absorption)

5-Year Average (Deliveries)

Lehigh Valley 44,483,681 109 7.3% 2,538,769 1,815,953 Central PA 62,794,514 150 10.2% 2,670,855 1,639,468 Northeast PA 45,037,610 115 6.0% 603,714 445,785 Total 152,315,805 374 8.1% 5,813,338 3,901,206

Submarket Category YE 2010 YE 2011 YE 2012 YE 2013 YE 2014 (est.)*

Lehigh Valley Vacancy 9.8% 5.8% 10.2% 7.9% 2.7% Net Absorption 2,023,168 1,848,635 651,962 1,348,210 6,821,872 Deliveries 713,683 423,500 2,509,753 493,200 4,939,630

Central PA Vacancy 11.2% 10.8% 11.6% 11.1% 6.3% Net Absorption 3,224,841 759,444 3,006,168 1,271,573 5,092,247 Deliveries 165,000 603,000 3,917,500 1,108,000 2,403,839

Northeast PA Vacancy 6.9% 6.0% 5.6% 5.4% 6.0% Net Absorption 984,310 390,690 265,920 117,100 1,260,550 Deliveries 465,000 0 108,939 0 1,654,987

Total Vacancy 9.4% 7.9% 9.4% 8.5% 5.2% Net Absorption 6,232,319 2,998,769 3,924,050 2,736,883 13,174,669 Deliveries 1,343,683 1,026,500 6,536,192 1,601,200 8,998,456

I-81/78 CORRIDOR MARKET SNAPSHOT - COMPETITIVE SET

* - Estimate based on building completions and additional signed leases Source - Costar

Competitive Set represents buildings over 100,000sf built after 1995

Built

-to-S

uit D

evel

opm

ents

TENANT SUBMARKET SIZE TYPE COMPLETED Proctor & Gamble Central PA 1,691,997 Lease Q3 2014 Walmart Lehigh Valley 1,644,450 Lease Q4 2014 American Eagle Outfitters* Northeast PA 1,208,400 Own Q3 2014 NFI Lehigh Valley 980,000 Own Q1 2014 Dollar General Central PA 906,919 Own Q1 2014 HUB 1 Logistics Central PA 400,000 Lease Q2 2014 FedEx Central PA 393,839 Lease Q3 2014 Ocean Spray Lehigh Valley 295,411 Own Q2 2014 Bimbo Bakeries Lehigh Valley 240,000 Own Q1 2014 Tech Packaging* Northeast PA 223,200 Lease Q1 2014

9 Projects 7,894,216

Spec

ulat

ive

Dev

elop

men

ts OWNER/DEVELOPER SUBMARKET SIZE COMPLETED STATUS

Liberty Property Trust Lehigh Valley 800,250 Q4 2014 100% Leased to Zulily TCC/Clarion Lehigh Valley 677,088 Complete 100% Leased to Primark Griffin Land Company Lehigh Valley 302,800 Complete 66% Leased to NFI First Industrial Central PA 708,000 Q4 2013 100% Leased to Federal Mogul Dermondy Partners Central PA 700,000 Q4 2012 100% Leased to Amazon

5 Projects 3,188,138


2014 I-81/78 CORRIDOR DEVELOPMENT ACTIVITY

2014 was a very fruitful year for developers in the Eastern Pennsylvania market. There were 10 B-T-S projects over 200,000 square feet

constructed between the Lehigh Valley, Central PA, and Northeast PA markets totaling nearly 8 million feet. This more than tripled the

amount of product delivered in 2013. Speculative development generated strong returns with three major projects signing significant

leases within months of building delivery. Additionally, two speculative projects constructed 2012 and 2013 signed full tenant users.

* - located in Humboldt Industrial Park

OWNER/DEVELOPER SUBMARKET SIZE STATUS

>40

0K

Liberty Property Trust Lehigh Valley 1,200,000 Approved

Chrin Commerce Center Lehigh Valley 1,104,000 Approved

TCC/Clarion Partners Lehigh Valley 947,500 Approved

Liberty Property Trust Lehigh Valley 660,000 Approved

Hillwood Central PA 1,209,000 Site Work

TCC/USAA Central PA 1,086,000 Site Work

Prologis Central PA 1,020,000 Site Work

Dermondy Partners Central PA 750,000 Under Construction

Dermondy Partners Central PA 602,500 Approved

Hillwood Lehigh Valley 435,000 Under Construction

DCT Lehigh Valley 425,000 Under Construction

<40

0K

First Industrial Lehigh Valley 341,000 Site Work

TCC/Clarion Partners Lehigh Valley 297,600 Approved

Griffin Land Company Lehigh Valley 280,000 Site Work

First Industrial Lehigh Valley 243,360 Site Work

Hillwood Lehigh Valley 231,000 Under Construction

MRP Industrial Central PA 249,600 Site Work

17 PROJECTS 11,081,560


2015 I-81/78 CORRIDOR SPECULATIVE DEVELOPMENT PIPELINE

The development pipeline for 2015 remains very strong.

With vacancy at historic lows and rents on the rise,

developers are gearing up for a new wave of speculative

development. However, very few of these projects will be

able to deliver before Q4 2015 leaving an 8-10 month

period of pent-up demand. It would not be surprising for

many of these buildings to pre-lease to tenants who cannot

find anything in the current market. While there is a lot of

speculative development on the way, most agree it is

necessary to keep up with the current pace of demand.

Unlike the Lehigh Valley and Central PA, the landowner

and developers in Northeast PA tend to focus more on

built-to-suit projects versus speculative construction.

However, with our location in an established park and

limited availability of modern bulk product, a speculative

development should be considered. While we are

anticipating the delivery of 17 projects in 2015, none have

rail-serve capabilities. Having that unique feature could set

our project apart from the rest.

TENANTS IN THE MARKET (300K – 500K)

Tenant (Project Name) Requirement (SF) Location Focus

Confidential Paper 500,000 - 1,000,000 CPA/LV

Confidential 3PL 500,000 - 800,000 NEPA

NFI 400,000 - 600,000 NEPA

Genco 400,000 - 500,000 CPA

Project Fairwinds 350,000 - 450,000 CPA

Kohler 400,000 NEPA

Bell Packaging 400,000 LV

Saddle Creek 300,000 - 500,000 LV/NEPA

Safavieh 300,000 - 500,000 LV


I-81/78 CORRIDOR CURRENT LEASING CONDITIONS Buildings with >400K vacancy

Market Buildings* Vacancy Spec Delivery

Q1-Q2, 2015 Lehigh Valley 47 0 2 Central PA 67 2 1 Northeast PA 38 2 0

Total 152 4 3

As we stated before, the current leasing market in Eastern PA is very

tight. Between the three submarkets we’ve discussed, there are 152

buildings over 400,000 square built after 1995. As of today, only 4 of

those remain unoccupied. Over the next 8-10 months, prospective

tenants searching for Class A warehouse space will have extremely

limited options. We anticipate only three developments over 400,000

square feet can deliver in the first half of 2015. Because of this, recent

transactions have pushed not only cyclical, but historical highs. In the

Lehigh Valley, rents have moved from the $4.40-$4.60 to near $5.00.

We expect rents in Central PA and Northeast PA, which tend to transact

at a slight discount to the Lehigh Valley—$4.00-$4.25—to follow suit.

2014 leasing was highlighted by the speculative lease ups of new

modern product. In Central PA, Amazon signed a 10-year lease at

$4.75/sf and Federal Mogul signed a 10-year lease at $4.16/sf

towards the beginning of the year. In the Lehigh Valley, Liberty Property

Trust closed a full building pre-lease to Zulily for 7 years at $4.65/sf,

TCC/Clarion signed a 10 year full building deal with European retailer

Primark at $4.85/sf, and Griffin Land leased 66% of their 300,000

square foot building to NFI for $4.85/sf.

For our project in Northeast PA, we’ve conservatively underwritten the

deal at $4.25/sf, not relying on the new market increase.


NORTHEAST PA MAP Northeast PA is broken into 3 main submarkets: Wilkes-Barre, Hazleton, and Blakeslee. The majority of development in 2014 was in

Hazelton and specifically the Humboldt Industrial Park with the completion of American Eagle and Tech-Packaging’s B-T-S projects.


BUILDING ADDRESS CITY RBA SF Vacant

1 200 CenterPoint Blvd Jenkins Township 1,582,113 -

2 Route 6 & Route 87 Meshoppen 1,578,393 -

3 100 Industrial Park Dr. N Tobyhanna 1,369,000 -

4 600 First Ave Gouldsboro 1,279,350 -

5 600-660 Oak Ridge Rd Hazleton 1,208,400 -

6 1201 Keystone Blvd Pottsville 1,200,000 -

7 50 Rausch Creek Rd Tremont 1,200,000 -

8 60 Ppl Rd Danville 1,172,808 -

9 100 Veterans Dr Tobyhanna 1,119,245 -

10 1055 Hanover St Wilkes Barre 1,052,107 -

11 400 1st Ave Gouldsboro 1,026,000 -

12 4000 Oldfield Blvd Pittston 1,017,000 -

13 6 Kane Ln Taylor 955,935 -

14 390 Highridge Park Rd Pottsville 901,813 -

15 156 Cedar Ave Scranton 780,056 -

16 60 Green Mountain Rd Hazleton 750,000 -

17 325 Centerpoint Blvd Jenkins Township 744,080 -

18 820 Keystone Blvd Pottsville 736,541 -


20 550 Oak Ridge Rd Hazleton 615,600 -

21 400 Stoney Creek Rd Hazleton 600,000 -

22 63 Green Mountain Rd Hazleton 582,400 582,400

23 1057 Hanover St Wilkes Barre 560,000 -


25 546 Can Do Expy Hazleton 508,773 -

26 545 Oak Hill Rd Mountain Top 503,000 -

27 1102 N Park Dr Hazleton 500,000 -

28 300 Enterprise Way Pittston 465,000 -

29 25 Keystone Blvd Pottsville 455,000 455,000

30 755 Oak Hill Road Mountain Top 434,299 -


31 1 Commerce Rd Pittston 420,000 -

32 10 Simmons Dr Hazleton 413,600 -

33 1104 North Park Dr Hazleton 410,000 -

34 61 Green Mountain Rd Sheppton 408,200 -

35 160-164 Commerce Rd Dupont 402,000 25,000




39 250 Highland Park Blvd Wilkes Barre 398,957 -

40 111 North Park Dr Hazleton 397,192 -

41 160 Research Dr Jenkins Township 396,800 -

42 100 First Ave Gouldsboro 390,000 390,000


44 43 Valley View Business Park Jessup 378,111 - 45 1200 E Lackawanna Ave Olyphant 365,114 365,114

46 200 1st Ave Gouldsboro 362,000 -


48 62A Green Mountain Rd Hazleton 350,000 -

49 1044 Keystone Blvd Pottsville 303,199

50 185 Centerpoint Blvd Pittston 297,600 -

51 301-305 Oak St Pittston 289,277 289,277

52 275-287 CenterPoint Blvd Jenkins Township 254,200 -

53 500 1st Ave Gouldsboro 252,000 -

54 1070 Hanover St Wilkes Barre 252,000 -

55 594 Can Do Expy Hazleton 250,000 -


57 1001 Sathers Dr Pittston 249,600 -

58 32 Preston Dr Hanover Township 248,640 - 59 101 Green Mountain Rd Hazleton 240,048 -

60 490 Forest Rd Hazleton 240,000 -


NORTHEAST PA (COMPETITIVE SET)



62 1 Passan Dr Wilkes Barre 225,000 -

63 300 Lasley Ave Wilkes Barre 224,000 -

64 225 Enterprise Way Pittston 223,387 200,484

65 20 Cinnamon Oak Dr Hazleton 223,200 -


67 295 Centerpoint Blvd Pittston 217,000 -

68 2 Scotch Pine Dr Hazleton 215,992 -



71 19-23 Elmwood Rd Mountain Top 210,000 -

72 1 Simmons Dr Hazleton 209,294 -


74 1028 Reeves St Dunmore 202,619 20,355

75 100-124 Capital Rd Jenkins Township 198,400 -


77 360 Maplewood Dr Hazleton 185,080 -

78 110 Keystone Blvd E Pottsville 182,000 -

79 800 Keystone Industrial Park Dunmore 178,196 -


81 150 Lions Dr Hazleton 170,115 -

82 585 Oak Ridge Dr Hazleton 168,960 -

83 533 Forest Rd Hazleton 164,102 -

84 1225 Mid Valley Dr Jessup 160,000 -


86 13-17 Elmwood Rd Mountain Top 159,511 -

87 7 Alberigi Dr Jessup 156,644 -

88 1270 Mid Valley Dr Jessup 151,100 48,000

89 1 Great Valley Blvd Wilkes Barre 145,199 -



91 125 Capital Rd Pittston 144,000 -

92 31 Roberts Rd Pine Grove 141,814 -

93 14-46 Alberigi Dr Jessup 140,800 -

94 165 New Commerce Blvd Wilkes Barre 140,000 -

95 1110 Hanover St Wilkes Barre 133,385 133,385

96 1200 Mid Valley Dr Jessup 132,000 -

97 1019 Underwood Rd Olyphant 131,900 54,000

98 15 Alberigi Dr Jessup 130,000 130,000

99 124 Centerpoint Blvd Jenkins Township 129,015 -



102 1054-1060 Hanover St Sugar Notch 120,000 -

103 301 Parkview Dr Hazleton 117,573 -



106 37 Valley View Business Park Jessup 110,000 -

107 220 Armstrong Rd Jenkins Township 110,000 -

108 345 Enterprise Way Pittston Township 108,939 -

109 320-330 Stewart Rd Wilkes Barre 108,000 -

110 1065 Hanover St Wilkes Barre 108,000 6,015


112 1 Oak Ridge Dr Hazleton 104,005 -


114 191 Industrial Park Dr Mount Pocono 103,905 -


RBA SF Vacant

Total 45,037,610 2,699,030

Vacancy Rate 5.99%


NORTHEAST PA (COMPETITIVE SET)

Source - Costar

NAME STATUS REGION OWNER SF BUILDINGS TYPE COMMENTS

1 Hanover Rigde Trade Center, Hanover, PA

Approved Wilkes-Barre KTR 2,322,000 3 Cross-

dock/Rear

Development consisting of three buildings: 1,663,200sf, 309,000sf, & 345,000sf. Located in

KOZ through 2024.

2 HighRidge, Pottsville, PA

Approved Hazelton Prologis 850,850 1 Cross-dock Currently building is 455,000sf. Expansion of

850,850sf available to bring total building over 1.3mm. Part of LERTA program. 36' clear.

3 Arcadia New Ventures, Blakeslee, PA

Approved Blakeslee Arcadia 2,119,500 2 Cross-

dock/Rear

Development consisting of two buildings: 1,500,000sf & 619,500sf. Located in Keystone Opportunity Zone

(KOZ), status through 2019. Will likely seek extension. 36' clear.

4 Arcadia North Business Park, Mount Pocono, PA

Approved Blakeslee JPM/Clarius 1,350,000 1 Cross-dock ~86 acre site located next to Pocono Mountain

Airport. Acquired in venture with Higgins in 2007 for $14mm or $163,742/acre. Located in KOZ.

5 Centerpoint Commerce & Trade Park, Jenkins Township, PA

Approved Wilkes-Barre Mericle 3,960,000 9 Cross-

dock/Rear

Located on 1800 acre site for manufacturing, office and distribution. Every building is part of the LERTA program. Many buildings designed with expansion

possibilities.

6 Covington Industrial Park, Covington Township, PA

Approved Wilkes-Barre First Industrial 501,600 1 Cross-dock Part of a 4,000,000sf industrial park. Infrastructure

already in place. Located in KOZ.

7 Interstate Distribution Center, Pittston, PA

Seeking Approvals

Wilkes-Barre Endurance 1,373,300 1 Cross-dock Located near large Mericle site. Proposed 500,000sf

warehouse expandable to over 1.3mm. Does not have LERTA and is not located in KOZ. Rail-served


As stated before, the development pipeline for the Northeast consists of mainly B-T-S developers and owners who do not have the desire or

location to undertake speculative development. While many of these projects have approvals, none are expected to deliver in 2015 and only

one has rail-serve capability. Every site is either apart of the LERTA program—Local Economic Revitalization Tax Assistance—or KOZ program—

Keystone Opportunity Zone to help offset the costs to developers and tenants.

We believe having the ability to go speculative is a competitive advantage. With the limited number of modern bulk products available in the

Northeast there is a realistic possibility that by the time we commence site work in the spring, Humboldt East could be the only modern bulk

building available in the Northeast submarket.

COMPETING DEVELOPMENT SITES – NORTHEAST PA


LEASE COMPARABLES: NORTHEAST PA

2014 MONTH PROPERTY MARKET TENANT LANDLORD SF TERM BASE RENT COMMENTS

OCT 325 Centerpoint Blvd, Pittston, PA Northeast PA Kimberly-Clark Mericle 744,080 3 years $4.50 w/ 2%

escalations

Cinder block and siding building. Extension of 7 year lease from '08 when

building was constructed.

OCT 185 Centerpoint Blvd, Pittston, PA Northeast PA Men's Warehouse Mericle 297,600 15 years $4.30 w/ 2%

escalations

Renewal. Cinder block and siding building. Extension from lease signed in

'07. Cross-Docked, over 600' deep.

FEB 225 Enterprise Way, Pittston, PA Northeast PA Greiner Packaging Mericle 113,871 12.5 years

$3.99 months 6-12 $6.85/sf w/ 2% escalations after

New building. Cinder block and siding building. Greiner invested over $17M

inside the facility. 6 months free


APR 400 Centerpoint Blvd, CenterPoint Business Park, Pittston, PA

Northeast PA Neiman Marcus Group Mericle 198,400 10 years $4.82 w/ 2%

escalations 10,000 sqft of office space


DEC 1104 North Park Drive, Hazle Township, PA Northeast PA PECO Pallet, Inc. Mericle 100,000 63 months $3.80 w/ 2%

escalations Low TI's.

NOV 61 Green Mountain Road, Hazleton, PA Northeast PA Genco

(Wegman's) Mericle 203,000 65 months $4.28 w/ 2% escalations

6 months free. $2/sf in TI's. Genco subsequently expanded into the entire

400,000sf building.

NOV 1104 North Park Drive, Hazle Township, PA Northeast PA Kluft Mattress Mericle 100,038 66 months $4.05 w/ 2%

escalations Low TI's.

There were several notable leases in 2014 highlighted by the renewals of the Men’s Warehouse and Kimberly Clark. The tenants resigned to stay in

these ‘07-’08 vintage buildings at rents above our assumptions for Humboldt East Trade Center. The signings represent the relationship between the

Lehigh Valley and Northeast PA and show that when rents rise in the Lehigh Valley, Northeast PA adjusts upwards as well.


2014

MONTH PROPERTY MARKET TENANT LANDLORD SF TERM BASE RENT COMMENTS

NOV 4270 Fritch Drive, Bethlehem, PA Lehigh Valley NFI Griffin Land 201,199 5 years $4.85 w/ 2.5%

escalations New building. 3 months free. $2.00/sf TI Allowance.

NOV 2485 Commerce Center Blvd, Bethlehem, PA Lehigh Valley Primark TCC/Clarion

Partners 677,088 10 years $4.85 w/ 2.25% escalations

New building. 3 months free, $4.25/sf TI Allowance, Termination Option after 66 months with penalty

OCT 10 Emery Street, Bethlehem, PA Lehigh Valley Zulily Liberty Property

Trust 800,000 7 years $4.65 w/ 2% escalations

New building. 2 months free, $5/sf TI Allowance. Building leased before completion.

SEPT 2 Ames Drive, Carlisle, PA Central PA Amazon.com Dermondy

Partners 700,000 10 years $4.25 w/ fixed escalations

New building. $4-5 TI's. Amazon spending $28mm on office, equipment, etc inside building. Class A.

SEPT 40 Logistics Drive, Carlisle Distribution Center, Carlisle, PA

Central PA Lindt Chocolate Liberty Property Trust 421,200 10 years $4.20 w/ 2.5%

escalations New Deal. $2.5/sf in TI's. Total building size is

972,000sf. Class A,.

AUG 125 North Commerce Way, Bethlehem, PA Lehigh Valley C&S Wholesale Safavieh 600,000 10 years $5.00 w/ 1.5%

escalations New deal. C&S tried to purchase building before leasing. Heavy Improvements, Racking included.

MAY 20 Leo Lane, York, PA Central PA Federal Mogul First Industrial

Realty Trust 708,000 10.5 years $4.16 w/ 2% escalations

New building. 4.5 months free rent w/ $3-4/sf in TI's. Built on spec in 2013. Tenant will phase into building.

MAY 8400 Industrial Blvd, Breinigsville, PA Lehigh Valley Dial Corporation Liberty Property

Trust 726,000 5 years $4.45 w/ 2.5% escalations

Renewal. Minimal TI. Termination Option after Year 3&4.

MAR 40 E. Main Street New Kingston, PA Central PA Chewy.com Exeter Property

Group 424,520 3 years $3.80 w/ $0.05 escalations

New Deal. Tenant to occupy 200k sf YR1 and phase into remainder of building YR2. Low TI's. Class B.


SEPT Commerce Center Blvd, Bethlehem, PA Lehigh Valley Walmart Liberty Property

Trust 1,200,000 20 years $3.51 w/ 1% escalations Below market deal, building built in 2012.

JULY 5 True Temper Drive, Carlisle, PA Central PA S.C. Johnson Industrial Income

Trust 511,760 7 years $4.00 w/ 2% escalations

Renewal. Class A, 32' clear. TI's <$1 included maintenance and painting.

JULY Arcadia Business Park, Allentown, PA Lehigh Valley NFI Hillwood 980,000 123 months $4.65 w/ 2%

escalations 8 months free, 6,500 SF office, 160,000 SF A/C space, will phase into entire building over 1st year.

JULY 4275 Fritch Drive, Bethlehem, PA Lehigh Valley Kuehne & Nagel Griffin Land Co. 228,000 5 years $4.75 w/ $0.12

escalations Rate includes $4/sf in TI's, 5,000sf A/C

JUNE 9750 Commerce Circle, Kutztown, PA Lehigh Valley One Kings Lane DCT Industrial 503,420 5 years $4.33 w/ 2%

escalations Tenant will phase in building over first year

JUNE 40 Logistics Drive, Carlisle Distribution Center, Carlisle, PA

Central PA Menlo Logistics (Amazon Account)

Liberty Property Trust 550,000 2 years $4.05 year 1 $4.20

year 2

$1-$2/sf in TI's. TI includes cost to demise. Amazon requested a delayed install for possible expansion.

Class A, 32' clear.

JUNE 201 Fulling Mill Road, Middletown, PA Central PA Schneider Electric IndCor Properties 650,671 5 years $4.25 w/ 2%

escalations Minimal TI's. Renewal 4 months prior to end of term.

Class A, 30' clear.

MAR Majestic Bethlehem Center, Bethlehem, PA Lehigh Valley Crayola Majestic 800,280 10 years $4.03 w/ $0.10

escalations Relocation from Central PA to Lehigh Valley.

JAN 555 Nestle Way, Breinigsville, PA Lehigh Valley Nestle CapLease Inc. 1,045,153 5 years $4.40 w/ 3%

escalations Renewal

LEASE COMPARABLES: LEHIGH VALLEY/CENTRAL PA

• Purchased by American Eagle after search of entire Eastern Pennsylvania submarket. (BTS Project)

• Located in same industrial park as Humboldt East Trade Center

• Building was completed in August, 2014.

• KOZ abatements through 2019.

• Minimum site improvements completed, significant site work required.

• 3 Building Design

• Land was fully entitled and approved

• KOZ abatements through 2023.

HANOVER RIDGE TRADE CENTER

• Purchase included two parcels

• Minimal site work done, but infrastructure is in place

• Part of LERTA program. No economic benefit on building construction.

• LERTA program extends 10 years after tenant occupies space.

SALE DATE PROJECT NAME SITE ADDRESS SUBMARKET ACRES BUYER SELLER BLDG SF PRICE $/sf $/ACRE

Oct-14 Covington Industrial Park 180 1st Ave, Gouldsboro, PA

Northeast PA 35.94 First Industrial Fr Option

Property Holding 501,600 $3,950,000 $7.87 $109,896

Feb-14 Hanover Ridge Trade Center New Commerce Blvd, Hanover, PA

Northeast PA 172 KTR TCC 2,322,000 $18,219,286 $7.85 $105,926

May-13 American Eagle B-T-S Humboldt Industrial Park, Hazleton, PA

Northeast PA 127.72 American Eagle

Outfitters Mericle 1,208,400 $13,530,000 $11.20 $105,935

LAND COMPARABLES: NORTHEAST PA


AMERICAN EAGLE B-T-S COVINGTON INDUSTRIAL PARK


SALE DATE SITE ADDRESS SUBMARKET ACRES BUYER SELLER BLDG SF PRICE $/sf $/ACRE COMMENTS

Apr-13 41 Martha Drive, Bethel, PA

Central PA 89.22 Dermondy Partners

Berks County Ind. Develop. Authority 712,500 $7,500,000 $10.53 $84,062

During Due Diligence DP expanded site plan to 750,000sf.

Jan-13 Jaindl Blvd, Bethlehem, PA

Lehigh Valley 50 Griffin Land Jaindl 532,000 $7,200,000 $13.53 $144,000 2 Building Site. Will commence

construction on 1 building in 2015.

Sep-12 6895 Silver Crest Road, Nazareth, PA

Lehigh Valley 12.52 Trader Joe's Phillips & Phillips

160,000 $2,007,421 $12.55 $160,337 Scheduled for 2014 completion.

Aug-12 Mill Creek Road, Allentown, PA

Lehigh Valley 234.1 Liberty Property

Trust Air Products 2,500,000 $42,372,100 $16.95 $181,000 104 Acres 1st of 3 takedowns.

Aug-12 Berks Park 78, Bethel, PA

Central PA 109 Dollar General Berks County Ind. Develop. Authority 906,919 $12,500,000 $13.78 $114,679 Completed in Q1 2014.

Aug-12 Berks Park 78, Bethel, PA

Central PA 88 Petsmart Berks County Ind. Develop. Authority 870,000 $9,700,000 $11.15 $110,227

Can be expanded by 200,000sf. 2014 completion

Jun-12 10 Emery Street, Bethlehem, PA

Lehigh Valley 30.69 Liberty Property

Trust 10 Emery Street

Association 800,250 $4,200,000 $5.25 $136,852

Brownfield site. Significant site work required. High concentration of rock.

May-12 2485 Commerce Center Blvd, Bethlehem, PA Lehigh Valley 39.39 Trammell Crow LVIP 677,088 $6,400,000 $9.45 $162,478 Brownfield site. Speculative development.

LAND COMPARABLES: LEHIGH VALLEY/CENTRAL PA


COMPARABLE SALES: NORTHEAST PA SALE DATE PROPERTY RSF SALE PRICE CAP RATE $/sf BUYER SELLER

Nov-14 Portfolio Sale (4 Properties) Northeast PA

1,644,480 $105,700,000 7.50% $64.28 Chambers Street Properties KBS Realty Advisors

May-13 Sears Distribution Center, Gouldsboro, PA

1,026,000 $60,253,857 6.40% $58.73 Duke Realty USAA

Feb-12 Johnson & Johnson, Tobyhanna, PA

1,369,000 $70,000,000 7.00% $51.13 USAA Ridge Property Trust

• Part of a portfolio sale of 8 properties in 2011.

• Portfolio sold for $311,000,000 ($64.25/sf). Overall cap rate was 6.25%

• Sears lease extends through 2018.

• Previously traded for $54.68/sf in 2008.

Sears Distribution Center Johnson & Johnson

• Johnson and Johnson BTS constructed in 2007

• At time of sale, J&J had five years remaining on the lease.

• Portfolio sale occurred after Kimberly Clark renewed for three years.

• Slightly above market rents.

• Two large buildings with KC and Amazon as tenants. Less than 4 years remaining for both tenants.

• Same portfolio traded for $54/sf in 2011 with more term on the leases.

NEPA Portfolio Sale – 4 Properties


SALE DATE PROPERTY RSF SALE PRICE CAP RATE $/sf BUYER SELLER COMMENTS

Under Contract

Chrin Commerce Center, Easton, PA

1,104,000 TBD TBD TBD Duke Realty Verus

Partners Forward Sale. Class A, Cross-Dock, 600' depth.

Delivery late 2015.

Under Contract

IBC Holdings Portfolio (4 buildings), New Kingston & Mechanicsburg, PA

1,076,600 $45,000,000 8.25% $41.80 Stag

Industrial IBC Holdings & Long Wharf

The portfolio is 60% occupied. Expected stabilized yield on cost is 8.25%. Class B.

14-May 8051 Allentown Boulevard, Harrisburg, PA

182,907 $8,328,540 7.10% $45.53 Gramercy

Property Trust Hayden Real

Estate

Class B with min. car parking, trailer loading, and trailer parking. 100% occupied through 2024. In-

place rent was $3.25sf at sale.

14-Apr West Hills Business Center, Kutztown, PA

980,000 $73,500,000 5.75% $75.00 Duke Realty Hillwood Presale. 100% leased to NFI for 10 years. Class A, Cross-Dock, 36' clear.

13-Aug Lehman/Prologis Portfolio (12 buildings), Central PA, Lehigh Valley & Southern Jersey

6,519,094 $444,000,000 5.40% $68.11 Prologis Lehman Brothers

Prologis bought Lehman's 80% interest in portfolio. 91% leased, Class A. 4.9MSF in Harrisburg, 1.2MSF

in Lehigh Valley, 360,000sf in Southern NJ.

13-Aug 500 Independence Avenue, Upper Allen Business Park, Mechanicsburg, PA

342,500 $22,576,000 5.73% $65.92 Duke Realty AEW Capital Management

100% leased to Kimberly-Clark through 2019. Class A, single-side load, 32' clear.

13-Aug 275 Cross Farm Lane, York, PA

342,160 $22,500,000 6.50% $65.76 Industrial

Income Trust

Exeter Property Group

100% leased to two tenants. Class A. Part of a national portfolio.

13-Jul 5 True Temper Drive & 700 Allen Rd, Carlisle, PA

693,750 $42,735,000 6.50% $61.60 Industrial

Income Trust LNR (Special

Servicer)

Class A. 5 True Temper—511,760sf—is 100% leased to S.C. Johnson. 700 Allen—181,990sf—is

100% leased to Schenker Logistics.

13-Jul 2625, 2655 Brodhead Rd & 2685 Opus Way, Bethlehem, PA

667,600 $46,732,000 4.75% (in-place)

6.5%-6.7% (stabilized)

$70.00 DCT

Industrial Opus

Three building portfolio. Class A, 80% leased. Weighted average remaining lease term +/- 2.6

years.

COMPARABLE SALES: LEHIGH VALLEY/CENTRAL PA


IMPORTANCE OF RAIL-SERVED SITES

The leasing market for rail-served buildings has tightened

considerably as well. There is currently no product for tenants in

search of a rail-served facility over 365,000 square feet with a limited

number in the development pipeline.

The importance of having a rail-serve site moving forward cannot be

underestimated. While the industrial market has continued to expand

post-recession, one structural component that hasn’t expanded is the

availability of truckers. The American Trucking Association reports that

the industry currently has 35,000 fewer drivers than it needs and

expects the number to grow to 240,000 drivers by 2020. The industry

has responded by dramatically increasing wages, which has pushed

freight rates per mile up 8% for the year, with forward rates up an

additional 14% by 2016. According to CBRE Supply Chain Services,

transportation makes up at least 50% of costs in the total supply

chain.

Costs in the Total Supply Chain

The obvious supplement and cost effective solution is rail. The Association of American Railroads has reported a 6.7% traffic increase year over year

and the week ending with October 25th registered the third-highest level of intermodal use in US History. Each of the secondary distribution markets

expected to grow most quickly in the next 12 months contains a significant intermodal facility and many are investing heavily in their rail

infrastructure. Moving forward there is a significant transportation risk for logistics providers due to the shortage of truck drivers. Having a warehouse

with access to rail can offset this risk.

Source – CBRE Supply Chain Services


RAIL-SERVED COMPETITIVE SET

Building Address Submarket RBA Year Built Vacancy

2785 Commerce Center Blvd Lehigh Valley 1,200,000 2012 -

5197 Commerce Dr Central PA 1,100,000 2009 -

95 Kriner Rd Central PA 837,540 2008 -

3025 Commerce Center Blvd Lehigh Valley 800,280 2012 -

10 Emery St Lehigh Valley 800,250 2014 -

350 N Lingle Ave, #1 Central PA 727,466 2003 -

350 N Lingle Ave, #2 Central PA 685,979 2003 -

2485 Commerce Center Blvd Lehigh Valley 677,088 2014 -

Zeager Rd Central PA 672,000 2015 -

4860 Hanoverville Rd Lehigh Valley 621,500 2006 -

2999 Guilford Springs Rd Central PA 509,250 2006 365,000

900 Kriner Rd Central PA 500,000 2003 -

1104 North Park Dr Northeast PA 410,000 2008 -

Antrim Commons Dr Central PA 400,000 2013 -

12875 Molly Pitcher Hwy Central PA 400,000 2014 -

2027 S 12th St Lehigh Valley 326,800 2007 225,000

201 Center St Central PA 315,500 2012 115,000

60 Steamboat Blvd Central PA 225,000 2004 -

19-23 Elmwood Rd Northeast PA 210,000 2006 -

1480 Zeager Rd Central PA 144,000 2009 43,200

34 Zimmerman Rd Central PA 124,900 2001

270 Silver Spring Rd Central PA 104,000 2001 -

1000 Conroy Pl Lehigh Valley 103,660 2001 -

1298 Keystone Blvd Northeast PA 102,000 2002 -

7108 Daniels Dr Lehigh Valley 101,250 2001 -

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

24.0%

28.0%

32.0%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2010 2011 2012 2013 2014

Vacancy

Squa

re F

eet (

000s

)

Modern Warehouse with Rail Access

Net Absorption Deliveries Vacancy

MAJOR TENANTS SF General Mills (2 Buildings) 1,413,445

Walmart 1,200,000

Crayola 800,280

Zulily 800,250

Primark 677,088

Nordstrom (2015) 672,000

EXISTING COMPETING RAIL SITES

Current Market Vacancy 6.2% Source - Costar Competitive Set represents buildings over 100,000sf built in last 15 years with rail-serve capability

PROJECT FINANCIALS

44

15 MARKET OVERVIEW Humboldt East Trade Center 45 PROJECT FINANCIALS Humboldt East Trade Center

SOURCES AND USES SOURCES USES

Land Loan Amount: $3,248,900 Estimated Fees: (1.5%) $48,734

Accrued Interest: (3 years, 4%) 342,360

Site work:

Clearing $80,448

E&S $123,251

Earthwork $889,626

Stone Pad 54,600

Deep Dynamic Compaction 568,400

Storm $366,997

Landscaping $46,429

Retaining Wall $266,331

Misc. $126,806

Contingency $334,918

Total $3,248,900

TOTAL COST COST/SF

Current Land Value $3,640,000 $8.00

Site Work/Improvements $2,857,806 $6.28

Total $6,497,806 $14.28

Loan Amount $3,248,900 $7.14

Loan-to-Value 50%

Category Cost Per RSF

Hard Costs

Land or Building Purchase $3,640,000 $ 8.00

PAD Ready Site Work $2,857,806 $6.28

Financing Fees + Accrued Interest $153,487 $0.34

Remaining Site Work $1,551,424 $3.41

Building Shell $10,378,550 $22.81

Tenant Improvements (Hard & Soft) $1,892,800 $4.16

Soft Costs

Arch. & Eng and Other Consultants $527,500 $1.16

Legal/Marketing/Insurance/Taxes $253,420 $0.56

Permits, Testing/Inspection, Fees, Bonds $395,000 $0.87

Leasing Commissions $833,724 $1.83

Development Fee $655,852 $1.44

Financial Costs

Finance Fees $159,694 $0.35

Interest/Loss to Breakeven $689,582 $1.52

Remaining Contingency $532,525 $1.17

Total Cost Budget $24,521,364 $53.89

Basic Assumptions

Construction Start Date (Building) Mar-16

Stabilization Date Mar-18

Construction Timeline 3 months for site work

9 months for building

Rental Rate $4.25

Lease Up Time 15 Months

Lease Term 7 Years

Operating Budget

Rental Income $1,945,836

Other Income $0

Vacancy ($38,917)

Structural Reserve ($19,458)

Operating Expenses $0

Net Operating Income $1,887,461

Yield on Cost 7.70%

PRELIMINARY BUDGET – Assuming Speculative Development


Basic Assumptions

Site Work State Date Mar-15

Construction Start Date Mar-17

Stabilization Date Dec-17

Construction Timeline (after site work) 9 months

Rental Rate $4.15

Time to Find Tenant 2 Years Lease Term 10 Years

Operating Budget

Rental Income $1,888,250

Other Income $0

Vacancy ($37,765)

Structural Reserve ($18,883)

Operating Expenses $0

Net Operating Income $1,831,603

Yield on Cost 7.25%

PRELIMINARY BUDGET – Assuming Built-to-suit Project

* - Assumes construction cost increase of 5%

While we can justify speculative construction with the assumptions listed on the previous page, currently we feel the most appropriate option is to

find a tenant before commencing construction of the building. We estimate it will take 2 years to find a tenant and when we account for increased

construction costs, a lower rental rate, and accrued interest from the land loan, we still feel this project will be successful.

Category Cost Per RSF

Hard Costs

Land or Building Purchase $3,640,000 $ 8.00

PAD Ready Site Work + Contingency $2,857,806 $6.28

Financing Fees + Accrued Interest $274,662 $0.60

Remaining Site Work* $1,670,152 $3.67

Building Shell* $10,899,580 $23.96

Tenant Improvements (Hard & Soft) $1,892,800 $4.16

Soft Costs

Arch. & Eng and Other Consultants $527,500 $1.16

Legal/Marketing/Insurance/Taxes $253,420 $0.56

Permits, Testing/Inspection, Fees, Bonds $395,000 $0.87

Leasing Commissions $1,124,758 $2.47

Development Fee $687,811 $1.51

Financial Costs

Finance Fees $181,097 $0.40

Interest/Loss to Breakeven $299,148 $0.66

Remaining Contingency $570,571 $1.25

Total Cost Budget $25,274,305 $55.55


PROJECT SPONSORSHIP

48

Trammell Crow Company, founded in 1948, is one of the nation’s leading

developers and investors in commercial real estate. The Company has developed

or acquired nearly 2,600 buildings valued at nearly $60 billion and over 540

million square feet. As of September 30, 2014, Trammell Crow Company had

$5.1 billion of projects in process and $2.9 billion in its pipeline.

Trammell Crow Company’s teams are dedicated to building value for its clients

with professionals in 16 major cities throughout the United States. The company

serves users of and investors in office, industrial, retail, healthcare, multi-family

residential and mixed use projects. For those who occupy real estate, TCC can

execute the development or acquisition of facilities tailored to meet its clients’

needs. For investor clients, the company specializes in joint venture speculative

development, acquisition/re-development ventures, build-to-suit development, or

providing incentive-based fee development services.

Trammell Crow Company is an independently operated subsidiary of CBRE Group,

Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los

Angeles, and the world’s largest commercial real estate services and investment

firm (in terms of 2013 revenue). For more information visit

www.TrammellCrow.com.

NORTHEAST REGION

The Northeast Regional business unit opened in 1985, and has thrived since its

inception developing and redeveloping office, industrial, retail, healthcare, multi-

family residential and mixed-use projects throughout Pennsylvania, New Jersey,

New York, Connecticut, Rhode Island, Ohio and Delaware. We are consistently

ranked as a leading developer known for creating the right product to capture the

most value for our clients, investors and communities in which we work.

ABOUT TRAMMELL CROW COMPANY Over the past fifteen years, the Northeast Regional division has completed the

development of 49 projects totaling over 11.3 million square feet with a value in

excess of approximately $1.5 billion. These projects included both owner

representation and principal transactions. Some of the more notable owner

representation projects include Westinghouse Corporate Headquarters, Main Line

Health, Reading Hospital, Dick’s Sporting Goods Corporate Headquarters, SEI

and Cendant Mortgage. The principal transactions were completed with multiple

capital partners including Chamber Street Properties, Partners HealthTrust, USAA

and Clarion, to name a few.

INDUSTRIAL EXPERIENCE

Since its 1985 inception, Trammell Crow’s Northeast Region office has developed

over 8.7 million square feet of industrial buildings ranging from 25,000 square

feet to 1,350,000 square feet. These facilities have included distribution,

manufacturing, assembly and sophisticated material handling systems. Whether we

are developing a build-to-suite or speculative project, Trammell Crow Company

brings unparalleled industry knowledge to their clients.

Currently, Trammell Crow’s Northeast office has over 10,000,000 square feet in

various stages of the development pipeline in the New Jersey and Pennsylvania

markets.

15 MARKET OVERVIEW Humboldt East Trade Center 49 PROJECT SPONSORSHIP Humboldt East Trade Center

nyse:CBG

http://www.trammellcrow.com/



18 PROJECT SPONSORSHIP Humboldt East Trade Center

CURRENT INDUSTRIAL PROJECTS

• 677,088 square feet under construction

• Located in Pennsylvania’s Lehigh Valley, less than 2 miles from Interstate 78

• Site is LERTA approved which allows for abatement of

some or all real estate taxes on building improvements for up to 10 years

• Site is 100% Lease to Primark (Retail)

LEHIGH VALLEY INDUSTRIAL PARK Bethlehem, Pennsylvania


• 532,793 square feet recently completed

• Located at Exit 6 of I-287 in the heart of the Northern New Jersey Industrial Market

• Less than 20 miles from New York City and the Ports of Newark and Elizabeth

• 82% Leased to Dawn Foods and SHI International

SOUTH WASHINGTON PARK Piscataway, New Jersey

Venture With

Venture With


• Located in the heart of Pennsylvania’s Lehigh Valley Industrial Market

• Two buildings totaling 1,245,000 square feet

• Construction start planned for Q1 2015

• Significant entitlement work completed

LEHIGH VALLEY TRADE CENTER Bethlehem, Pennsylvania

Venture With

• Located near Exit 6 of I-78, Central PA submarket

• Single building totaling 1,086,000 square feet

• Site is “PAD ready” with speculative construction expected to begin in Q1 2015.

• Received 690k highway grant for road improvements. Relocated above ground electrical lines.

LEBANON VALLEY DISTRIBUTION CENTER Fredericksburg, Pennsylvania

Venture With



• Located near I-295 and Exit 7 of the New Jersey Turnpike

• Single building totaling 440,550 square feet

• Site can easily to broken into two buildings to accommodate smaller tenants

• Fully approved

RISING SUN ROAD Bordentown, New Jersey


• Over 2,800,000 square feet in 3 buildings

• Located at Exit 8A of New Jersey Turnpike in the heart of the Northern New Jersey Industrial Market

• Less than 20 miles from New York City and the Ports of Newark and Elizabeth

• Construction start planned Q2 2015

CRANBURY BRICK YARD Cranbury, New Jersey

Venture With

Venture With

FEATURED COMPLETED INDUSTRIAL PROJECTS

• Single speculative building totaling 833,300 square feet

• Cross-dock design, 32’ clear height, ESFR sprinklers with extensive trailer storage

• Completed in 2008

• Fully leased to Amazon.com as a fulfillment center for a 10 year term

CUMBERLAND VALLEY DISTRIBUTION CENTER Carlisle, Pennsylvania

• Single speculative building totaling 315,000 square feet

• Rear load, 32’ clear height, ESFR sprinklers, extensive trailer parking and multi-tenant design

• Full circulation around the building and the ability to add above standard car parking for large employers

• Completed 2008

LEHIGH VALLEY SOUTH Lower Macungie, Pennsylvania


• Exit 44 of I-81

• 700,000 square foot building completed and sold in 2013.

• 100% leased to Amazon.com

• Phase II totaling 602,250 square feet approved and pad ready

• Designed to meet LEED Green Building standards

MOUNTAIN CREEK DISTRIBUTION CENTER Carlisle, Pennsylvania

• Over 2 million square feet in 10 buildings

• Class A master planned industrial development combining speculative and build-to-suit projects for Goya Foods, Nine West and Owens & Minor.

• Significant land development challenges including wetlands, utilities and traffic and railroad easements.

• Consistently viewed as the best master planned industrial development in Southern New Jersey.

FOREST PARK CORPORATE CENTER Paulsboro, New Jersey

• Over 1 million square feet in 3 buildings

• Multi-phase industrial development featuring tilt-wall construction, and cross-dock and rear-load designs.

• Included build-to-suit for Tech Data Corporation and speculative construction with two different capital partners.

• All buildings were designed and approved with expansion capability for maximum tenant flexibility.

NORTHEAST BUSINESS CENTER Bridgeport, New Jersey


• Single speculative building totaling 1,351,200 square feet

• Largest speculative industrial building built in New Jersey

• The property was built on a 98-year ground lease. This was the first project in the market to be built and financed on a ground lease. Fast track site and shell construction completion in 8 months.

• Completed in 2006. Sold to an institutional investor upon completion.

MIDDLESEX CENTER 1 South Brunswick, New Jersey

FEATURED COMPLETED INDUSTRIAL PROJECTS

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