Project Development Report

500 Ferguson DriveMountain View, California

Mona Hassen

Brandy Bridges

Juan Barrios

Nate Johnson

Wendy F. Wang

Chris Thompson

CEE 248May 28, 2002Amitis Pourarian

Project Background: Location

Project Concept

• Site size: 10.5 Acres• Site owner: Kalcic family• Development agreement

only; property owner retains deed

• Land previously used as apricot orchard

• Project bisected by VTA light rail right-of-way

Important Site Issues

• Environmental Issues• Easements• Site drainage• Seismic• Geotechnical

Zoning Information

• Currently zoned ML district: 0.35 FAR; will apply for T-zone overlay with 0.5 FAR

• On- and off-site improvements required for T-Zone overlay

• $3/sf for pedestrian and bicycle improvements

• Minimum 20 ft. building setback• 2/3 of site required for landscape

Project Concept: Flex Tech

• Two four-story, L-shaped buildings• Surface and podium parking• 16 ft. floor-to-ceiling on first floor• 14 ft. floor-to-ceiling on second,

third, and fourth floors

Site Plan

Amenities

• Adjacency to Highway 237• Garaged parking• Bicycle parking• Access to light rail and transit• On-site service facilities• Outdoor recreational facility

– Healthy tenants are happy tenants

A Great Opportunity

• Project satisfies need for lab space on the Peninsula

• Development already approved by City of Mountain View

• Proximity to premier biotechnology research institutions (Stanford, UCSF, UC Berkeley)

• Proximity to Highway 101, Highway 85, and Highway 237

Market Analysis

• Mountain View: Heart of Silicon Valley• Intensive public transit effort

underway• Location of notable companies

including biotechnology ventures• Much available office space on the

Peninsula, but little available for biotechnology

Mountain View Office Space

Mountain View R&D/Office Historical Available Square Feet

1,129,841

987,883

842,234

552,120

261,890

191,822

435,0291,092,227

1,684,683

2,223,759 3,180,030

3,904,378

3,938,335

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000

1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02

Rent Distribution on the Peninsula

• The following bell-shaped curve shows the distribution of rent rates in the following areas (Palo Alto having the highest rates):

Palo Alto/Menlo Park Redwood Mountain View

Sunnyvale

San Mateo

Burlingame Santa Clara

Mountain View Rental Rates

Mountain View R&D/Office Historical Rental Rates

$2.565 $2.621 $2.744$3.026

$3.499

$5.686

$8.169$8.629

$6.027

$3.943$3.093 $2.972

$1.810

$-$1.000$2.000$3.000$4.000$5.000$6.000$7.000$8.000$9.000$10.000

1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02

Total Development Cost

Total Per SF (Gross Building)

Percent of Total Development Costs

Land Acquisition $11,857,903 $52.00 18.49%

Hard Costs $36,606,937 $160.53 57.08%

Soft Costs $15,668,300 $68.71 24.43%

Total Project Costs $64,133,140 $281.24 100.00%

Timing and Source of Funds

PHASE: Land Acquisition

Pre-Development

Construction Permanent CUMULATIVE FINANCING

Owner’s Equity $ 11,857,903* $450,000 $10,754,103 $23,062,007

Construction Loan

$ 49,051,220 ($49,051,220) $0

Permanent Loan

$41,071,134 $41,071,134

Total $64,133,140

Maximum Loan Amount

Criteria Implied Maximum Loan Amount

Loan To Cost 0.85 Maximum $54,513,169

Dollars / SF $200 Maximum $45,607,320

Loan To Value* 0.75 Maximum $43,031,750

Debt Service Coverage** 1.25 Minimum $41,071,134

Operations and Project Returns

• Assume $2/sf and 7% vacancy rate– ROE = 4.11%– Rent NNN = $5,089,777– Vacancy = $356,284– NOI = $4,733,493– Debt Service $3,786,791– Free Cash Flow =

$946,701– Owner’s Equity $23 MM

• Assume $2.75/sf and 7% vacancy rate– ROE = 12.37%– Rent NNN =

$6,998,443– Vacancy = $489,981– NOI = $6,508,552– Debt Service

$4,205,031– Free Cash Flow =

$2,303,521– Owner’s Equity $18 MM

Project Schedule

• Complete Lease-Up by 2006– Commence project in May 2002– City approvals complete by March

2003– Engage architect concurrently with

initiating approval process – Construction duration 400 days until

September 2004