Selig Enterprises

08

Investment AnalysisInvestment Team BTiffany Lee Ebonee DicksonAl SmithLee Myers

79 Marietta StreetAtlanta, Georgia

Table of Contents:

1. Team Overview

2. Executive Summary

3. Market Analysis

4. S.W.O.T. Analysis

5. Alternatives

6. Financial Analysis

ExhibitsExhibit 1 Aerials and Photographs Exhibit 2 Maps Exhibit 3 Tax Parcel Information Exhibit 4 Demographics

Team Overview

Ebonee Dickson is the project manager for the GSU Investment Team. A senior at Georgia State University, she is studying Real Estate and Managerial Sciences at the Robinson College of Business. She has an associate degree in Business Administration from Georgia Military College. Ebonee is a member for the Georgia State University Real Estate Club. Ebonee is interested in pursuing a career in real estate development after she completes her education.

Tiffany Lee is in her final year at Robinson College of Business majoring in Real Estate. She is a member of the GSU Real Estate Club and Investment Team. Tiffany currently works in the food service industry. Tiffany’s career goals are in commercial real estate and business administration.

Lee Myers is a senior at Georgia State University pursuing a degree in Real Estate. He is a member of the GSU Real Estate Club and Investment Team. He has three years of experience in residential construction and sales. After graduation, Lee plans to seek a career in residential development.

Albertio Smith is a senior at Georgia State University majoring in International Economics and Spanish. He is a member of the National Association of Realtors, the Dekalb Real Estate Board, GSU Real Estate Club and Investment Team. Albertio is also a licensed realtor with Metrobrokers GMAC. He currently works in management for UPS. Alberio’s career goals include climbing the executive ladder with UPS and investing in residential and commercial real estate.

Purpose of Report:79 Marietta Street NW, Atlanta GA 30303-2810This parking lot property owned by Selig Enterprises incorporated, lies in the downtown area of Atlanta, Georgia. On the corner of Marietta Street and Williams Street, this parking lot has great potential to earn high rewards if converted to meet the new demands placed on the growing area of Atlanta. By analyzing the growth of Atlanta’s economic conditions from all aspects of real estate investments, options for the highest return for this parking lot will substantial support a conversion.

Executive Summary

Property CharacteristicsSize: .27 Acres 11,770 Square FeetDimensions: 105ft x112ft

Location:County: FultonCensus Tract/Block: 27.00/1

Building Characteristics:Type: Parking DeckNumber of Parking Spaces: 212Built Date: 1957Size: 42,364 Sq. Ft.

Tax Information:Land Value: $353,100Structure Value: $1,417,900Total Value: $1,771,000Assessed Year: 2007Tax Year 2007: $28,387.90

Owner Information:Selig Enterprises INC1100 Spring St. Atlanta, GA, 30309

Market Analysis

National Overview: Economic employment trends for 2009 are expected to latter throughout the year according to the national market research performed by Marcus and Millicap. On a national level, the apartment market seems appealing due to the strict credit restrictions for the housing market. Employment rates are expected to increase as during the mid- to end of 2009. Consumer confidence is a must for the economy to gain positive returns during this economic recession. Office markets forecast for 2008 deemed optimistic due to the overall recorded return office market investors held as a lesson from the 2001 office explosion. This lesson forecasted vacancy’s to only increase 3.6% for 2008 while other markets were forecasted to experience even higher vacancies. For retail

real estate investors, reliable financing is obtainable but due to the high increases in vacancy, value-added concessions to tenants will increase for investors. Industrial markets create available and easier convertibility for different real estate redevelopments making the reliable reactions to a volatile market easier. Each sector of real estate is finding new innovative ways to create the best return for current market status. As a result, a new trend towards health investments for real estate show and still show, positive returns from the aging baby boomers. The main focus for all real estate endeavors is perhaps what the investor can bring to the available local market to help the community and longevity of the city for the consumers.

Atlanta Employment and Economic Overview:Employment in the Metro Atlanta Region, which includes Fulton County, Cobb County, Dekalb County, Buckhead, and the City of Atlanta, employment has continued to show positive signs for increased employment according to Metro Atlanta’s Chamber of Commerce. During these slow economic time, in 2007, Atlanta gained more than 60,000 new jobs placing Atlanta in first place for the largest increase in jobs supplied from 2000-2006 (Chamber of Commerce: Atlanta, 2007). Challenges that are underway for Atlanta are the large plants closing due to economic distress forcing companies like General Ford Motors, to lay off thousands of employees. Georgia-Pacific, BellSouth, and Scientific-Atlanta, and Russell Corp, all of which are huge contributors to the Metro, also announced the merger in 2007 and plan to make the merger final in 2008, ultimately sacrificing landscape, jobs, and a lower absorption rate (Chamber of Commerce: Atlanta, 2007). Increases in employment suggest that Atlanta is continuously creating jobs for civilians increasing the overall market share for Atlanta businesses.

In 2007, according the Chamber of Commerce, business in the Atlanta area were targeted to corporate headquarters, technology sectors, logistics, Telecommunications, and computer software and services market featuring lower overall operating costs for large corporations. Since Atlanta’s population has continuously grown despite economic stresses, Atlanta’s Office building sector also continues to show positive outcomes. Cresa Partners, a real estate advisors service, stated that for Atlanta’s second quarter, Atlanta experienced an average 14.5% vacancy rate and an absorption rate at a negative 155,064 square feet, which is an increase from a negative 417,547 square feet during the first quarter of 2008.

Market analysis from Marcus and Millicap, Inc., back-up Cresa Partners for Atlanta’s economic status by explaining slow office absorption has increased unemployment and vacancy rate by occupants that use commercial office buildings within Atlanta (Marcus & Millicap). Marcus and Millicap’s research continues to explain that employer’s in Atlanta has added 37,000 jobs since the beginning of 2008 and ultimately raising the rate 1.5 percent. Historically evidence concludes that employers who normally invest in office use bring an estimated 7,700 new jobs yearly to the Atlanta area (Marcus and Millicap: 2008).

Employment, in relations to vacancy rate and absorption rate directly affect the overall economic stability for Atlanta’s market (Cresa Partners: Atlanta, 2008). Midtown, Central Atlanta, and downtown Atlanta, have seen these relations first hand last quarter when big companies like Think Ink, Cox, Piedmont Hospital, and Portman Holdings, LLC., recently transacted an office/lease in one of these areas, increasing employment and lowering the vacancy and absorption rate (Cresa Partners: Atlanta, 2008). For Westy Office Building, a high employment rate gives this investment a positive beginning outlook.

Office Market for Atlanta:Atlanta’s economic conditions for Office real estate showed a negative absorption rate in 2008 first Quarter analysis and increasing even more in the second quarter analysis. Atlanta still remains a hot spot for many companies due to dropping operating expenses and low construction costs. Though new construction is still growing substantial for Atlanta, many new building constructions have been dismissed due to the recent real estate market downfall. (Marcus and Millicap: 2008); (Goddard, NAI Global: 2008). New construction forecasting for office buildings in 2008 have decreased from 2.4 million square feet in 2007 to 1.9 million

square feet for 2008. The average trend for new construction in Atlanta is approximately 3.9 million square feet (Marcus and Millicap: 2008).

Rents for 2008 are expected to increase 2.4 percent averaging $21.70 per square foot creating a more modest rent base while increasing effective asking rents to increase 4.6 percent. Rents have increased slightly for 2008 and are forecasted to increase in the upcoming quarters (Goddard, NAI Global: 2008). Due to a drastic decrease in demand, Class A Office rents are expected to raise to $24.35 per square feet, signifying a rent increase of 3 percent since 2007. Capitalization rates have decrease slightly since the last quarter computing at an average of 6 to high-7 percent. Sales trends forecasted for 2008 predict commercial office building to sell $157 per square foot

Vacancy rates have reached a high of 18 percent since 2000, hitting the lowest level of absorption seen in the last few years. Class A Office segment for Atlanta shows an increased forecast for the next few quarters. Since 2007, vacancy has raised 60 basis points, increasing the rate to about 14.5 percent for the second quarter in 2008 (Marcus and Millicap: 2008). Overall outlook for vacancy due to unemployment rates increases are expected to reach a 16 percent by the end of 2008 (Marcus and Millicap: 2008).

Capital markets suggest that lenders will become more conservative during upcoming quarters, resulting in lower loan-to-value ratios, and higher requirements for debt service ratios. A submarket overview for Cobb County predict that lenders will still remain cautious for next few quarters, and many construction projects will be halted until the traffic congestion within the area are corrected in order to meet the demand of markets (Marcus and Millicap: 2008).

Since 1918

Background:Real Estate Firm specializing in Retail, Industrial, Office, and Residential properties, dedicated to building a strong foundation and service to all clients, continuous growth, and a positive attribute to the surrounding communities.

Established : 1918, Ben J. Massell. Today the majority of the highest ranking authorities are still family members. They believe that stability and integrity have helped them maintain their status as one of the largest privately held real estate companies in the Southeast and the U.S.

Services: This company not only acquires and holds ownership of their properties, they also provide leasing, development, space design, construction, legal, property management, brokerage and accounting services for their portfolio of over 250 properties. Keep in mind that Selig is the sole owner of Triple AAA parking in which they manage more then one hndred parking facilities.

Overview : Selig is committed to the growth of the business, political, and social environment of Atlanta and the Southeast. They believe in dedicating energy, resources, and time towards the empowerment of the community. There are four key factors in which Selig attributes their continued growth and success: responsive service, strong tenant relationships, LONG-TERM OWNERSHIP of properties, and an experienced staff. Selig focuses not only on developing neww projects, but also acquiring existing income properties. Their financial resources allow them to avoid obtaining construction or interim financing. Their leasing activities encompass the full spectrum of RETAIL, INDUSTRIAL, AND OFFICE holdings. Since everything is done in house, there is no hassle with third parties when it comes to property management and contracts are always negotiated in the swiftest and most efficient manner possible.

Current properties on the market: In the metro-Atlanta area, Selig has almost seventy properties new and old for sale or with vacancies for lease, ranging in type from industrial buildings and office spaces to strip malls and grocery sites.

S.W.O.T Analysis

LOCALE STRENGTHS : Location, in the heart of downtown Atlanta Frontage on Marietta Street, one of Atlanta’s major surface streets Close to Georgia State University, a nexus for growth in the downtown area Short walk to Centennial Olympic Park and Woodruff Park 250 Yards from Five Points Marta Station Quarter of a mile from CNN Center and Phillips Arena Half of a mile from the Georgia Dome Parking deck currently occupying site does not meet current aesthetic standards in city zoning creates potential for

increased municipal cooperation in a redevelopment

WEAKNESSES: Surrounded by office buildings with high vacancy rates Area is “dead” outside of normal business hours Low pedestrian traffic High vagrant population in the area

STRENGTHS OF CURRENT USE: Parking is at a premium in downtown. Atlanta has a “car culture” Steady income stream Low maintenance compared to other options

WEAKNESSES OF CURRENT USE: Outdated structure Parking structure cannot easily be converted to another use Relatively low, relatively fixed, income.

Alternatives

Office Building- High vacancies in area.- Many competing structures nearby

Condominium- Poor market- One time return

Apartments- High Maintenance- Limited market in area

Improved Parking Structure- Low maintenance- Great location- Highly profitable- Low management- Low vacancy rate

Hotel- Extremely high maintenance- High management fees- Highly volatile to market

Financial Analysis

79 Marietta Street, Atlanta GA

Added Estimating Assumptions:

Operating Expenses are expected to increase 3% each year to account for inflation

In order to increase the potential cash flows, 5% will be deducted for Management fees from the EGI

Operating Statement

Assumptions:

Holding Period: 6 Years

Asking Price: $ 3,500,000.00

Vacancy Rate: 10%

3% Increase in Rent from Year 2 and On: 3%

Operating Expenses: $5.00

3% Inflation per year for Operating Expenses: 3%

Rent Per Square Ft.: $23.00

Management Fee of 5% of EGI: 15%

Maintenance and Repair Fees: $60,000 *increases for first 3 years by $10,000

Total Square Feet: 42,364

Assumed Loan Mortgage Rate: 8%

Assumed Loan Period Listed in Months: 360

LTV 20%: $700,000

Anticipated Monthly Payments: ($5,136.35)

Replacement Reserves: 2%

Cash Flow Forecast Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Potential Gross

Income: $974,372.00 $1,003,603.16 $1,033,711.25 $1,064,692.05 $1,096,545.54 $1,129,271.73

Vacancy: ($143,002.06) ($100,360.32)

($103,371.13) ($106,469.20) ($109,654.55) ($112,927.17)

Effective Gross Income: $831,369.94 $903,242.84 $930,340.13 $958,222.84 $986,890.99 $1,016,344.56

Operating Expenses Statement:

Management Fees and Salary Expense: $124,705 $135,486.43 $139,551.02 $143,733.43 $148,033.65 $152,451.68

Replacement Reserves: $16,627 $18,065 $18,607 $19,164.46 $19,737.82 $20,326.89

Maintenance and Repair Fees: $60,000 $70,000 $80,000 $80,000 $80,000 $80,000

Total Expenses: $201,333 $223,551 $238,158 $242,898 $247,771 $252,779

Net Operating Income: $630,037.05 $679,691.56 $692,182.31 $715,324.96 $739,119.52 $763,565.98

DS: ($61,636.22) ($61,636.22) ($61,636.22) ($61,636.22) ($61,636.22) ($61,636.22)

BTCF $568,400.82 $618,055.34 $630,546.08 $653,688.74 $677,483.29 $701,929.76

Less Tax Paid: $103,522.14 $115,141.03 $118,796.20 $125,438.91 $134,961.58 $139,287.35

After Tax Cash Flows:

$ $464,878.68 $502,914.30 $511,749.89 $528,249.82 $542,521.72 $562,642.41

Sale:*The anticipated Cap Rate according to

market value: 7.00%

Future Value of Property: $10,908,085.46

Original Basis: $3,500,000.

00

Plus Transaction Costs: $105,000.

00 Total Tax due at

time of sale:

Adjusted Basis: $3,395,000.

00 $2,470,117.99

After Tax Reversion:

Anticipated Future Sales Price: $10,908,085.

46

Less Adjusted Basis: $3,395,000.

00

Gain on Sale: $7,513,085.

46

Depreciation: 25% $1,224,358.

97 *Mid-Month

Convention

Capital Gain: 15% $1,126,962.

82 Mortgage Balance: $541,898.00

Less Selling Costs: $327,242.56

Total: $3,220,462.

36

After Tax Reversion: $7,687,623.

10

Ratios

NPV $2,108,849.78 IRR 67.44%

Overview of Financial Analysis:

From the financial analysis, perhaps the most important figures to be aware of, is the Internal Rate of Return (IRR), the Net Present Value (NPV), and the Net Operating Income (NOI). If the property anticipates keeping the property as a parking deck area, the NOI shows high positive returns to the current owner. The IRR and NPV verify the high returns by displaying figures well over the original basis and the loan down payment of 20%. For this loan, the assumed holding period is five years. The anticipated Capitalization rate, according to the current market figures, holds an average of 7%, indicating that the property value is estimated to equal $10,908,000 after the five year holding period, giving the owner a 67.44% internal rate of return, or actual return for the property including all the cash flows. The return for this property type is higher than any other property types due to the economic crisis and stress on the current market. **This examples figures are based off comparables within the Atlanta market for parking deck property types.

Exhibits

Exhibit 1 – Aerials and Photographs

Parcel Aerial

Exterior View

Exterior Views

Exterior Views

Exhibit 2 – Maps

Atlanta Map

Neighborhood Aerial View

Map of Major Nearby Streets

Map of Major Attractions

Exhibit 3 – Tax Parcel Information

Tax Map

Exhibit 4 – Demographics

Demographics

Demographics

Demographics

Demographics

Demographics