COMMISSION 
AGENDA MEMORANDUM                Item No.       4d 
ACTION ITEM                   Date of Meeting   November 22, 2016 
DATE:    October 28, 2016 
TO:     Ted Fick, Chief Executive Officer 
FROM:   David McFadden, Managing Director Economic Development Division 
Jeffrey Utterback, Director Real Estate & Economic Development 
SUBJECT:  Assignment and Assumption of Ground Lease Agreement at Des Moines Creek
Business Park Phase I, and Amendments to Ground Leases at Des Moines Creek
Business Park Phase I, Phase 2 and Phase 3. 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to (1) execute an Assignment
and Assumption of Ground Lease Agreement at the Des Moines Creek Business Park Phase I
from the existing tenant, Des Moines Creek Business Park Phase I, LLC, to the new tenant CAVA
Des Moines Industrial, LLC; and ( 2) execute amendments to the assignment provisions in the
ground lease agreements with Des Moines Creek Business Park Phase I, LLC; Des Moines Creek
Business Park Phase II, LLC; and Des Moines Creek Business Park Phase III, LLC. 
EXECUTIVE SUMMARY 
The Port entered into a ground lease with Des Moines Creek Business Park Phase I, LLC in [April
2015], a limited liability company controlled by the Panattoni Development Company
("Panattoni"). Now that this project has been completed and fully leased, Panattoni has
identified a buyer for the entire investment and wishes to exit the property through a sale of
the assets and an assignment and assumption of the underlying ground lease. 
The proposed new owner, LaSalle CAVA Industrial Fund, LLC ("Fund") is an investment vehicle
created to own, develop and operate industrial warehouse facilities across the U.S. The owners
of the fund are the $188 billion New York Common State Retirement Fund, and LaSalle
Investment Management, a global real estate investment advisory firm with over $45 billion of
asset under management. The Fund will form a single-asset special purpose entity called CAVA
Des Moines Industrial, LLC ("CAVA Des Moines") for this transaction. CAVADes Moines is
purchasing the assets and the ground lease from Des Moines Creek Business Park Phase I, LLC
for $68 million in cash. 
The ground leases for the three Des Moines Creek Business Park ("DMCBP") phases provide
that the tenant assigning the lease remains liable to the Port for all obligations, including rental
payments, throughout the term of the leases. Panattoni is requesting that the Port amend the

Template revised September 22, 2016.

COMMISSION AGENDA  Action Item No. 4d                       Page 2 of 4 
November 22, 2016 
ground leases for each of the three DMCBP phases to eliminate this requirement in future
assignments. If assignment of the Phase I ground lease is approved, CAVA Des Moines will
replace the existing one-year lease security, providing the same security that Port currently has
from Des Moines Creek Business Park Phase I, LLC. 
JUSTIFICATION 
Panattoni is an industrial merchant developer. Like many similar developers in this asset class,
they look to sell their investments as soon as the projects they develop are completed and the
income from leasing is fully stabilized. This exit strategy is typically driven by the cost of their
capital and the need to repay their original investors and allowing them to achieve the highest
IRR possible. The shorter the period they use the money, the higher the IRR they achieve, and
the more profit they make as a developer as the result of the sale. In the US, the primary buyers
of stabilized industrial assets are pension funds, as is the case in the deal. 
The security provided the Port by CAVA Des Moines matches what is currently provided by
Panattoni. More importantly, the new tenant is investing $68 million in the property and its
ultimate owners financial depth far exceeds that of the existing tenant. The Port should draw
comfort by this level of investment and any concerns over lease payment defaults. 
DETAILS 
As part of the discussions with Panattoni and their request for assignment and assumption of
the Phase I lease and amendment of the assignment language in the leases for all three DMCBP
phases, Panattoni has agreed to provide the Port with the following: 
(1)   Reimburse the Port $140,000 to relocate a water line installed at the request of Des
Moines Creek Business Park Phase I, LLC. This water line caused the Port property to
the north to have development impairment. By funding the relocation costs, the site
can now be developed. 
(2)   Grant the Port a Right of First Offer ("ROFO") on Phase 2 and Phase 3 of the Des
Moines Creek Business Park. This right allows the Port to have an option to acquire the
assets from Panattoni and unify the investment, creating the maximum investment
value, possible only by the Port as the underlying ground owner. 
Under a ground lease, transfer of liability through an assignment and assumption of the ground
lease is very common. In this case and in most cases, the second tenant is often a better tenant
with lower risk than the initial developer, as is the situation here. 



Template revised September 22, 2016; format updates October 19, 2016.

COMMISSION AGENDA  Action Item No. 4d                       Page 3 of 4 
November 22, 2016 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  The Port does not agree to the request to the assignment and assumption of
the ground lease from Panattoni to CAVA Des Moines. 
Cost Implications: By not agreeing to this request, the Port with have to fund the $140,000 
relocation cost of the water line located on the Port property to the north of this property. 
Pros: 
(1)   The Port retains Panattoni as the ultimate responsible tenant under the existing
ground lease agreement. 
Cons: 
(1)   The Port does not receive the $140,000 payment to cover the relocation costs of the
water line on the Port property to the north. 
(2)   The Port does not receive the Right of First Offer (ROFO) on the DMCBP Phase 2 and
Phase 3 and is not able to consolidate the investment as a result. 
This is not the recommended alternative. 
Alternative 2  The Port agrees to the request to the assignment and assumption of the ground
lease from Panattoni to CAVA Des Moines. The Port will not ask Panattoni for any concessions
in return for releasing their liability on DMCBP. 
Pros: 
(1)   The Port receives a matching level of lease security from the new tenant CAVA Des
Moines that it currently has from Panattoni. 
(2)   The Port is able to replace the original tenant with a tenant who has made a significant
investment in the property and is focused on holding and maintaining the property
long term. 
(3)   The Port receives a ROFO for the DMCBP Phase 2 and Phase 3. 
Cons: 
(1)   The Port does not receive any consideration or value in return for granting this release
of liability.
This is not the recommended alternative. 
Alternative 3  The Port agrees to the request to the assignment and assumption of the ground
lease from Panattoni to CAVA Des Moines. 
Cost Implications: The Port receives a $140,000 payment from Panattoni to fund the cost
related to relocating a water line on Port property to the north of this property. 
Pros: 
(4)   The Port receives a matching level of lease security from the new tenant CAVA Des
Moines that it currently has from Panattoni. 

Template revised September 22, 2016; format updates October 19, 2016.

COMMISSION AGENDA  Action Item No. 4d                       Page 4 of 4 
November 22, 2016 
(5)   The Port is able to replace the original tenant with a tenant who has made a significant
investment in the property and is focused on holding and maintaining the property
long term. 
(6)   The Port receives a ROFO for the DMCBP Phase 2 and Phase 3. 
Cons: 
(1)   The Port releases a known tenant in Panattoni and has a ground lease with a new
tenant in which they have no current standing relationship. 
This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
(1)   DMCBP_Assignment of Phase 1 GL-HBB-11-1 (00208897xB9B50) 
(2)   DMCBP_First Amendment to GL-Phase II-HBB-11-1-16 (00208901xB9B50) 
(3)   DMCBP_First Amendment to Phase III GL-HBB-11-1-16 (00208903xB9B50) 
(4)   DMCBP_Side Letter-HBB-11-1-16 (00208899xB9B50) 
(5)   DMCBP_Third Amendment to Phase 1 GL-HBB-11-1 (00208898xB9B50) 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
June 10, 2014  The Commission authorized Des Moines Creek Business Park ground lease
approval for Panattoni. 










Template revised September 22, 2016; format updates October 19, 2016.