PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6a 
ACTION ITEM 
Date of Meeting     August 19, 2014 
DATE:    August 12, 2014 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   Patricia Spangler, Real Estate Manager 
Melinda Miller, Director, Portfolio and Asset Management 
SUBJECT:  Wounded Warrior Project Lease Approval 
Amount of This Request:         $449,263   Source of Funds:  General Fund
Est. Total Project Cost:           $449,263 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to: (1) enter into a new
agreement with an existing Port tenant, Wounded Warrior Project (WWP), to effectively relocate
from Pier 66, extend the term and expand the leased premises with WWP at World Trade Center
West (WTCW) for an initial term of five years and four months, with one five year option to
renew; (2) include a Port funded tenant improvement allowance in the amount of $341,640 and
payment of a broker fee in the amount of $73,153; (3) terminate WWP's existing lease at Pier
66, which has a remaining term of two years and eleven months, upon full execution of the new
lease and completion of the tenant improvements; (4) relocate an existing WTCW tenant, Pacific
Merchant Shipping Association (PMSA), extending the initial term of the PMSA lease by an
additional two years and nine months;  and (5) include Port funded tenant improvement
allowance in the estimated amount of $34,470 in the PMSA lease. This request is for the total
project cost of $449,263. 
SYNOPSIS 
Port staff proposes to relocate WWP from their existing leased space, consisting of 4,903
rentable square feet at Pier 66 by terminating the existing lease, which has two years and eleven
months remaining on the term. Simultaneously, WWP will enter into a new lease consisting of
11,388 rentable square feet at WTCW, for a five year, four month term at a market rental rate of
$15.25 per rentable square feet and will provide one five year option to renew.
Entering into a new lease with WWP would a) increase leased square footage and corresponding
revenue by an additional 6,485 rentable square feet, b) extend WWP's lease term for an
additional two years and five months, c) provide an option to renew for an additional five years,
and d) provide a First Right of Offer to WWP for any additional available space within WTCW 
for the duration of the term with the exception of the space being occupied by PMSA. The Port
would provide $341,640 toward tenant improvements and $73,153 toward the broker fees.

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 12, 2014 
Page 2 of 6 

BACKGROUND 
Established in 2003, and headquartered in Jacksonville, Florida, WWP  is a non-profit
organization that began as a program to provide comfort items to wounded service members. It
has grown into a complete rehabilitative effort to support wounded service members as they
transition back to civilian life. WWP is committed to honoring and empowering "wounded
warriors" by raising awareness, public aid, and to providing unique programs and services
directly to meet the needs of injured service members.
WWP currently occupies approximately 4,903 rentable square feet at Pier 66. WWP approached
the Port about availability of additional space within Pier 66. WWP has outgrown its space and
is looking to more than double in size to expand the valuable programs offered to the veterans in
the Puget Sound Region. Pier 66 is 100% leased with no space coming available in the near
future. WWP then inquired if space was available to meet their size requirements at WTCW.
WTCW has space coming available under a short term lease with a first floor tenant occupying
9,641 rentable square feet that terminates August 31, 2014. WWP inquired if the Port would
consider terminating WWP's existing lease early and entering into a new five year lease for the
larger premises at WTCW.  During discussions to lease the available space of 9,641 rentable
square feet, WWP inquired about additional space on the first floor.
In order to respond to WWP's growth by providing contiguous space in WTCW, Port staff
secured the approval of an existing first floor tenant, PMSA to relocate elsewhere within the
building. PMSA's relocation to the suite on the north end will involve an early termination of
their existing lease that has a remaining term of two years and three months and entering into a 
new five year lease. The Port would  provide an estimated $30 per rentable square feet tenant
improvement allowance of $34,470 for a build-out equivalent to their existing premises. This
new lease with PMSA is contingent upon a new fully executed lease with WWP.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 12, 2014 
Page 3 of 6 
MARKET CONDITIONS 
The Real Estate Division staff consults with several different resources to determine market rate; 
including real estate market condition reports prepared by several brokerage firms, a market
report assessed through our Costar subscription service and a review of recent transactions for
comparable buildings provided by the Port's listing broker for WTCW. The market rate for Net
Rent for comparable buildings is in the range of $15.00 to $17.50 per rentable square feet plus
building expenses and annual rent increases between $.75 and $1.00. The Port staff negotiated a
market rate with WWP for a Net Rent of $15.25 per rentable square feet commencing year one
with $.75 annual rent increases. The current market for Landlord concessions for abated rent for 
a five year term is in the range of one to three months per each year of the term and landlord
funded tenant improvements range between $20 and $40 per rentable square feet. The Port
negotiated four months abated rent as tenant will perform their improvements during this period,
while continuing to pay rent under their current lease at Pier 66. The Port would fund $30 per
rentable square feet for tenant improvements, which include construction of a new storefront 
directly off the lobby entrance creating a greater value for this suite in the future. 

TERMS OF PROPOSED WWP LEASE 
The major elements of the proposed term lease are outlined below: 
Term:          Five year, four months commencing October 1, 2014, expiring 
January 31, 2020. 
Option to Extend:    One additional five year Option to Extend. 
Use:            General and administrative office. 
Premises:         Premises Consists of approximately 11,388 rentable square feet on the
first floor 
Base Rent:        11,388 rsf @ $15.25/rsf/yr 
Base Rent Increase:  $.75 annual Base Rent increases 
Rent Abatement:    The rent is abated for four (4) months October 1, 2014 through 
January 31, 2015. 
Operating Expenses:  Tenant is responsible for all the operating costs associated with their
occupancy of the Premises currently estimated to be $6.68 per rentable
square foot billed back to tenant as a Pro-Rata Share of the Building
Expense. Tenant is also responsible for the Leasehold Excise Tax charged
against the Base Rent at 12.84% currently estimated to be $1.96 per
rentable square foot.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 12, 2014 
Page 4 of 6 
Tenant's Pro-Rata 
Share:           16.384% 
Port Improvements:  Port shall provide up to $30 per rentable square feet or an amount not to
exceed $341,640.00 
Security Deposit:    The Security Deposit of $47,888.25 which is equal to the average of three
month's rent over the term of the lease. 
FINANCIAL IMPLICATIONS 
Budget/Authorization Summary              Capital     Expense   Total Project 
Original Budget                            $0          $0          $0 
Previous Authorizations                       $0          $0          $0 
Current request for authorization              $376,110       $73,153      $449,263 
Total Authorizations, including this request      $376,110       $73,153      $449,263 
Remaining budget to be authorized               $0          $0          $0 
Total Estimated Project Cost               $376,110      $73,153     $449,263 
Project Cost Breakdown                     This Request       Total Project 
Tenant Improvement Allowance                 $376,110          $376,110 
Broker Commission                         $73,153          $73,153 
Total                                       $449,263           $449,263 
Budget Status and Source of Funds 
Funds for the capitalized tenant improvements will be provided by a combination of the 2014
Plan of Finance Committed CIP C800126 Tenant Improvements and savings on other capital
projects. Of the total broker fees, $30,448 will be paid in 2014 and $42,705 will be paid in 2015.
It is expected that lower spending and delays on other broker commissions included in the 2014
Operating Budget will offset these unplanned 2014 broker commission expenses. The remaining
2015 broker commission payment will be included in the 2015 Operating Budget. 
The source of funds will be the Real Estate General Fund.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 12, 2014 
Page 5 of 6 
Financial Analysis and Summary 
CIP Category           N/A 
Project Type            N/A 
Risk adjusted discount rate   7.0% 
Key risk factors          Risk of tenant default, which is partially mitigated by: 
Security deposit totaling $47,888 
Good standing as a current tenant of the Port 
Project cost for analysis     $449,263 
Business Unit (BU)        Portfolio Management, Real Estate Division 
Effect on business        The incremental impact of the new WTCW leases on Net
performance           Operating Income (NOI) for Year 2014 through Year 2018: 
Incremental Incr/(Decr)
NOI (in $000's)       2014  2015  2016  2017  2018
WWP Revenue      $0   $71  $105  $151  $201
PMSA Revenue      $0   $0   $0   $16   $16
WWP Expense      ($30)  ($43)   $0   $0   $0
NOI           ($30)  $28  $105  $167  $218
Depreciation          ($6)   ($25)   ($25)   ($25)   ($25)
NOI After Depreciation   ($37)   $3    $80   $141   $193
Incremental Revenue is generated by expanding WWP leased
premises 6,485 sf, extending WWP's initial lease term two
years and one month, and extending PMSA's initial lease term
two years and 9 months. Incremental Expense is generated by
the WWP broker fee (first payment in 2014, second payment 
in 2015). Depreciation will increase approximately $25K per
year based on a 15 year WWP lease term, a 5 year PMSA
lease term, and the assumption that both tenants' 
improvements will be capitalized. 
IRR/NPV             NPV    IRR  Payback
(in $000's)   (% )    Years
$190     NM      4
The Net Present Value is based on the incremental net cash
flows generated by the new leases and does not factor in the
underlying value of the spaces leased. The basis for
establishing the market rates for the leases is described in the
memo under "Market Conditions." 

ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1) Do Not Execute a New Lease Agreement: If the Port does not enter into a new
lease for larger space at WTCW that includes terminating WWP's current lease at Pier 66, WWP
potentially vacates at the end of their current Pier 66 lease term. The Port would earn roughly
$346,000 in total revenue from this Pier 66 lease.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 12, 2014 
Page 6 of 6 

The Port also loses the opportunity to extend the term of its lease with PMSA for an additional
two years and three months. The Port would earn roughly $73,000 in total revenue from this
lease. The Port also loses the opportunity to lease space on the first floor that has had unsecured
short term tenants over the past five years. This is not the recommended alternative. 
Alternative 2) Execute Proposed Lease: Entering into the proposed  new lease agreement with 
WWP at WTCW increases occupied square footage, extends the lease term an additional two
years and eleven months, and terminates their existing lease at Pier 66. This new lease provides 
incremental revenue to the Port in the amount of $769,000 over the term of the WWP new lease 
plus $52,000 over the term of the PMSA new lease. It also secures a longer term lease for space
that the Port has previously only been able to achieve short term leases. Additionally, the tenant
improvements proposed by WWP will provide for better marketability of the space by removing
the window offices, creating an open floor concept, current with today's typical office build-outs.
Tenant improvements also include a new storefront entry off the lobby, improving marketability
for this first floor space. Finally, securing a longer term tenant aligns with the Real Estate long
term asset plan. This is the recommended alternative. 

ATTACHMENTS TO THIS REQUEST 
Lease Agreement substantially as negotiated. 

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
June 5, 2012: The Commission authorized the Port enter into a Lease with WWP at Pier
66 for a term of five years, two months and further approved a Port funded tenant
improvement allowance of $112,769 and payment of a broker fee in the amount of
$24,514.