PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      5d 
ACTION ITEM 
Date of Meeting      April 1, 2014 
DATE:    March 17, 2014 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   James R. Schone, Director, Aviation Business Development 
Michael Ehl, Director, Aviation Operations 
James Jennings, Manager, Aviation Properties 
SUBJECT:  First Amendment to Air Cargo Building Lease Agreement with BT Property LLC 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute a First
Amendment to Air Cargo Building Lease with BT Property LLC, substantially represented in 
Attachment 1, to reflect a 4 year, 7 month extension of the lease term to 12/31/2018. 
SYNOPSIS 
BT Properties leases half of a cargo building, constructed in 1978, from the Port and the other
half of the cargo building from AMB. This unique lease situation was created in 1998 when
AMB, a development company, leased an adjacent parcel of land from the Port and expanded
both the BT Properties building, as well as built a separate standalone cargo building for a 
separate tenant. Staff would like to extend the lease of BT Properties to align with the lease
expiration date of the AMB lease and the anticipated ownership reversion of the adjacent
improvements built by AMB, as well as align termination dates with several adjacent cargo
buildings as depicted in Exhibit B.
The Port is proposing a 4 year, 7 month lease extension for both the building and the land, which
would extend to 12/31/2018. The original lease term was 4 years, 5 months and thus, did not
require Commission approval. Extending the current lease term to 2018, will require
Commission approval as the extension creates a 9 year total lease term. The terms of the
extension would match existing lease terms, except for an added annual consumer price index
(CPI) adjustment to rent commencing 6/1/2015. Comparable properties surrounding the BT
Property building were appraised in 2012, demonstrating that the current rent was already at the 
market rate. 
Exhibit A depicts the BT Property ground and warehouse lease and clearly shows the lease line
dividing the warehouse and the portion of the warehouse currently owned by AMB on their
ground lease. In Exhibit B, the highlighted buildings represent properties that will be owned by
the Port on or before 12/31/2018. The boundary line area in red represents approximately 17
acres of property. The extension of the lease term for BT Properties is a derivative of the larger
strategy of assembling a large chunk of property for future redevelopment flexibility, with the

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
March 17, 2014 
Page 2 of 4 
specific use to be proscribed by the Airport's Sustainability Master Plan, which is currently in
development 
BACKGROUND 
BT Property is a limited liability corporation under UPS Supply Chain Solutions, headquartered
in Alpharetta, Georgia.  UPS Supply Chain Solutions provides logistics and distribution,
transportation and freight (ground, air, and rail), international trade management and customs
brokerage. 
Emery Air Freight constructed the facility BT Property LLC presently occupies under a ground
lease dated April 25, 1978. BT Property LLC assumed the ground lease on April 27, 2005, when
Menlo Worldwide Forwarding, the successor company to Emery, was acquired by UPS. Emery
constructed the building and through a variety of subsequent transactions was ultimately
acquired by UPS. The lease expired May 31, 2009, at which time, pursuant to the terms of that
lease, ownership of the Lessee-constructed improvements reverted to the Port. At expiration, the
lease continued in a holdover status until a lease with BT Property was negotiated, which took
effect January 1, 2010. The Port of Seattle entered into this term lease agreement with BT
Property, LLC to lease 61,073 sf of ground space and 16,545 sf of warehouse space for the
operation of a cargo building, warehousing, air and ocean freight forwarding, customs brokerage,
distribution services and other related activities. The term of the lease commenced on January 1,
2010 and will expire on May 31, 2014. 
This facility is unique, in the fact that the Port's adjacent lessee (AMB) in 1998 constructed an
approximately 9,000 square foot (sq. ft.) expansion to the existing BT Property building, and
then subleased it back to BT Property LLC, resulting in 50% of the building being leased from
the Port and the other 50% of the building being leased from AMB. The staff that negotiated this
arrangement are no longer with the Port, but we believe this unique agreement was developed
because BT Properties was unable to contribute the needed capital to expand the building
themselves. Therefore, AMB who leased the entirety of land between the Port's Air Cargo 4 and
BT Properties LLC, expanded the BT Properties LLC building as well as building a separate
cargo building. All improvements built by AMB as part of their lease will revert to the Port on
12/31/18. This will facilitate the Port owning both the separate cargo building, as well as the
entirety of the BT Properties building, which will allow for the entire building to be under one
lease in the future if the Port desires.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
March 17, 2014 
Page 3 of 4 
LEASE SUMMARY COMPARISON 
Current Lease Terms            Proposed Amended Lease Terms 
Term                    1/1/2010 - 5/31/2014           1/1/2010 - 12/31/2018 
Premises (Square Feet)           16,545 sf  building             16,545 sf  building 
61,073 sf - land                  61,073 sf - land 
Monthly Rent                $6,886.94  building            $6,886.94  building 
$7,786.81 - land                $7,786.81  land 
Annual CPI adjustment, effective
6/1/2015 
Capital Investment Requirement    None                     None 
All other terms and conditions of the current lease will remain unchanged. Given the limited
number of potential tenants for this existing facility, and based on the limited market for these
custom buildings, as well as the Port's limited term constraint, Port staff believe offering BT
Property a minimal lease extension insures a continued revenue stream through 12/31/2018, as
well as aligns this lease with the lease termination dates of adjacent properties in preparation for
future strategic redevelopment, if warranted by the Airport's Sustainability Masterplan. 
FINANCIAL IMPLICATIONS 
The lease in its present condition contributes $176,085.00 in annual rent to the Port.  The
proposed First Amendment to Air Cargo Building Lease will secure continuation of this revenue
through December 31, 2018, with annual increases by the percentage change in the CPI, All
Urban Consumers, Seattle-Tacoma-Bremerton Index. 
STRATEGIES AND OBJECTIVES 
The Port's Century Agenda articulates a regional initiative to strengthen access to global markets
and supply chains for Northwest businesses.  Two of the Agenda's strategic objectives support
that initiative: 1) increasing air cargo tonnage at the airport to 750,000 metric tons by 2036, a
near tripling of tonnage from 2011 when the Century Agenda was authorized, and 2) positioning 
the Puget Sound region as a premier international logistics hub. 
In the longer term, alignment of the termination dates for all the properties in this area supports
future development for cargo or other uses, as determined by the Airport's Sustainability 
Masterplan.  In the near term, this lease extension supports UPS Airlines, a signatory airline at
Seattle-Tacoma International Airport (Airport), whose scheduled flight service is primarily at
King County International Airport, but whose freight forwarding arm UPS Supply Chain
Solutions is a vital component of the region's logistics supply chain and supports air cargo at the
Airport. Freight that is handled through the BT Property facility is delivered for transport to a
variety of domestic and international airlines at the Airport, contributing to the Airport's annual
tonnage figures. This freight forwarding and logistics service provided by UPS is a significant
component to the Northwest region's logistics supply chain, providing economic benefit to the
region's businesses and industries by providing access to global markets.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
March 17, 2014 
Page 4 of 4 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Allow the BT Property lease to expire and market the property to another user. 
The risk for this alternative, to the Port, would be finding a replacement tenant to lease the
property. There is lim ited demand for on-airport cargo warehouse property and even less
demand for property with no direct airfield access. This alternative would also negatively affect
UPS and its role in the regional logistics supply chain. This is not the recommended alternative. 
Alternative 2)  Allow BT Property to remain in the space, in holdover status, without
extending the lease. The holdover rent would be the same rate as is currently in place under the
lease, but would not provide the stability both the landlord and tenant desire, nor the
commitment for a CPI adjustment in 2015. This is not the recommended alternative. 
Alternative 3)  Request BT Property to vacate the space and leave the space vacant until 2018,
when the adjacent lease with AMB will expire. No lease revenues would be received by the Port
after May 31, 2014, and UPS would be negatively impacted. This is not the recommended
alternative. 
Alternative 4)  Extend the lease with BT Properties to ensure a continued revenue stream and
align the termination with the reversion of the remaining portion of the building, as well as align
the lease termination with adjacent cargo facilities. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Attachment 1  Draft First Amendment to Air Cargo Building Lease Agreement 
Exhibit A  BT Property Leased Premises 
Exhibit B  Cargo Building Lease Expiration Alignment