7a Supp

ITEM NO. __7a_Supp______
DATE OF
MEETING March 1, 2011



Real Estate Division Inventory
Port of Seattle Commission
March 1, 2011

Critical Question
As a steward of publicly-owned assets, it is our role to
maximize the return on publicly-owned investments. With
regard to real estate positions, the most critical question
is:
When do we:
(1) maximize current return on an asset and create a recurring
revenue stream or
(2) maximize the current value of an asset and sell that asset or
(3) when do we do both?

Critical Drivers
Anticipated changes in the market
Expeditious response to market opportunities
Ongoing carrying, operating, and deferred
maintenance costs
Uses for funds
increase borrowing capacity,
retire debt,
support alternative initiatives,
lessen tax levy requirements

Favorable Implications to Sale Option
Provides capital infusion for debt retirement/funding
alternative obligations
Minimizes future capital expenditure obligations
Removes ongoing maintenance and operating
expense obligation
Reduces the public liability
Returns lands to the tax roles
May marginally reduce staffing costs.

Unfavorable Implications to Sale Option
Eliminates a revenue producing asset that supports
other obligations of the enterprise
Removes revenue producing assets and increases
the reliance upon the tax levy
Removes the most attractive assets and burdens the
public ownership with the least attractive assets
Reduces the portfolio upon which overhead
allocations are charged

Favorable Implications of Hold Option
Provides income to support bonding
capacity/acquisitions/future obligations
Permits land uses that are consistent with market
developments
May decrease the reliance upon the tax levy
May reduce future capital expenditure obligations
Maintains portfolio upon which to allocate overhead

Unfavorable Implications of Hold Option
Does not provide for one time capital infusion to retire
debt/fund alternative objectives
Requires ongoing obligations for maintenance and
operating expenses
Keeps land off the tax roles (notwithstanding
leasehold excise tax generated)

Current Market Conditions
Q4 2010
120%
100%                   96
90
82
Occupancy Rate %                79
80%
Seattle
60%
Kent
40%                               Valley
20%
0%
Commercial            Industrial
Source: CBRE

Seattle Close-in Industrial Vacancy
3,000,000

2,500,000

2,000,000

1,500,000                                     Demolition
Deliveries
1,000,000                                     Total Vacant

500,000

0
Total Market:
2006   2007   2008   2009   2010
62,543,221 sf
-500,000

Planning & Development Activity
35
1
30
8
25
4
20
6
15
# of Expiring Permits                                            24
10
15
5
3
0
2010           2011           2012
Interbay   SODO   Waterfront    Total Square Footage: 2,050,309

Valuation Principles
Rent assumptions:
Projections based on current rates increased by inflation
Building occupancies based on 2010 Budget average
occupancy
Expense assumptions:
Actual expenses where appropriate/2008 BOMA Experience
Exchange Report (most current available)
Future years increased by inflation
Cap rates:
7.5%-9.5% @ 25 basis point increments
Discount rates:
8.0%-10.0% @ 25 basis point increments

Valuation Principles
Inflation assumption: 2.5%/year over 10
years
Applied capital improvement expenditures
consistent with plan of finance
Assumes no brokerage/cost of sale charges
Assumes all sites environmentally clean

Tier 1 Properties
Property     Occupancy     2011 Cap Ex     2012-2015       Value
Cap Ex
Revenue  Revenue
Protection  Generation          Low     High
Tier 1
Fishermen's Terminal        86     9,450       500    24,479
Maritime Industrial         100     2,123         0        0
Center
Bell Harbor Int'l           100      1,185         0       290    26,593     34,101
Conf. Center
Bell Harbor Marina                 60        0        0     Incl.      Incl.
BHICC   BHICC
Shilshole Bay Marina               200        0     1,815    53,452     71,261

Tier 2 Properties
Property     Occupancy     2011 Cap Ex     2012-2015       Value
Cap Ex
Revenue  Revenue
Protection  Generation          Low     High
Tier 2
World Trade Center        64        0         0       0    11,582     15,181
West
World Trade Center                  0         0       0    16,658     21,454
Garage
Harbor Marina Corp.       70      100         0     2,330    12,749    17,172
Center
Pier 34                           0         0        0     2,401      3,078
Pier 2                             0          0        0     2,990      5,554

Tier 3 Properties
Property     Occupancy     2011 Cap Ex     2012-2015      Value
Cap Ex
Revenue  Revenue
Low   High
Protection Generation
Tier 3
Terminal 91 Uplands         69       0         0       0   67,039    80,659
CEM Site               1       0        0       0    9,110    9,110
Tsubota Steel Site            11        0          0        0     2,619     4,863
Terminal 5 SE             10       0         0       0     (62)     (31)

Total Tiers 1, 2 & 3:                                        $205,831  $264,102

Pier 69                         1,625               1,503   $15,500   $22,621
Eastside Rail Corridor                  0         0        0
Notes: Includes all business plan prospective projects; excludes tenant improvements; excludes overhead projects

Commercial Properties
Property     Occupancy     2011 Cap Ex     2012-2015       Value
Cap Ex
Revenue  Revenue
Protection  Generation          Low     High
World Trade Center         64        0        0        0    11,582     15,181
West
World Trade Center                  0        0        0    16,658     21,454
Garage
Bell Harbor Int'l           100      1,185         0       290    25,593     34,101
Conf. Center
Harbor Marina Corp.        70      100        0     2,330    12,749    17,172
Center
Pier 34                 100        0         0        0     2,401      3,078

Terminal 5 SE           100        0        0        0     (62)      (31)

Industrial Properties
Property     Occupancy     2011 Cap Ex     2012-2015       Value
Cap Ex
Revenue  Revenue
Protection  Generation          Low     High
Fishermen's Terminal        86     9,450       500    24,479
Maritime Industrial         100     2,123         0        0
Center
Terminal 91 Uplands        69        0        0        0    67,039     80,659

CEM Site              1       0       0       0    9,110     9,110

Tsubota Steel Site           11        0         0        0     2,619      4,863

Pier 2                    5         0         0        0     2,990      5,554

Marina Properties
Property     Occupancy     2011 Cap Ex     2012-2015       Value
Cap Ex
Revenue  Revenue
Protection  Generation          Low     High
Shilshole Bay Marina        98      200        0     1,815    53,452     71,261
Bell Harbor Marina                 60        0        0 Incl.     Incl.
BHICC  BHICC
Harbor Island Marina        70        0        0        0    1,700     1,700

Total All Properties:                                       $205,831   $264,102

Pier 69                           0         0     1,503   $15,500    $22,621

Eastside Rail                        0         0        0
Corridor

Policy Questions/discussion
Competitive        Protocol upon when
processes--RFP vs.    to consider for sale
direct negotiation      Distinguish between a
'for profit' portfolio
and a 'not for profit'
portfolio

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