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
Limitations of Translatable Documents
PDF files are created with text and images are placed at an exact position on a page of a fixed size.
Web pages are fluid in nature, and the exact positioning of PDF text creates presentation problems.
PDFs that are full page graphics, or scanned pages are generally unable to be made accessible, In these cases, viewing whatever plain text could be extracted is the only alternative.