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Item Numbers: 6a 6b 6c EXHIBIT A Date of Meeting: December 9, 2014 Airport Dining and Retail Program Authorization of Prime Lease Modifications ACTION ITEMS November 25, 2014 Airport Dining & Retail Master Plan 2 Anticipated Commission Actions Authorization of Lease Authorization of Design Authorization of Prime Review Leasing Plan 2014 S. Satellite Restaurant Phase I Infrastructure Lease Modifications and New RFP 3rd Quarter October 28 November 25 January COMPLETED COMPLETED Authorization of Authorization of Leases Authorization of Leases Authorization of Leases 2015 Construction Phase I for Personal Services for Food & Beverage for Specialty Retail Infastructure 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 3 Phasing Plan: Groundwork for New Opportunities Following finalization of Number of units and locations Anticipated timeline for competition transition phasing, the leasing Type of competitive process plan will consist of packages for Anticipated investment requirement every existing and new location: Preferred offering and/or concepts 4 Airport-Wide Expirations 2015-2017 5 Phasing Plan Strategy Develop a phasing plan that mitigates impact by spreading expirations over several years Avoid wide-spread closures in 2017 Assure adequate customer service in all parts of the airport Maintain revenue generation to the Port Mitigate employment instability A well-conceived phasing plan is the best solution for the traveling public and the Port 6 Prime Lease Expirations PHASE I PHASE II PHASE III 2015-2016 2017-2019 2020-2024 (2 years) (3 years) (5 years) 1 1 UNIT 60 UNIT UNITS Current schedule of expirations is not manageable 7 Proposed Prime Lease Expirations PHASE I PHASE II PHASE III 2015-2016 2017-2019 2020-2024 (2 years) (3 years) (5 years) Early Returns New Leases 13 22 * 27 UNITS UNITS UNITS * Includes Concessions Intl. units Achievable schedule of prime operator expiration dates 8 Proposed Lease Modifications Prime Operator Units: Early Returns On-Time Expirations Extended Operation under Current Leases New Leases 9 Lease Modification I: Anthony's Restaurant Central Terminal Anchor Restaurant Opened in 2005 Operated by HMSHost 7,000 square feet Initial investment: $4.2 M Refurbished in 2010: $400K Sales $13 M in 2013 Approx. 140 employees 11 Anthony's Restaurant 12 Phasing Proposal Summary Extend lease 2 years, 3 months (Sept. 2017) Eliminate two 5-year options Total lease term: 12 years, 3 mos. Increased percentage rent to Port Higher rent:10.5% (tiered) Longer term: $600,000 incremental revenue 13 Lease Modification II: Host Host/SRA at Sea-Tac Master concessionaire 1963-2004 Operates in 24 locations Leases 9 units to ACDBEs Employs 700 associates 2013 Gross sales: $60 million 15 Phasing Proposal Summary Return six units early (2015-2016) No reimbursement for remaining value ($352,000) Six Host/SRA operated units expire on-time, four North Satellite units remain in operation Four subtenant units expire on-time, five continue operation additional 1-2 years Ten Host exclusive-concept units in a new lease expiring in 2023 16 Current Host Leased Space 17 Early Return Units 2015-2016 18 Expiring On-Time 12/31/2016 19 Extended Operation 2017-2019 20 ACDBE Lease Expirations Four units proposed to expire on-time allow for new opportunities, e.g: Concourse A restaurant/gourmet market Specialty retail Personal services Five units proposed to remain in operation for an extended period between 15-24 months Total extended lease term: ~14.5 years 21 Transition Lease Objectives Reasonable 'premium' rent in exchange for a negotiated contract Only HMSHost's exclusive brand-name concepts, e.g. Starbucks Coffee Balance desired new investment in as short a lease as possible 22 New Lease Food Package #1 Expire 2023 23 Summary of Proposed Terms Rent Tiers Percentage Proposal Summary New Expiration Date 2023 New Investment $7.2 million 0 - $10 million 12% Net Book Value for $352,000 Returned Units $10,000,001 - 13% Effective Rent 13.5% $20 million Estimated First Year $26.1 million Sales Sales over $20 15% million Estimated Term $27.3 million Revenue to Port Jobs Supported 250 24 Recommended New Host Lease Benefits for the Port: Premium percentage rent Higher square footage productivity Comparison Current Proposed All Host-exclusive, local sense-of- Effective Rent 12.6% 13.5% place concepts Square Footage 13,606 11,689 Staple brand Starbucks in place for transition Estimated Sales $1,675 $2,200 Limited to ten units, preserves per SF future competition Continuity of employment for 250 Host associates 25 Lease Modification III: Hudson Hudson at Sea-Tac Awarded in RFQ process Evolving to convenience retail Employs 250 associates ACDBE ownership: 25% 2013 Gross sales: $55 million 27 Phasing Proposal Summary Return seven units early (2015-2016) No reimbursement for remaining value ($1.2 million) $12.3 million in new investment to increase sales Two lease packages with different expiration dates, two years apart Package #1: 6 units + 2 NorthSTAR limited duration, Package #2: 9 units Increased percentage rent to Port 28 Current Hudson Leased Space 29 Early Return Units 2015-2016 30 Transition Lease Objectives Reasonable 'premium' rent in exchange for negotiated contracts Split the current business into two packages Require investment to generate higher sales in convenience retail Re-concept specialty retail to Hudson premium brands, e.g. Coach 31 New Lease Retail Package #1 Expire 2022 32 New Lease Retail Package #2 Expire 2024 33 Summary of Proposed Terms Rent Tier Percentage Proposal Summary Convenience New Expiration 2022 2024 0 - $25 million 16% Date $25,000,001 - 17.5% New Investment $3.3 million $9 million $45 million Estimated First $27.1 $27.9 Sales over $45 19% Year Sales million million million Net Book Value for $1.2 million Returned Units Rent Tier Percentage Effective Rent 16.4% Specialty 0 - $10 million 9% Estimated Term $82 million Revenue to Port $10,000,001 - 10% $15 million Jobs Supported 250 Sales over $15 11.5% million 34 Recommended New Hudson Leases Benefits for the Port: Comparison Current Proposed Premium percentage rent Appropriate reduction in square footage Effective Rent 15.1% 16.4% Higher square footage productivity Splits business into two packages Square Footage 32,336 26,992 New investment in 2015-2016 At full capacity for transition Estimated Sales $1,688 $2,044 Continued ACDBE ownership per SF Continuity of employment for 250 Hudson associates 35 ' 7 PRE-2004 ' 2017-2024 2024 & MASTER =4: 1" TRANSITION FORWARD CONCESSIONAIRE I "'9 FOOD i.' '3: FOOD ALL UNITS RECOMPETED HMS Host HMS Host Multiple New Packages for Fd NEWS/GIFT SRA Primes, Local, R9 a1t 1 HMS Host Concessions Small & International Disadvantaged Duty Free DUTY FREE ACDBE HMS Host HMS H081: Subtenants (10) Recompete 2023 ACDBE SUbtenants Direct Leases ACDBE (6) Subtenants " ' , Recompete Hudson 2018-19 .11-" 571"":15 RETAIL . Dufry Hudson Recompete 2022, 2024 DUTY FREE Dufry Recompete 2020 36
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