1

Expected ROI 4.5% to 8.5%Plus Appreciation

Stabilized Leased Properties

Management and Lease Renewals

Does Not Assume Costs of Construction

REIT’S -Capital MarketsValue Add, Hold or SellDevelop, BTS, Hold or Sell

Leveraging Investor ROI Expectations

Expected ROI 20% to 45%

Plus Appreciation

Ground Up Development

Management and Full Building Lease-up 2- 3 years

Assumes Costs of Construction and Marketing

Expected ROI 20% to 35%

Plus Appreciation

2nd Generation - Problem Facility

Management and Full BuildingLease-up 2-3 years

Assumes Costs of Construction and Marketing

2

“Your Lease Payments Increase the Building’s Value”200,500 Square

Feet

Building Value – Empty: $110.00 PSF $18,300,000

New Lease – Good Credit 2% - 3% annual increases

3, 5, 7, 10, 12, 15 & 20 Lease Terms

Rent Rate: $12.50 NNN Annual Starting Rent: $2,506,250

3, 5, 7, 10, 12, 15 & 20 Income Stream

Capitalize the rent at 7.0%

New Building Value: $35,800,000

Profit Before Costs: $17,500,000

3

Your Lease Payments Increase the Building’s Value 200,500 Square Feet

Profit Before Costs: $17,500,000

Closing Costs:Tenant Improvements:

Marketing, Architectural, Permits,Real Estate Fees, Etc.:

$275,000 $3,200,000

$1,400,000

Total Costs: $4,875,000

Income / Profit after Costs: Annual Income Stream: $2,506,250 $12,625,000

4

Winning bidder executes Tenant’s contingent lease, deposits purchase proceeds and owns the lease and building

CoreStrategy offers the building and long-term lease to Capital Markets investors

Client dictates lease terms

CoreStrategy negotiates purchase price, places building in escrow

Capital Markets Discount Structure

5

Case Study 1: Capital Markets Discount Structures

Sample 125,000 Sq. Ft. Office Building

Vacant Building (Asking Price) $125.00 PSF $15,625,000

Negotiated Purchase Price (Contract Price) $110.00 PSF $13,750,000

Open Escrow

Craft New Lease10-20 year term

(Rental Rate) $15.60 PSF $1,950,000

Capitalization Rate 7% $223.00 PSF $27,857,142

Tenant Improvement Costs $ 40.00 PSF $ 5,000,000

Sale Costs $ 8.91 PSF $ 1,114,286

Net Profit Distributed $ 63.94 PSF $ 7,992,856

Subsidies OccupancyCosts

$ 6.39 PSF$799,285

(annual savings)

6

Case Study 2: Capital Markets Discount Structures

Sample 205,000 Sq. Ft. Facility

Vacant Building (Asking Price) $97.56 PSF $20,000,000

Negotiate Purchase Price (Contract Price) $89.27 PSF $18,300,000

Open Escrow

Craft New Lease (Market Rate) $12.60 PSF $ 2,583,000

15 year term (Total Rent Cost) $42,221,377

Sell lease/company credit and building based lease income

Capitalization Rate 7% $180.00 PSF $36,900,000

Tenant Improvement Costs $ 30.00 PSF $ 6,150,000

Sale Costs $ 7.20 PSF $ 1,476,000

Net Profit Distributed $ 53.53 PSF $10,974,000

7

Case Study 3: Impact on EBITDA Over 15 Year Period

Lease Purchase Delta

Salary, Wage, OT & Fringe $65,841,965 $65,841,965 ---

Rent ($5,090,887) $50,750,187 ($55,841,075)

Depreciation ($44,731,274) ($35,705,713) ($9,025,561)

Maintenance $4,524,707 $4,524,707 ---

Other $4,675,526 $4,675,526 ---

Total P&L $25,220,035 $90,086,672 ($64,866,636)

Total EBITDA $69,951,310 $125,792,385 ($55,841,075)

8

“ CTL / Bond structure used by Worldwide Fortune 1000 Companies“

Walmart Target Bank of America Canadian Imperial Bank

Chase Bank Accor Hotel Group Starwood Hotels Kraft Consumers

Federal Express EXXON Zurich GE Capital

Children’s Hospital St. Luke’s MD Anderson Equitable Insurance

UCLA Medical Center US Federal Government GSA Cummings Engines

HP Hartz Mountain CVS Constellation Brands

Shell Oil Wells Fargo Kroger McDonalds Corp.

As well as many other household and corporate named companies.

• $125 Billion of CTL have been funded with less than 0.05% foreclosure rate since 1987

• A CTL is supported by your company’s good credit rather than the intrinsic value of the real estate

9

Bondable - Credit Tenant Lease (CTL) – Rated “BBB” or Higher

Overview

• Single Tenant Lease.• Rental rate can be flat for term of the lease.• Lease provides renewal options for up to 40 years at favorable rates. • Property financed with debt based primarily on underlying credit of tenant. • Tenant responsible for all costs associated with property.

Term • 15 to 25 years with up to 40 years of renewal options at favorable rates.

Advantages

• Financing secure on company’s credit, Less dependence on the real estate• Rates significantly lower than a Life Insurance or Commercial Mortgage Back Security• Long term control and flexibility through purchase options, assignment, sublease and

substitution rights, and property modifications and improvements.• Landlord holds title and bears residual and environmental risks. • Little to no constraints on how the mortgage proceeds are spent by the borrower

Pro/Con • Landlord assumes risk and benefits of the real estate’s increase or decrease in value.

10

Typical Lease2/3 Debt – Traditional Bank Financing

1/3 Equity – Expected Developer ROI

5.5% to 6.5%

15.0% - 25.0%

Capital MarketsDiscount Structures

Capitalize NOI – REIT expected return 5.0% - 8.0%

Bondable Leases Bond – expected return 3.50% - 5.0%

Real Estate Cost Structure Comparison

11

12

Capturing Increased Building Value in a Lease Renegotiation

Real Estate Brokers Negotiate To: We Negotiate Base On:

“MARKET”

• Landlord Economic Loss Factor• Increased Building Value Created By Your Lease• Credit / Financial Strength Of Your Company• Future Capital Expenditures

13

Prior to every lease negotiation: Building Condition and Systems Analytics

• HVAC / Building Systems repair and life expectancy• Roof repair and life expectancy• Parking lot repair and life expectancy• ADA – Compliance

• 10 year lease:• HVAC, roof and parking lot life expectancy 4 years

Economic Savings: $250,000 - $3,500,000

14M O N T H

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

$0.40

$0.35

$0.30

$0.25

Assume Space Size Assume Lease Term Contract and/or Option Rate

485,000 120 $0.40/PSF per mo.

15 Mo. Lost Rent = $2,910,000

$6.50 PSF HVAC, Roof, Pkg Lot & TI Allowance =

$3,152,500

Total Reduction in Cash Flow = $6,062,500 - WCS

= $0.10 PSF/Mo. Reduction over the term

Market Rate = $0.40 PSF/Month

Landlord Effective Rate = $ 0.30 PSF/Month

EF

FE

CT

IVE

C

AS

H

FL

OW

TENANT CONTRACT RATE = $0.40

LANDLORD EFFECTIVE RATE = $ 0.30

Early Lease Renegotiation – Landlord Cost Model

15M O N T H

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

$0.40

$0.35

$0.30

$0.25

Assume Space Size Assume Lease Term Contract and/or Option Rate

485,000 120 $0.40/PSF per mo.

$0.06 Rent Reduction = $2,328,000

$3.50 PSF Systems & TI Allowance =

$1,940,000

Total Reduction in Cash Flow = $4,268,000 70% of WCS

= $0.075 PSF/Mo. Reduction over the term

Market Rate = $0.40 PSF/Month

Landlord Effective Rate = $ 0.325 PSF/Month

EF

FE

CT

IVE

C

AS

H

FL

OW

TENANT CONTRACT RATE = $0.325 80% of MKT

LANDLORD EFFECTIVE RATE = $ 0.325

Early Lease Renegotiation – Landlord Cost Model

16

Case Study 4: Toshiba 117,000 Sq. Ft. - Industrial Warehouse $8.6 Million – Cash, Credits, Rent Abatement, T.I.’s

17

Case Study 5: LabCorp 138,000 Sq. Ft. – Office Facility$15.6 Million – Cash, Incentives, Rent Abatement, T.I.’s

18

Case Study 6: Actual CTL Transaction Options Available to Client

Same Rent / Prepay Loan @ 15 yr Term

$29.05 million Net Cash: $1.5 Million

End Value 15 years:

$27.9 minus estimated

$7.2 Prepayment

Net: $20.7 million

Option #3Option Price$26.5 Million

CTL Loan Amount Net Cash Today 2% Annual Appreciation Estimated Net Profit

Option #2Option Price$26.5 Million

CTL Loan Amount Net Cash Today 2% Annual Appreciation Estimated Net Profit

Same Rent / Increase Term – 5 Years – 20 Yr.

$29.05 million Net Cash: $1.5 Million

End Value 20 years:

$30.8 million

Net: $30.8 million

Option #1Option Price

$26.5 Million

CTL Loan @ 4.98%

Bond Amount

(2% Annual Appreciation from Replacement Value)

“ Value Empty”

CTL @ Same Rent / Same Term 15 yr.

$22.30 million

RVI Insurance

$4,400,000 Plus Interest

$9.2 million

End Value 15 years:

$27.9 minus $9.2 RVI

Net: $18.7 million

19

Strategic Planning

Shared Services

Logistics & Supply Chain Analysis

Workforce & Location Planning

Information Systems & TechnologyIntegration

Benchmarking & Efficiency Programming

Process Implementation

Mergers & Acquisitions Support

Working Capital Management

Lease/Purchase Contract Negotiations

Early Lease Contract Structures

Business Economic Incentives

Capital Markets Discount Structures

G&A Related Cost Reductions

Equipment Leasing

Captive Insurance Structures

Lease Contract Cancellation

Building Condition & Systems Analytics

Lease Audit & Expense Reimbursements

Capital Incentives, Allowances & Economic Concessions Packages

Concealed Landlord Profit Centers

Sustainability Solutions

Lease Administration & Portfolio Management

Facility Leases, Purchase Acquisitions &Build-to-Suit

Over Market Cost Analysis & Site Selection

Project Management & Construction Design

Dispositions

OPERATIONSCONTRACTSFACILITIES

Unrealized Cost Reduction and Increased Efficiency Opportunities

20

Typical Lease Audit Savings

Competitively Bid Expenses $8.7 million

After-Hours HVAC $1.7 million

Tax Refunds & Management Fees $1.2 million

Duplicating Electric Cost $0.4 million

Base Year Gross Up & Equivalency $0.4 million

Utility Gross Up & Amortized Capital $0.53 million

Lighting Retrofit = T.I. Work $60,000 per annum

Parking Expenses & After Hours HVAC

$2.55 million

Capital Costs & Equity Participation $1.85 million

Garage Taxes & Insurance $1.3 million

21

Potential non-rent dollars in play = $12,266,000

500,625 SQ FT FOR A 10-YEAR LEASE AT $0.50 P SQ FT/MONTH = $30 MILLION CONTRACT

$1,652,000$30/sq ft reduction in value

X 500,625 sq ft X 1.1% X 10 years

TenantImprovements

ConstructionEstimate

LandlordConstruction

Profit

Base BuildingIssues

Lease Flexibility (Termination

Options)

Lease Flexibility (Sublease)

Lease Flexibility (Market

Fluctuations )

Tax Appeal

SecurityDeposit

Annual Operating Expense Cap

First Year Lease Audit

Right Size The Space

$1,502,000$0.10/sq ft/mo X 60 months

X 50% probability

$1,081,000$0.02/sq ft/mo X 108 months

$1,500,00025,000 sq ft

X $0.50/month

$250,000ONE MONTH RENT

$50,000$0.10/sq ft/yr

$75,000$3.00/sq ft @ 5%

$451,000$0.10/sq ft/MO

X 36 months X 25% probability

$3,755,00060 months rent

X 25% probability

$500,000$1.00/sq ft

$500,000$1.00/sq ft Short

$500,000$1.00/sq ft Short

Case Study 7: Landlord Profit Centers

22

Business Economic Incentives

Overview

In 2015, over $220 million in economic development incentives.

Federal, state and local governments award up to $50 billion per year in discretionary incentives.

Incentivesawarded relate to:

• Expansion projects• Mergers & Acquisitions• Consolidations & Closures• Administration of existing incentive

packages

• Facilities upgrading• Site selection & start-up• Employee recruiting, training and

retraining• Divestitures

Sales and Use TaxAnother opportunity in California, Illinois and Texas, is a 1% sales and use tax reduction.

23

Cash grantsEmployee training

grantsProperty tax abatements

Sales tax exemptions

Utility rate reductions

Infrastructure grants (water, sewer, road,

telecom)

Subsidized landInventory tax

reduction

Employee tax credits

Wage subsidiesEnterprise Zones (EZ) and Foreign

Trade Zones (FTZ)

Low-cost and/or tax-exempt financing

Tax Increment Financing (TIF)

Fast-track permitting,

approvals and fee waivers

Business Economic Incentives – Available Federal, State and Local Government Awards

24

Workforce and Location Planning

OverviewCompanies across the country are addressing their costs in the context of workforce and locationplanning.

Cost Points

• Labor• Power & Energy • Freight• Incentives

• Power reliability• Natural disaster risk• Education assessment• Crime research and

reporting

• Sector Saturation Analysis• Comparative Wage Analysis• Comparative Demographic

Analysis• Compensation

25

Case Study 8: Workforce and Location Planning

Company Maker of household plastic storage items, based in Inland Empire, CA.

Project National search for 500,000 sq. ft. manufacturing & distribution center with 250 new positions.

Reduce cost of energy, freight and wages, while simultaneously improving delivery times andmaintaining skilled labor.Goals

Results $62 million in total savings over a 10 year period.

Cost Point Current New Savings

Labor $54,440,298 $50,242,067 $4,198,231

Energy $21,000,004 $9,360,002 $11,640,002

Freight $125,025,555 $80,426,211 $44,599,344

Incentives $0 $1,403,000 $1,403,000

Total savings over 10 years $61,840,577

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Sustainability Solutions

Sustainability practices enhance liquidity to properties/portfolios. Financial alternative enables $0 capital investment potential.

Sustainability reduces operating costs.Sustainability is a proactive approach for offsetting escalating energy costs (water, gas, electric and waste).

Operating cost reductions increase net operating income.

Sustainability assists in preferred financing terms and conditions.

Capitalizing reduced operating costs adds asset value.

Sustainability platforms enable ownership to comply with federal, state and local energy efficiency mandates being developed.

27

Property Assessed Clean Energy (PACE)

OverviewPACE is an innovative way for commercial property owners to pay for energy efficiencyupgrades, on-site renewable energy projects and water conservation measures.

Funding

PACE funding provided or arranged by a local government for 100% of project’s costs andrepaid with an assessment over a term up to 20 years. Over the past 12 months, financingactivity has more than doubled, with more than $30 million provided to improve over 160buildings.

What States are eligible?

PACE is a national initiative, but programs are locally based and tailored to meet localmarket needs. PACE can now be used in 31 states and programs are being launchedthroughout the U.S.

Benefits

• 100% financing requires no up-front cash investment• Long-term financing (up to 20 years) results in immediate positive cash flow• Assessment costs and savings can be shared with tenants• PACE may be treated as off balance sheet financing• Non-recourse, non-accelerating financing

AvailabilityVisit www.pacenow.org to see if PACE financing is available in your community or learnmore about how you can support development of a program.

28

Mergers and Acquisitions Support

Overview

Potential economic impact $1 million to > $50 million.

Total facility M&A costs become a negotiable component of the final acquisition terms as wellas a preliminary cost estimate relating to implementation of a long term real estate plan.

Value enhancement

and risk mitigation

• Facility & lease contract liabilities

• Deferred facility maintenance cost

• Roof & HVAC life expectancy/associated cost projections

• Facility efficiency & functional evaluation

• Facility overlap –employee redundancy

• Facility integration – (Real Estate as part of business plan)

• Lease and/or facility valuation

• Discounted lease cost • Market-comparable analysis• Contingent liability & facility

restoration cost analysis • Environmental consulting

contractor management • Cost to revenue conversion

• Unused allowances• Termination and buy-out

clauses• Subleasing analysis –

Landlord shared profits provision

• Evaluation of lease extension with enhanced credit opportunities

• Speed of execution –ability to react quickly and on tight deadlines

29

ABC

SF: 310,298

Exp: 6/30/2019

ABC

SF: 665,502

Exp: 6/30/2018

ABC

SF: 146,432

Exp: 9/30/2021

ABC

SF: 416,938

Exp: 12/01/2016

ABC

SF: 148,468

Exp: 6/1/2017

ABC

SF: 277,800

Exp: 09/30/2017

ABC

SF: 218,420

Exp: 5/31/2019

16 miles

2.6 miles

3.2 miles

11.6 miles

26.7 miles

39.4 miles

Southern California M&A Consolidation Template

30

Case Study 9: Mergers and Acquisitions Support

RESULT • Reduced operating costs by 22%

Company• Privately held food brokerage company • $65 billion in sales

Goal • Reduce operating costs• Increase operating efficiency

Project• Consolidated existing corporate facilities • Renegotiated existing lease obligations

31

Risk Management Solutions

• Entitlements• Design• Engineering• Construction of the core/shell• Tenant improvements

ConstructionBid AdvertisingContractor PrequalificationBid Analysis Contract Analysis Construction MgntQuality ControlSafety CompliancePayment ApplicationsProject Controls and ReportsBudget Management/Change OrderSchedule ManagementTeam ManagementSite and User Coordination

Pre-DesignSite Analysis Site SelectionMaster PlanningProject Delivery Method Design Team SelectionConceptual Design Entitlements/Permits Conceptual Estimates Conceptual Schedules Bid Strategy

DesignProgramming Review Schematic Design Review Design Development Review Construction Document ReviewIT/AV/Security/Phone/Data Review Constructability/VE ReviewReview Estimates Master Schedules Site Utility Logistics Coordination

Close OutCommissioning ValidationFurniture, Fixtures, Equipment Telecom/Data/AVSecurity Coordinate Operation and MaintenanceDocuments/Guarantees/Warranties TrainingCoordinationPunch ListsRelocationFinal Lien Releases/Payments/Close Out

General Scope of Services

32

Project Management & Construction Design

Implementation methods

Landlord PM No Advocacy

15% to 35% of budget at risk

Tenant PM AdvocacyCompetitive Bid

10% to 20% of budget at risk

Tenant PM AdvocacyLicensee Developer – Contractor

Collapsed SchedulePreferred Approach

Responsibilities of the Project Manager

• Assembly of professionals • Competitive procurement of professional

services• Negotiation of service agreements

• Proactive budget/cost management/reporting

• Documentation of project activities• Coordination of all related and

scheduled activities

33

Hyundai Motor America USA Corporate Headquarters - Project Value $345 million - Size 600,000 SF

The Hyundai Motor America is their USA Corporate Headquarters, designed byGensler & Associates. The project is LEED Gold Certified with a SustainableDesign implementation that consists of a six-story office building ofapproximately 600,000 SF, including an open/private office, conference, A/V,presentation rooms, marketing, retail, sales, computer, data, research lab, techcenter, fitness/health facility, a full cafeteria with a four-story multiple stairopen atrium, and a six-story structured parking to accommodate 2,100 parkingspaces.

The project was completed on an accelerated schedule to accommodateHMA’s request, which required our aggressive negotiations on pricing andscheduling with all consultants, vendors, engineers, and generalcontractor/subs to maintain the project schedule without compromisingquality and increasing costs. The other challenges included the inability of thecity of Fountain Valley to provide proper resources and time commitments toimplement a time sensitive EIR, CEQA, Permit/Plan check review process andapproval. To overcome this, we worked directly with Fountain Valley and theappropriate agencies to implement a program that would provide an out ofsequence process and overlap the entitlements with the permitting of theunderground infrastructure/structure and phase the permitting process toallow us to begin construction ahead of all the necessary approvals. We werealso able to utilize a process to occupy the building under a temporarycertificate of occupancy prior to the completion of all work, due to theschedule delays of the General Contractor, AMCO.

The other challenge we encountered was Hyundai Motor America had committed to use their own General Construction Company, AMCO, to build the project. TheAMCO team had virtually no experience on a project of this size or complexity, and had not completed a project in California. We provided a major leadership role notonly to manage the development, design, and construction of the project, but also overall expertise, knowledge, and insight to AMCO in order to complete the projectwithin a GMAX budget and schedule.

Case Study 10: Savings $82 million

Fountain Valley, CA

34

Teva Pharmaceuticals Manufacturing & Warehouse Facilities - 305,000 Sq. Ft.

“CoreStrategy presented and implemented astrategies plan encompassing multiple initiativesinvolving operations and corporate facilities thatincumbent service providers never considered and I'mconvinced could not have pulled off. The net resultsubstantially reduced facility related costs whileeliminating considerable risk to Teva Pharmaceuticals.Ken is a superior strategist, and top tier negotiatorwho produced results that other seasoned real estatebrokers could not. I highly recommend Ken Ward andhis team at CoreStrategy Corporation.”

Jeffrey Herzfeld, Senior Vice President & GeneralManager –TEVA PHARMACEUTICALS

Case Study 11: Savings and Cost Avoidance: $120 million

35

Savings of $15.6 millionSingle facility lease renegotiation

Savings of $8.6 millionSingle facility lease renegotiation

Savings of $9.7 million

Savings of $4.7 millionProfit of $13.9 million

$120 million in savings & cost avoidance (3 Operations / 9 Facilities)

Savings of 27% of total annual facility spend

Savings of $61 million over prior annual portfolio expense

$55 million increase in EBITDA over 15 yearsSingle Facility Result

Results Attained by Speaker

Savings of 22% of total annual facility spend

36

Jim LesleyCapital Markets –Ascendant

Tim MyllykangasWorkforce & Location Planning

Chuck SmithSustainability

Ken WardPresident | Managing PrincipalCorporate Facilities

Natalie Hedman Senior Director Credit / Finance Analytics

Joe Faulkner Strategic Planning & Implementation

Robert JesenskiSenior Director Portfolio Management

Roger O’NealExecutive VP | DevelopmentProject Management

Bill LazorStrategic Planning/Analytics

Dan FiskExecutive Vice PresidentGeneral Counsel

18201 Von Karman Suite #440 | Irvine, CA 92612949.484.7800 | www.corestrategy-corp.com