Report on LMCDC/Haymarket/HSC

U of L FoundationBoard of Directors

March 20, 2007

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LMCDC - Background

Founded 1997 Jewish Hospital Healthcare

Service, Inc. (now JHSMHC) Norton Healthcare, Inc. University of Louisville

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LMCDC - Evolution

Coordination Real Estate Economic Development 2004

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LMCDC - Future

Vision 2004 Strategic Plan

To make the Louisville Medical Center the next significant biomedical commercialization center in the United States

Identified critical success factors

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LMCDC

Drivers of Success for 2004 LMCDC Strategic Vision

Build Translational Research

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Increase federal research funding to more than $40 million annually and increase total sponsored funding to $80 million per year

Federal research funding rose from $14.8 million in fiscal 1999 to $74.5 million in 2006

Total funding rose from $21 million in fiscal 1998 to $178 million in 2006

Fastest growth among research universities, according to NIH – 270% increase as of 2004

Increased patents/licenses/startups Aptamera/IACT/Owensboro

U of L Challenge for Excellence Goals for 2008

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LMCDC

Other Drivers of Success for 2004 LMCDC Strategic Vision

Health Science Seed Fund - ULF Health Science Venture Fund - ULF Develop Haymarket as Health

Science Park

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So, Brief HistoryHaymarket

Purchased by LMCDC for $4.9MM, $4.4MM mortgage with Thomas family, $500k grant from Rep. Northup

Selected Wexford as Developer – 2005 Visit to other Wexford Parks – 2005 Began discussions on master lease

with LMCDC Partners – 2005 Meeting of Partners – 2006 U of L Due Diligence - 2006

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U of L Due Diligence

Discussion of possible tenants Discussions with state Discussions with Wexford Review of options for U of L role

(4) Decision: U of L lead role

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Given this Decision More Due Diligence

Develop Pro Formas Need for efficiencies

Continued discussions State/City Lead Tenant JG Brown Foundation Partners – Lead role of U of L

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Next Steps Reorganization agreement partners Finalize negotiations

State Lead Tenant Wexford

U of L Foundation approval – March 20

Groundbreaking – April Opening – Fall 2008

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Implications

U of L responsible Operations Assets/Liabilities Development of property

Maintain Board/Officers of Board – Mayor as Chair

Implement NUCLEUS – Bill Street Branding effort

Reignite effort to attract new stakeholders – Ed Glasscock

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Basic Financials

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LMCDCAssets

Real Estate 10,550$ Equity 208 Other 404

Total 11,162$ Liabilities

Debt Haymarket 4,400$ Debt Bank 4,470 Other 288

Total 9,158$ Net Worth 2,004$

(In Thousands)

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FY07 (4 mo) FY08 FY09 FY10 FY 11 Total

Notes Receivable 100 0 500 0 0 600Land Lease - Advance 1,550 0 0 0 2,100 3,650State Grants 0 0 0 0 0 0Federal Grants 0 425 0 0 0 425Notes Payable (Principal Payments) (1,700) (425) (1,491) 0 (5,254) (8,870)Professional Fees (25) (75) (77) (80) (82) (339)

Total (75) (75) (1,068) (80) (3,236) (4,534)

( In Thousands)

Cash Basis

Real Estate Projections

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Real Estate Projections( In Thousands)

Long-Term Financing

FY07 (4 mo) FY08 FY09 FY10 FY 11 Total

Notes Receivable 100 0 500 0 0 600Land Lease - Advance 1,550 0 0 0 2,100 3,650Bond Proceeds 8,870 0 0 0 0 8,870Federal Grants 0 425 0 0 0 425Notes Payable (Principal Payments) (8,870) 0 0 0 0 (8,870)Professional Fees (25) (75) (77) (80) (82) (339)

Total 1,625 350 423 (80) 2,018 4,336

Note: Has effect on LMCDC operations for 20 years.

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( In Thousands)

ULF Loan Financing

FY07 (4 mo) FY08 FY09 FY10 FY 11 Total

Notes Receivable 100 0 500 0 0 600Land Lease - Advance 1,550 0 0 0 2,100 3,650Loan Proceeds 8,870 0 0 0 0 8,870Federal Grants 0 425 0 0 0 425Notes Payable (Principal Payments) (8,870) 0 0 0 0 (8,870)Professional Fees (25) (75) (77) (80) (82) (339)

Total 1,625 350 423 (80) 2,018 4,336

Real Estate Projections

Note: Has effect on LMCDC operations for 20 years.

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Financial OperatingProjections

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Operating Projections( In Thousands)

Cash BasisFY07 (4 mo) FY08 FY09 FY10 FY11 Total

RevenuePartner Contributions - Operations 293 730 380 380 380 2,163Interest Income 14 41 40 0 0 94Rental Income 252 585 601 584 594 2,616Miscellaneous Income 42 126 2 0 0 170

Total Operating Revenue 600 1,482 1,024 964 974 5,044

ExpenseSalaries, Wages and Benefits 137 116 121 125 129 628Operating Expenses 152 440 453 384 395 1,823Interest - Notes and Lines of Credit 143 428 402 315 315 1,602Miscellaneous 98 293 302 311 321 1,325Forgiveness of Indebtedness - MC2 50 0 0 0 0 50Operational Consolidation Savings (68) (205) (205) (205) (205) (890)

Total Operating Expense 511 1,072 1,072 929 954 4,539

Total - Operating Activities 89 410 (48) 35 20 505

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( In Thousands)

Long-Term Financing

Operating Projections

FY07 (4 mo) FY08 FY09 FY10 FY11 TotalRevenue

Partner Contributions - Operations 293 730 380 380 380 2,163Interest Income 14 41 40 0 0 94Rental Income 252 585 601 584 594 2,616Miscellaneous Income 42 126 2 0 0 170

Total Operating Revenue 600 1,482 1,024 964 974 5,044

ExpenseSalaries, Wages and Benefits 137 116 121 125 129 628Operating Expenses 152 440 453 384 395 1,823Interest - Notes and Lines of Credit 143 0 0 0 0 143Bond Payment - 20 yr @ 4.75% 0 955 716 716 716 3,102Miscellaneous 98 293 302 311 321 1,325Forgiveness of Indebtedness - MC2 50 0 0 0 0 50Operational Consolidation Savings (68) (205) (205) (205) (205) (890)

Total Operating Expense 511 1,599 1,386 1,330 1,355 6,181

Total - Operating Activities 89 (117) (362) (366) (381) (1,137)

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( In Thousands)

ULF Loan Financing

Operating Projections

FY07 (4 mo) FY08 FY09 FY10 FY11 TotalRevenue

Partner Contributions - Operations 293 730 380 380 380 2,163Interest Income 14 41 40 0 0 94Rental Income 252 585 601 584 594 2,616Miscellaneous Income 42 126 2 0 0 170

Total Operating Revenue 600 1,482 1,024 964 974 5,044

ExpenseSalaries, Wages and Benefits 137 116 121 125 129 628Operating Expenses 152 440 453 384 395 1,823Interest - Notes and Lines of Credit 143 0 0 0 0 143Loan Interest - 20 yr @ 4.75% 0 421 421 421 421 1,685Miscellaneous 98 293 302 311 321 1,325Forgiveness of Indebtedness - MC2 50 0 0 0 0 50Operational Consolidation Savings (68) (205) (205) (205) (205) (890)

Total Operating Expense 511 1,065 1,091 1,036 1,061 4,765

Total - Operating Activities 89 416 (68) (71) (87) 280

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Impact ofTenant Decision

Ten Year HorizonFY07-FY16(In Thousands)

UofL HSC Unit TenantsLMCDC Anchor Tenant Lease Guarantees to Wexford 5,049

Less: Relocation of MedCen 1 HSC Tenants (4,316)MedCen 1 Lease Termination Fee 200

Total Additional UofL Expense 933

TenantLMCDC Anchor Tenant Lease Guarantees to Wexford 5,049

Less: Tenant Payments (5,049)MedCen 1 Lease Termination Fee 50

Total Additional UofL Expense 50

Net Positive Impact of Lead Tenancy 883

HSC Master Plan