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Development Description

Background Overview

After talking with many owners, property managers and agents, the Greater Orlando market has demonstrated that the demand for office/warehouse, office/showroom and service center space for the trades and skilled small business is very tight with little or no vacancy. A recent study of leasing activity concluded, "The typical 1,000 SF to 2,000 SF spaces in this market continue to be very difficult to find. Rates in those spaces are advancing steadily -- $.50 psf per quarter, and expansion opportunities are very difficult to find. There are many small tenant prospects that cannot find space in the 1,500 to 2,500 SF range." The survey goes on to say:

• expansion is very difficult if not impossible in many centers
• rates are increasing and tenants have very little negotiating room
• choice of location is very limited
• tenants having to lease for longer periods (5 years) to secure space
• spaces 1,000 SF - 3,000 SF are most difficult to find
• landlords are not willing to make major changes -- tenants must take space "as-is"

The Greater Orlando market can absorb over one million square feet of office/warehouse and office/showroom development. Several qualified sites have been identified, skilled contractors have been recognized and respective construction lenders have been acknowledged.

Collateral Description

The purpose of this development is to build an office/showroom and service center for the trades and skilled small business. This facility will offer affordable space, serve as a business incubator and provide employment opportunities. This is a speculative building and the type and activity of the tenants will include light manufacturing, warehousing, wholesaling, storage, assembly, and distribution of goods.

The improvements will be built in one phase. The ground level improvement will be a split face concrete block exterior wall with a pre-engineered metal roof. The roof will be a standing seam metal roof with a 3 on 12-pitch and 4' front overhang and soffit. The eve height is 16' and the ridge is 22'. The interior walls are (1-hour) drywall. The electric service will be individually metered and the water will be master metered. Three-phase power will be available.

The development will have three buildings containing a total of 37,500 square feet. The 25 individual bays range in size from 1,500 to 4,500 square feet. The building is single side loaded and the exterior signage will be uniform and aesthetically controlled. The zoning allows for a 35% FAR but the Borrower has elected a 27% FAR in order to increase parking.

Fire sprinkler installation is not required as indicated by the Fire Marshall because the roof material is non flammable.

Every attempt will be made to maximize the buildable square feet while at the same time providing an aesthetically pleasing development that meets the municipality requirements.

Tenant Mix

Developments of this type have attracted a wide variety of professions, occupations and vocations. Business avoided include (1) automotive related (excluding after market accessories), (2) tenants that use toxins, pollutants or contaminants, (3) crafts that create dust (4) businesses that make noise or (4) use machines that viberate.

Risk

There are two risks to consider: construction and market. The construction risk is minimized because of the simplicity of construction, selection of an experienced contractor and use of concrete block walls and pre-engineered roof system. The market risk can be measured. A comparable office/warehouse was recently completely leased at market rates and terms within 140 days of completion. The market is strong.

Feasibility/Marketability

Recently Business Week reported that the U.S. Census Bureau published a study called the County Business Patterns. This study looks at the number of employees per establishment. Based on the data, about 54% of U.S. workplaces have fewer than five employees. According to the Seminole County Chamber of Commerce, 90% of the businesses in Seminole County are classified as small business.

Following is an example of what is presently occurring in the office/warehouse market:

• John Wilson, recently completed The Wilson Commerce Center. This development is a 23,400 square foot office/warehouse located in Casselberry. The Wilson development was 100% leased when it was 140 days old and the contact rent and effective rents were at pro forma. None of the tenants received free rent.

• Mack Plumbing Systems built an office/warehouse behind Courtesy Pontiac in Longwood. They leased eight of the 11 units in two months.

• Longwood Point is an office/warehouse located in Longwood on Wilma Street that contains 7,230 square feet. This building leased up in 57 days.

• Based comparable developments and current experience, we anticipate that American Commerce Center will lease up in 180 days.

Competition and Comparables

There is very little competition in comparison to the demand. I have spoken to over 100 owners, tenants, lenders, brokers and investors in order to establish market rates. Following is a sample of current office/warehouse rents:

Legal Description

A legal description will be obtained from the survey.

Land Use And Zoning

The site of the proposed American Commerce Center is located in Seminole County. The site is vacant and the present Comprehensive Land Use Plan and zoning classification permit the development as proposed and described in this Executive Summary.

Services

The municipal utilities, including water and wastewater are provided by a municipality. The municipality has stated that the site has access to a gravity fed manhole. No allowance has been made for a lift station.

Contractor

There are many qualified and available general contractors. Once the land is under contract the Developer will select three contractors to submit bids for the complete turnkey construction. The specific contractor will be selected prior to the closing of the construction loan.

• Construction Budget
• Rent Roll
• Income and Expenses
• Cash Flow Analysis

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