ADDITIONAL SUPPORTING DOCUMENT

Transcription

1 eoa4, e&1k eomau44at 4 6a ew4 144eeae P. 0. Vox55MOQ 4a teqad. n (604 (702) (702) ,444e4e44 u4 ee a ADDITIONAL SUPPORTING DOCUMENT THE ATTACHED DOCUMENT DESCRIBED AS Hard Copies of Slides Entitled "Ground Lease Portfolio Assessment" (11 pages) WAS SUBMITFED DURING THE BOARD OF COUNTY COMMISSIONERS MEETING UELD ON APRIL 15, 2014 UNDER AGENDA ITEM NO.55 BY JAY BARRETT AND IS BEING ADDED TO THE RECORD PURSUANT TO NRS 241 Wocud 4 eooct, eoaa - aad 4 E9aatcatis e e, 4e0o'r ad - 3(44 wcty 'cc4wcta Dcaaat &crd 4 7,aaa - at4 4at4 Vde znaqencc.t 9,Offi$c(44W4 loata V4m4e &oatd 4 Ttaacca - 'a4eat Cotta T4.d4 road 4 7uøeea

2 I 4- Ground Lease Portfolio Assessment a substantive.busines review of select Clark County real property assets Presentation to Clark County Board of County Commissioners April 15, 2014 The JABarrett Company Intelligently Forward. Faster.

3 IN Introduction and Background Today, 2014 Assessment Objectives The Portfolio Valuation Assessment Findings Assessment Recommendations April 15,2014 The JABarrett Company Ground Lease Portfolio Assessment 2

4 General overview and context CMA program has yielded Clark County many benefits Recent direct and global issues are impacting Po rtfo I i o April 15,2014 The JABarrett Company Ground Lease Portfolio Assessment 91

5 Jan. 1, 2014, the Portfolio includes 1,084 acres: 645 acres under lease 439 acres subject to option agreements for another 7 years. CMA objectives complete and markets returning, leading to Clark County evaluating its continuing need and capacity to best manage the Portfolio E:j An Independent Assessment initiated in September 2013 April The JABarrett Company Ground Lease Portfolio Assessment 4

6 Review the financial and contractual status of the Po rtfo l i o. Evaluate the potential value of the Portfolio. Provide insight and recommendations on enhancing the Portfolio's value and monetizing it. Identify opportunities to increase efñciency in managing the Portfolio. April 15,2014 The JABarrett Company Ground Lease Portfolio Assessment 5

7 Beltway Business Park, LLC Blue Valley Ill, LLC Pacifica Blue Diamond, LLC Rainbow Beltway, LLC WH Properties, LLC (Spring Valley Med) Durango Warm Springs, [[C EJM Spencer Helm Property, LLC Majestic Runway Partners V, LLC VRE Las Vegas, LLC io. Sunset Business Park, LLC The Strip, LLC TOTAL April 15,2014 The JABarrett Company Ground Lease Portfolio Assessment 6

8 April 15,2014 The JABarrett Company Ground Lease Portfoho Assessment

9 The Indication of Value for the Portfolio focuses on four () primary elements: The projected income of existing leases. The residual value of the leased land at the termination of the leases The projected income, or residual value from the 439 acres which are optioned. The unique terms of the participatory leases. Additional consideration was given to: Unlike fixed ground leases with a predictable income stream, the valuation of participatory leases is subject to several variables requiring subjective estimates. The Portfolio contains several leases achieving positive cash flow alter debt service, but not yet paying land rent due to Companies' equity balance payments. There are three (3) lease option agreements, covering 439 acres, which have 7 years before they expire. April 15, 2014 The JABarrett Company Ground Lease Portfolio Assessment

10 Indication of Value SummaryTable Projected Residual Residual Income of Value of Value of Existing Lease Option Existing Leases Existing Leases Agreements $67,584,468 $24,060,442 $82,772,207 $174,417,117 ONE SHOULD NOT USE THESE CALCULATIONS AS ABSOLUTE -THEY REPRESENT AVERY SMALL PART OFTHE RANGE OF VALUES DEPENDING ON VERY DIFFERENTASSUMPTIONS. The Indication of Value computation illustrates the significant value of the Portfolio, and the complex components which make up the total asset. This approach is distinct from a professional appraisal, in that it does not include market factors, comparable property information, etc. Instead, traditional mathematical valuation formulas are applied to show the direction and magnitude of the value. Importantly, the calculation does not reflect the very real opportunity of enhancing the Portfolio's value and returns through strategies such as exercising existing lease option agreements or creating related future income streams. April 15,2014 The iabarrett Company Ground Lease Portfolio Assessment

11 Agreements were successful Participatory leases lead to benefits, and challenging complexity Significant administration and expertise required in managing Portfolio Real estate development management not within county's core competencies Option land acreage remaining April 25,2024 The iabarrett Company Ground Lease Portfolio Assessment 10

12 Based on our Independent Assessment and the status of the participatory leases and option acireements, we recommend Clark County proceed with a Monetization Procjram to sell on a calculated basis all the components of the Portfolio. As iiitial steps of the Monetization Program, we recommend the following actions take place to increase the universe of buyers and j..the value of the leases and options. Discuss with selected Companies modification of terms and conditions in the interest of both parties. Discuss with selected Companies terms and conditions of their equity balances, in the interest of accelerating rent payment. Discuss with selected Companies holding lease options the likelihood and timing of exercising the options and the possibility of accelerating or terminating the options. Discuss with selected Companies their interest in a combined effort to sell their development along with the County land. Consider converting the participatory provisions to traditional ground leases, with fixed payments having annual increases. Continue dialogue with Companies regarding current operations, long term planning and future development. Consider sale of the reversionary interest and retain the future land payments. County to continue its current practice of advising the BLM of the status of Portfolio activity and plans. April 15,2014 The JABarrett Company Ground Lease Portfolio Assessment ii