In one week, my group (Nurulauni Saniman, Maike Zhang, Yuhua Zhou) and I analyzed an acquisition case and created a 15-minute investor presentation with a complicated Excel distribution waterfall. Presentation highlighted an analysis of linkages, market, sources and uses, financial returns, sensitivity analysis, and risk mitigation.

1. CONEJO POINT
Daniel Mandel, Nurulauni Saniman,
Maike Zhang, Yuhua Zhou

2. C O N E J O P O I N T
Vision & Investment Overview
Property Highlights:
• 13 acre parcel in California City with redevelopment
opportunity
• 40 miles northwest of Los Angeles in the Conejo
Valley
• Easy access to 101 Ventura Freeway
• 3 building R&D/office site with developable vacant
land
• Entitled for 255,715sqft of gross office/R&D

3. C O N E J O P O I N T
Vision & Investment Overview
Value Creation:
• Asset class with increasing demand, limited
supply, and land scarcity
• New development of a Class A office
• Remodeling of a R&D/office to Class B finish
• Reduce site vacancy

4. C O N E J O P O I N T
Vision & Investment Overview
Property Highlights:
• 13 acre parcel in California City with redevelopment
opportunity
• 40 miles northwest of Los Angeles in the Conejo
Valley
• Easy access to 101 Ventura Freeway
• 3 building R&D/office site with developable vacant
land
• Entitled for 255,715sqft of gross office/R&D

5. C O N E J O P O I N T
Location
Sensitivity Analysis
Site Proposal
Partner Proposal
Deal Structure
Conclusion

6. 47B
47C
47A
46
4647A
47B
Ventura
Expressway

7. Retail

8. Hotels

9. Restaurants

10. Leasing Demand Inventory
Tenant Type SQ FT
Tekelec R&D 25,000
Beckman R&D 4,000
American Clubs Office 19,000
RBC Dan Rausher R&D 5,000
United Government Services Office 65,000
Value Click R&D 35,000
Work Training Programs Office 10,000
Line 6 R&D 45,000
Heschel West R&D 147,000
Wachovia Securities Office 13,003
Smith Barney Office 10,000
City National Office 4,000
Liquid Entertainment R&D 9,000
In Three R&D 30,000
High Payment R&D 10,000
Trompeter Elect. R&D 10,000
First Franklin Office 12,000
Amgen R&D 88,000
Honeywell R&D 9,000
Dr. Gero Office 5,800
BAE Systems R&D 40,000
Ryland Hanes Office 40,003
Nomadix R&D 10,500
Cornerstone Properties Office 6,300
D.R. Hortai Office 15,000
County of LA Office 10,500
Fortune 100 Office 250,000
Griffin Properties Office 20,000
Troika R&D 14,000
THO Office 70,000
THO Office 30,000
WebOuest R&D 9,000
HMS Capital R&D 40,000
Progressive Insurance Office 12,000
Inventory
Type Total SF SF Rate FSG Availability Parking Class
R&D 90,878 13,000 $1.90 Now 33/1000 B
Office 339,629 18,931 $2.15 Now 4.5/1000 AB
Either 38,419 21,659 $2.10 Now 4/1000 AB
Either 97,000 48,622 $2.00 Now 4/1000 A
Office 37,813 15,000 $2.50 Now 4/1000 A
Office 63,000 63,000 TBD TBD 4/1000 A
Either 40,000 40,000 TBD TBD 4/1000 B
Either 40,000 40,000 TBD TBD 3/1000 B
Either 22,000 22,000 TBD TBD 3/1000 A
Either 60,000 60,000 TBD TBD 4/1000 AB
Office 30,000 30,000 TBD TBD 3/1000 B
Office 70,000 70,000 TBD TBD TBD A
Either 161,400 161,400 TBD TBD 4/1000 B
Supply Demand
Either 393,681 0
Office 196,931 592,606
R&D 13,000 530,500
Total 603,612 1,123,106
Market
Analysis

11. C O N E J O P O I N T
Location
Sensitivity Analysis
Site Proposal
Partner Proposal
Deal Structure
Conclusion

12. R&D & Office Portfolio Profile
• Purchase site for $19MM
• 4 parcels with 3 existing buildings, and 1 vacant parcel
• Building A: Class A, Office, Fully Leased
• Building B: Class B, R&D Office, Fully Leased
• Building C: Class C, Office, Vacant
• Parcel D: Vacant land entitled for 90,000 sqft development
• Allocated purchase price to each parcel based on proposed future use
• A: $4.97MM; B: $0; C: $7.68MM; D: $6.35MM
• Development of a Class A office on parcel D
• Remodelling of Building C to R&D/Office to Class B finish
• Operating cash flow and revision cash flow distributed as waterfall structure
D E V E L O P E R ’ S P R O P O S A L
IRR Equity Multiple
37.1% 3.29x
Badger Equity Fund, General Partner

13. Exisiting Improvements
Building Gross Sqft Finish
A 59,660 Two-story Class "A-" office
B 13,744 Single-story Class "B" R&D/office
C 92,311 Single-story Class "C" office
Total 165,715
Parcel Gross Sqft Entitlement
D 90,000
Proposed Improvements
Building Gross Sqft Finish
A 59,660 Two-story Class "A-" office
C 92,311 Single-story Class "B" R&D/office
D 76,278 Single-story Class "A" office
Total 228,249
Existing
and
Proposed
Site Plan

14. AC
B
D
Proposed Site
Design
Proposed Improvements
Building Gross Sqft Finish
A 59,660 Two-story Class "A-" office
C 92,311 Single-story Class "B" R&D/office
D 76,278 Single-story Class "A" office
Total 228,249

15. A
B
C D
Proposed Site
Design
Proposed Improvements
Building Gross Sqft Finish
A 59,660 Two-story Class "A-" office
C 92,311 Single-story Class "B" R&D/office
D 76,278 Single-story Class "A" office
Total 228,249

16. C
D
Proposed Site
Design
Proposed Improvements
Building Gross Sqft Finish
A 59,660 Two-story Class "A-" office
C 92,311 Single-story Class "B" R&D/office
D 76,278 Single-story Class "A" office
Total 228,249

17. Project Timeline
C O N E J O P O I N T
2004 20082004 2005 2006 2007 2008
Begin construction of Building D on Parcel D
1/1/2005
Construction of Building D Complete
1/1/2006
Build 120 new parking spots on parcel D
1/1/2006
Build 132 new parking spots
4/1/2006
Sign Purchase Contract
11/1/2004
Close on Site
12/31/2004
Building A&B 100% Occupied, Paying Full
Rent
4/1/2005
Building C 100% Occupied and paying rent
10/1/2005
Building B Lease Over, Demo Building
4/1/2006
Building D 100% Occupied and paying rent
7/1/2006
Sell
12/31/2008
1/1/2005 - 4/1/2005
Building A TI Build
out
1/1/2005 - 7/1/2005Pre-Lease and Rehab Building C
10/1/2005 - 4/1/2006Lease Building D
1/1/2005 - 1/1/2006Construction Building D

18. + THE CONEJO
Location
Sensitivity Analysis
Site Proposal
Partner Proposal
Deal Structure
Conclusion

19. 63%
ProjectF U N D I N G
Equity
Class A & Class B
Debt
37%
Sources of Capital & Total Project Returns
C O N E J O P O I N T
F U N D I N G
$12MM acquisition loan and
$16MM second mortgage

20. 85%
15%
Developer Equity
F U N D I N G
Class A & Class B
Sources of Capital & Total Project Returns
C O N E J O P O I N T
Equity
F U N D I N G
Fund Equity
24.3% IRR and 2.25x EM
78.0% IRR and 9.20x EM

21. Debt Financing
C O N E J O P O I N T
6.5%
5 year term
Non-Recourse
$12MM
Acquisition Loan
7% I/O
4 year term
15% LTC Recourse to
Developer
65%
LTC(w/o acquisition)
Second Mortgage

22. Use of Capital
Acquisition Price $19,000,000
Demo/Remediation $68,720
Site work $461,555
Hard Cost $8,188,955
Financing Costs Construction Loan $3,266,745
Financing Costs Acquisition Loan $3,784,207
Recourse Fee $294,485
Soft Cost $2,448,670
Tenant Improvements $3,820,642
Leasing Commission Renew $0
Leasing Commission New $1,780,787
New Parking Cost $252,000
Contingency $0
Developer Fee $674,508
Total $44,041,274
Sources
&
Uses
Sources of Capital % Cost Rate Ownership Total Cost
Second Mortgage 36% 7% $15,951,292
Acquisition Debt UW Credit Union 27% 6.5% $11,880,000
Classs A Equity 35.0% 95% $15,399,483
Class A Badger Fund 31.3% 85% $13,778,485
Class A Developer 3.7% 10% $1,620,998
Class B Developer 1.8% 5% $810,499
Total 100% 100% $44,041,274

23. C O N E J O P O I N T
Location
Sensitivity Analysis
Site Proposal
Partner Proposal
Deal Structure
Conclusion

24. Remaining
Equity Cash Flow Distributions (After Debt Service Paid)
C O N E J O P O I N T
Class A
Distribution
Class A
Distribution
Class B receives 0%
until Class A’s hurdle
is met
A- 12% Preferred C/C
100%
Class A
Distribution
Tier 1
This Split until A achieves 18% C/C
75%
Class B receives
25% until Class A’s
hurdle is met
Tier 2
Class B receives
additional 15%
thereafter
60%
Tier 3

25. Reversion Cash Flow Distributions
C O N E J O P O I N T
No Equity receives capital
until Debt Service Met
Debt Service
Tier 1
Class B receives 25% until
Class A’s hurdle is met
Return of all Capital
Tier 2
Class A Receives 60% while
Class B receives remaining
40%
Class A
Distribution
60%
Tier 3
Remaining

26. Cash Flow
Timing and
Break-
Even
Analysis

27. Equity Returns Breakdown by Parcel
C O N E J O P O I N T
Vacant Land used for parking Fund: 24.3% IRR and 2.25x EMC
D
C
A
B

28. C O N E J O P O I N T
Location
Sensitivity Analysis
Site Proposal
Partner Proposal
Deal Structure
Conclusion

30. C O N E J O P O I N T
Location
Sensitivity Analysis
Site Proposal
Partner Proposal
Deal Structure
Conclusion

31. Risk Mitigation
C O N E J O P O I N T
Process Risk Mitigation
Design Follow Comprehensive Plan
Cost Overruns Experienced Development Team
Debt Leverage Low 65% LTC second mortgage for construction costs
Many companies looking for space because area has comparatively affordable housing, skilled labor, higher quality of life
Area experiencing company growth but exisitng office space is limited in addition to land scarcity
Building A is fully leased and Building C will be rehabed and building D will be brand new
Great road access points and commutable proximity
Ample complementary on-site parking
Competitive advantage of great freeway visibility
Fully-leased Class A Office and rennovated Class B R&D/Office with excellent long term linkages
Land locked desirable area experiencing company growth with limited supply of alternative office space
Exit Strategy Cap Rate
Development
Stabilization
Absorption
Competitors

32. Vision
Market Analysis
Site Proposal
Timeline
Sources of
Capital
Equity Cash Flow
Distribution
Equity Returns
Sensitivity
Analysis
Risk Mitigation
C O N E J O P O I N T
Questions?

33. INVEST
WITH US

34. Land Utilization
Cost efficient to rehab building C and demo building B
To build a new class A office building on parcel D
𝐹𝐴 + 𝐹𝐶 + 𝐹 𝐷 + 𝑂 + 𝑃 = 13 𝑎𝑐𝑟𝑒𝑠
𝐺 𝐷 = 2 ∗ 𝐹 𝐷
59,660/2 + 92,311 + 𝐹 𝐷 + 40,000 + 4*400*(2*𝐹 𝐷 + 59,660 + 92,311)/1,000 = 13*43,560
29,830 + 132,311 + 𝐹 𝐷 + 1,600/1,000*(2*𝐹 𝐷 + 151,971) = 566,280
𝐹 𝐷 + 1.6*(2 ∗ 𝐹 𝐷 + 151,971)= 404,139
𝐹 𝐷 + 3.2*𝐹 𝐷 + 243,153.6= 404,139
4.2*𝐹 𝐷 = 160,985.4
𝐹 𝐷 = 38,329
Check for whole parking spots:
P=4 *(2*38,329 + 59,660 + 92,311)/1,000
P= 914.5

35. Want whole parking so P= 915 so work backwards to get new 𝐹 𝐷
59,660/2 + 92,311 + 𝐹 𝐷 + 40,000 + 400*(915) = 13*43,560
29,830 + 132,311 + 𝐹 𝐷 + 366,000 = 566,280
𝐹 𝐷 + 528,141 = 566,280
𝐹 𝐷 = 38,139
𝑮 𝑫 = 76,278
Check within Maximum Building Entitlement:
𝐺 𝐴 + 𝐺 𝐵 + 𝐺 𝐶 + 𝐺 𝐷 = 59,660 + 13,744 + 92,311 + 90,000 = 255,715
Proposal: 𝐺 𝐴 + 𝐺 𝐶 + 𝐺 𝐷 = 59,660 + 92,311 + 76,278 = 228,249 (less than max building entitlement so ok)
Check Answer:
59,660/2 + 92,311 + 38,139 + 40,000 + 4*400*(2*38,139 + 59,660 + 92,311)/1,000 = 565,478.4 (less than
566,280 so ok)
Current parcel has 663 spots
So need 915-663= 252 new parking spots

36. Leasing Comparables
Tenant Date Type Size (sf) Load Term (mos) FSG Rate TI $
WebQuest 7/14/2004 Office 9,000 15.0% 60 $2.09 $29
Wells Fargo Bank 4/14/2004 Office 8,176 12.0% 84 $2.33 $36
Employers Direct 3/9/2004 Office 32,065 13.5% 63 $1.66 $5
Massachusetts Life Insurance 12/5/2003 Office 8,413 13.5% 87 $2.10 $30
Bank of America 10/11/2003 Office 8,171 12.6% 60 $2.39 $35
Kennedy Western University 10/5/2003 Office 34,191 9.5% 88 $2.13 $32
The Medwell Group 9/25/2003 Office 6,616 17.7% 36 $1.70 $10
Aetna Life Insurance 9/23/2003 Office 34,331 6.03% 84 $2.29 $34
INQ Inc. 5/12/2004 R&D 18,556 12.0% 67 $2.02 $24
Jettis 3/10/2004 R&D 12,414 15.0% 64 $1.85 $22
i-Homeowners, Inc. 2/13/2004 R&D 14,758 0.0% 120 $2.07 $26
Broadspire (Kemper) 1/1/2004 R&D 30,000 15.0% 60 $1.83 $18
Main Street Alliance 12/20/2003 R&D 8,028 13.5% 67 $1.79 $21
A.G. Edwards 11/11/2003 R&D 5,191 12.0% 60 $2.05 $22
Call Source Inc. 11/5/2003 R&D 9,970 10.0% 63 $1.86 $17
Key Health Management 9/1/2003 R&D 9,086 12.1% 64 $1.96 $26
Office Size (sf) Load Term (mos) FSG Rate TI $
High 34,331 17.7% 88 $2.39 $36
Median 8,707 13.1% 74 $2.12 $31
Low 6,616 6.0% 36 $1.66 $5
Mean 17,620 12.5% 70 $2.09 $26
R&D Size (sf) Load Term (mos) FSG Rate TI $
High 30,000 15.0% 120 $2.07 $26
Median 11,192 12.1% 64 $1.91 $22
Low 5,191 0.0% 60 $1.79 $17
Mean 13,500 11.2% 71 $1.93 $22

37. Operation
Owners CF % CF CUM Ret CF % CF CUM Ret CF % CF CUM Ret CF % CF CUM Ret
Acquisition Loan $12,000,000 $910,178 44% 7.6% $0.00 0% 7.6% $0.00 0% 7.6% $0.00 0% 7.6%
Secondary Mortgage $16,276,828 $1,139,378 56% 7.0% $0.00 0% 7.0% $0.00 0% 7.0% $0.00 0%
Class A $15,399,483 95% $0 0% 0.0% $1,847,938 100% 12.0% $923,969 75% 18.0% 60% 18.0%
Class B $810,499 5% $0 0% 0.0% $0.00 0% 0.0% $307,990 25% 38.0% $0.00 40% 38.0%
$2,049,556 $1,847,938 $1,231,959 $0.00
Total $2,049,556 $3,897,494 $5,129,453 $5,129,453
$1,231,958.67
0 $2,049,555.93
$2,049,555.93 $3,897,493.94
$3,897,493.94 $5,129,452.62
$5,129,452.62 infinity
Operation NOI -->
CF % CF ANN Ret CF % CF ANN Ret CF % CF ANN Ret CF % CF ANN Ret CF % CF ANN Ret EM IRR Year 0 Year 1 Year 2 Year 3 Year 4
Acquisition Loan $12,000,000 0 $910,178 53% 7.6% $910,178 17% 7.6% $910,178 16% 7.6% $910,178 15% 7.6% $11,407,149 16% 100.0% 1.25 6.5% ($12,000,000) $910,178 $910,178 $910,178 $12,317,327
Secondary Mortgage $16,276,828 0 $793,126 47% 4.9% $1,508,137 29% 9.3% $1,139,378 20% 7.0% $1,139,378 19% 7.0% $16,276,828 23% 100.0% 1.28 7.0% ($16,276,828) $793,126 $1,508,137 $1,139,378 $17,416,206
Class A $15,399,483 0.95 $0 0% 0.0% $2,466,059 47% 16.0% $3,161,380 55% 20.5% $3,265,395 55% 21.2% $25,758,961 36% 167.3% 2.25 24.3% ($15,399,483) $0 $2,466,059 $3,161,380 $29,024,356
Class B $810,499 0.05 $0 0% 0.0% $349,930 7% 43.2% $567,638 10% 70.0% $636,981 11% 78.6% $17,172,641 24% 2118.8% 23.11 125.2% ($810,499) $0 $349,930 $567,638 $17,809,622
$1,703,304 $5,234,303 $5,778,575 $5,951,932 $70,615,579
$0 $649,122 $822,479
$104,851
$42,931,602
Reversion per Building
Building A 59660 0.261381 $11,221,514.05
Building B 0 0 $0.00
Building C 92311 0.404431 $17,362,876.02
Building D 76,278 0.334188 $14,347,211.68
1st rule 2nd rule 3rd rule 4th rule
Debt Service 12% 18%
$70,615,578.72
End 4th Year Reversion1st Year Operation 2nd Year Operation 3rd Year Operation
$1,703,304 $5,234,303 $5,778,575
4th Year Operation
$5,951,932

38. Total Equity Return (16,209,983) - 2,815,989 3,729,019 46,833,978 37.1% 3.29x
Fund (13,778,485) - 2,206,474 2,828,603 25,969,160 24.3% 2.25x
Developer (2,431,497) - 609,515 900,415 20,864,817 78.0% 9.20x
Building
Equity Return Breakdown per Building #NUM! EM
Building A $4,966,243 26.1% (4,236,985) - 736,047 974,695 12,241,522 37.1% 3.29x
Fund (3,601,437) - 576,731 739,344 6,787,851 24.3% 2.25x
Developer (635,548) - 159,316 235,352 5,453,671 78.0% 9.20x- #NUM!
Building B $0 0.0% - -
Fund - -
Developer - -- #NUM!
Building C $7,684,191 40.4% (6,555,821) - 1,138,874 1,508,131 18,941,118 37.1% 3.29x
Fund (5,572,448) - 892,367 1,143,975 10,502,737 24.3% 2.25x
Developer (983,373) - 246,507 364,156 8,438,382 78.0% 9.20x- #NUM!
Building D $6,349,566 33.4% (5,417,176) - 941,069 1,246,192 15,651,338 37.1% 3.29x
Fund (4,604,600) - 737,376 945,284 8,678,573 24.3% 2.25x
Developer (812,576) - 203,692 300,908 6,972,765 78.0% 9.20x

39. Income Statement
Occupancy Projections
Building A 75% 100% 100% 100% 100%
Building B 75% 25% 0% 0% 0%
Building C 25% 100% 100% 100% 100%
Building D 0% 79% 100% 100% 100%
Rent Projections
Building A 3.0% $25.20 $25.96 $26.73 $27.54 $28.36
Building B 3.0% $20.40 $21.01 $21.64 $22.29 $22.96
Building C 3.0% $22.92 $23.61 $24.32 $25.05 $25.80
Building D 3.0% $28.68 $29.54 $30.43 $31.34 $32.28
Effective Gross Rent 0.85
Building A 1,127,574 1,548,535 1,594,991 1,642,841 1,692,126
Building B 210,283 72,197 - - -
Building C 528,942 2,179,241 2,244,618 2,311,957 2,381,316
Building D - 1,791,300 2,320,881 2,390,508 2,462,223
Total Effective Gross Rent 1,866,799 5,591,274 6,160,491 6,345,305 6,535,664
Growth

40. Expense Metrics (Property Mgmt, Tax, Insurance)Units Start Value
Building A $/gross sqft 0.6 0.60 0.62 0.64 0.66 0.68
Building B $/gross sqft 0.5 0.50 0.52 0.53 0.55 0.56
Building C $/gross sqft 0.5 0.50 0.52 0.53 0.55 0.56
Building D $/gross sqft 0.6 0.60 0.62 0.64 0.66 0.68
Asset Management Fee % of EGI 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Building Cap-ex Reserves % of EGI 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Operating Expense Summary
Building A 35,796 36,870 37,976 39,115 40,289
Building B 6,872 1,770 - - -
Building C 46,156 47,540 48,966 50,435 51,948
Building D - 47,140 48,554 50,011 51,511
Asset Management Fee 18,668 55,913 61,605 63,453 65,357
Building Cap-ex Reserves 56,004 167,738 184,815 190,359 196,070
Total Operating Expenses 163,495 356,970 381,916 393,373 405,175
% of EGI 9% 6% 6% 6% 6%
NET OPERATING INCOME after reserves 1,703,304 5,234,303 5,778,575 5,951,932 6,130,490

41. Operations and Reversion Waterfall $1,750,678 0.85 0.62
Return to Class A
Second Mortgage $793,126 $1,508,137 $1,139,378 $17,416,206
Acquisition Debt UW Credit Union $910,178 $910,178 $910,178 $12,317,327
Classs A Equity $0 $2,466,059 $3,161,380 $29,024,356
Class B Developer $0 $349,930 $567,638 $17,809,622
Total (44,041,274) 1,703,304 5,234,303 5,778,575 76,567,511

42. Parking Summary Housing Hotel Total
Existing Parking 663
New Parking 252
Total 0 0 915

43. Investor Downside Case Base Case Upside Case
5% over budget on-budget 5% below budget
Fund 20.7% 24.3% 27.5%
Developer 71.8% 78.0% 83.6%
Investor Downside Case Base Case Upside Case
90% Occupancy 95% Occupancy 100% Occupancy
Fund 22.2% 24.3% 26.3%
Developer 74.6% 78.0% 81.2%
Investor Downside Case Base Case Upside Case
8.5% terminal cap rate 8% terminal cap rate 7.5% terminal cap rate
Fund 21.9% 24.3% 26.8%
Developer 74.1% 78.0% 82.0%
Investor Downside Case Base Case Upside Case
7.5% Interest Rate 7% Interest Rate 6.5% Interest Rate
Fund 24.0% 24.3% 24.6%
Developer 77.4% 78.0% 78.5%

44. Year Fund Cash Flow
Developer Cash
Flow
Equity
Investor Developer
Initial Investment -13778485 -2431497 (13,778,485)$ (2,431,497)$
2005 0 0 (13,778,485)$ (2,431,497)$
2006 2206474 609515 (11,572,011)$ (1,821,982)$
2007 2828603 900415 (8,743,408)$ (921,567)$
2008 25969160 20864817 17,225,752$ 19,943,250$