The Square at Broadway Place

Development Team

Michael CoonsMeghan McCoyGreg Rickman

Eduardo Roubik Rojas

December 5, 2011

Agenda

“We’ve owned the building for 100 years, we are just waiting for the market and the right partners.” – Marty Cepkauskas, Director of Real Estate at Hearst Corporation

I. Investment Thesis

II. Property Information

III. Market Analysis

IV. The Square at Broadway Place Program

V. Planning & Entitlements

VI. Financial Analysis

VII. Sales & Marketing

VIII. Conclusions

Investment Thesis

The Square capitalizes on trending revitalization… Extend the eastern boundary of up-and-coming, South Park,

by developing Broadway Place into a vibrant, walkable, mixed-use community

… while mitigating downside risks: Match current demand with Phase 1 now, then introduce

new product in Phases 2 & 3 as the market recovers

Repurpose existing structures and leverage Hearst’s special properties to save on land and loan costs

Property Information

Location

LA LIVE & STAPLES CENTER

SOUTH PARK

LITTLE TOKYO

FINANCIAL DISTRICT

CIVIC CENTER

BUNKER HILL

CHINATOWN

WESTLAKE

PICO - UNIONFASHION DISTRICT

The site is located ½ mile from the intersection of the 110 and I-10 freeways and six blocks from LA Live! in

the South Park neighborhood.


Site Layout

5

1

46

2

3

87

1.1101 South Hill Street (“Concrete Warehouse”)

• 88,510SF (27,530SF basement, 1st & 2nd floors, 5,920SF office mezzanine)

• Asking price: $8,500,000

2. 1108 South Hill Street (“Hill Street Site”)• 46,004SF

3. 1101 South Broadway (“Herald Examiner Site”)• Building Total 68,079SF (1st Floor: 28,176SF, 2nd Floor:

33,221SF, 3rd Floor: 5,258SF, 4th Floor: 1,424SF)

4. 120 West 12th Street (“12th Street Site”)• 44,547SF

5. 1108 South Broadway (“Surface Lot 1”)• 5,519SF• Asking price: $725,000

6. 1100 South Broadway (“Case Hotel”)• 107,200SF, 13-stories• Los Angeles Job Corps m-t-m lease• Asking price: $11,800,000

7. 1060 South Broadway (“Flatiron Building”)• 83,600SF, 10-stories• Asking price: $8,500,000

8. 1050 South Broadway (“Surface Lot 2”)• 1.08-acres• Asking price: Accepting offers

GLASS TOWER

SITE

CITY HOUSE & OLYMPIC

OLIVE STREET LOFTS

TRANSAMERICA LOFTS

INDIGO CONDOS

SOUTH PARK TOWERS

Property InformationPast & Current Planned

Projects

NEW YWCA CAMPUS

CLUB MAYAN

BELASCO THEATERAT&T

PARKING

AT&T PARKING

AT&T CENTER

AT&T PARKING

GRAND LOFTS

9th & MAIN


Current Neighboring Uses

Market & Site AnalysisEconomic Data & Trends - RETAIL

• 1560 buildings: 21,802,456 GLA.

• Vacancy: 4.4%

• 54,458 SF YTD net absorption

• 34,000 GLA delivered YTD

• Zero under construction

• Downtown cap rates single tenant: mid-6%

• National credit tenants mid/high 5%

Market & Site AnalysisEconomic Data & Trends - MULTIFAMILY

• Surging population and incomes

• Household deleveraging

• Vacancy declined 120bps year over year in 2011 to 4.4%

• Effective rents +0.4% YTD to $1,290 per month, reducing concessions to 13 days of free rent

• Cap rates in low to mid 6% range, larger buildings mid 5% range

Market & Site AnalysisEconomic Data & Trends - OFFICE

• 678 buildings: 9,392,040 RBA.

• Negative net absorption of (269,549SF)

• Zero new deliveries in 2011

• Class-A Cap rates = Low to high 6%

• Class B&C Cap rates = Mid 7%

Market & Site Analysis

Economic Data & Trends - HOTEL

• 77% increase in hotel investment year over year, RevPAR growth of 13%

• $500MM investment to date, strong international interest

• Major convention venue

• JW Marriott & Ritz Carlton fully absorbed in first year

• Average ADR gain 5.7% in 3rd quarter to $157

• Occupancy up 2.1% to high 60% from one year ago

Market & Site Analysis

Product Type Analysis

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 20303.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

Break Even Delivery Analysis for New Construction

Cap Rate MF Cap Rate Off Cap Rate Rt ROC MF ROC Off ROC Rt

Cap R

ate

s

Program

Phase I

• 28,000 ft2 retail• 38,000 ft2 flex office• On-line 2013

• 150 room boutique hotel • 4,000 ft2 restaurant• On-line 2013

• 8,400 ft2 ground-floor retail • 80 market-rate apartments• On-line 2013

Program

Phase II

• 16 floors • 340 market-rate units• 510-space subterranean garage• 33,000 ft2 ground-retail• 15,000 ft2 public plaza• Integration with retail at Hearst Examiner Building• On-line 2016

Program

Phase III

• 10-story mixed-use, set-back building• 120 market-rate units (avg. 1000 ft2)• 30,000 ft2 ground floor market• Amenity deck• On-line 2018

• 9-story mixed-use, courtyard building• 189 market-rate units• 20,000 ft2 ground floor gym• 25,000 ft2 ground floor retail• On-line 2018• 9-story mixed-use• 200 market-rate units• 20,000 ft2 pharmacy• 300-space parking structure• On-line 2018

Development Construction Hold Period

Program

Planning & Entitlements

Zoning & Density Parameters

ZONING• All Parcels Zoned: C2–4D–O

• R4 (multi-family) permitted• 6:1 FAR — permitted to 13:1 through TFAR

• Central City Parking District• 1.25 spaces/unit for residential• 1 space/1000 ft2

JURISDICTIONS• Central City Community Plan• Downtown Strategic Plan• Adaptive Reuse Ordinance

• Site Plan Review exemption• Greater Downtown Housing Incentive Area

• 5% low-income allowance + additional• Bonuses:

• +35% FAR• 1.0 parking space/unit

• Retail Streets — Broadway & 11th

• 75% of street wall accommodate retail• Downtown Design Guide

• “… create a garden city environment”

Financial AnalysisProduct Pricing

Financial AnalysisReturns

Sales & MarketingTarget Market

Ethnicity Breakdown of Downtown Los Angeles

53.3

17.7

19.6

6.5 1.71.2

Ethnicity

Caucasian (Non-Hispanic) Hispanic/Latino

Asian /Pacific Islander African American

Native American Other Group

**Downtown Residents are well educated, high-income, active and diverse individuals who seek additional amenities such as restaurants, personal services, cafes and fashion. **

Sales & Marketing Community-Serving Retail Services


Key Takeaways


Downtown/South Park revitalization (including the light rail) provides an emerging opportunity to develop Broadway Place for mixed use.

Market analysis prescribes a 3-phase development plan to satisfy current demand and to deliver product to match emerging future demand.

To further mitigate downside risk and costs, the development plan repurposes existing structures and leverages Hearst’s special properties.

Appendix

AppendixConstituent Matrix

AppendixLocal Market / Site Demand

Drivers

AppendixLocal Market / Site Demand

Drivers

AppendixOffice Lease Comparables

AppendixOffice Lease Comparables

AppendixOffice Sale Comparables

AppendixRetail Lease Comparables

AppendixMultifamily Sale

Comparables

AppendixFinancial Analysis – 1101 S. Hill St. “Concrete

Warehouse”

AppendixFinancial Analysis – 1108 S. Hill St. “Examiner Lot”

MARKET RATE

Retail efficiency is 95% because we adjusted elsewhere, net is 90%

AppendixFinancial Analysis – 1108 S. Hill St. “Examiner Lot” PARTIAL

AFFORDABLE

AppendixFinancial Analysis – 1101 S. Broadway “Herald

Examiner”

AppendixFinancial Analysis – 120 W. 12th St. “12th Street

Lot”

AppendixFinancial Analysis – 1100 S. Broadway “Case

Hotel”

AppendixFinancial Analysis – 1160 S. Broadway “Flatiron

Building”

AppendixFinancial Analysis – 1150 S. Broadway “Corner

Lot”