Proposal
from LaSalle, Casto, Arshot
Financial
Analysis
We believe in long-term ownership so we build for lasting value. Our financial strength is supported by our national reputations as real estate developers who have been in business for decades.
The
Foundation for Success
Campus Partners Objectives As we understand them, the objectives in this
endeavor include the following:
Qualitative returns to the neighborhoods and businesses in the area, the city and the University in the revitalization of a degenerating area; an enhanced image for the city, neighborhood and University; and an increase in services provided by the University.
- Long term control of land
- Preservation of principal
- A reasonable quantitative return on investment
LaSalle/Casto/Arshot is prepared to meet these key objectives by demonstrating the viability of the project through a realistic, yet exciting urban design and by bringing strong tenant interest (150,000 SF exists already) and a combined financial capability that is unequalled.
LaSalle/Casto/Arshot is prepared to enter into a ground lease that would provide a competitive and reasonable return. Depending on which of our two schemes is ultimately developed and how the perceived gaps as listed below are addressed, we would additionally be willing to provide participation by Campus Partners in the cash flows of the project. An additional structure that could be explored is one in which the land is contributed as equity in exchange for a partnership interest in the project and preferred return on the value of the land.
Perceived
Gaps/Key Financing Issues
LaSalle/Casto/Arshot has addressed each of the economic issues and the
identified sources and methods of funding in each applicable section of
this presentation. We list them here for further clarification. The developer
would seek assistance from Campus Partners in the assessment and procurement
of various sources of funding to meet these potential issues:
Parking would preferably be financed through Tax Incremental Financing (TIF), keeping the schools whole to the maximum extent possible. Preliminary conversations have been held with the City and preliminary numbers are being analyzed by the development team.
Potential grants or subsidies to existing businesses in the redevelopment area who fit within the merchandising plan and wish to remain in the redevelopment but need financial assistance to do so. - Funds for job and life skills training programs.
Affordable Housing stipends for programs for certain disenfranchised groups, such as unwed mothers, participants in the Lifeboat program, etc.
Tax abatement as applicable.
City Capital Improvement dollars for streetscape, utilities and roadwork.
Seeking Funding
From Outside Sources
The developer would also exhaust all of the organizations and strategies
listed in this presentation to meet these potential requirements. This
includes all public and private sources of funding.
Demonstrated Financial Capacity
LaSalle Partners
Founded in 1968, LaSalle Partners Incorporated (NYSE: LAP) completed its
initial public offering of approximately 28 percent of the Company's total
common stock in July of 1997. Of this amount, approximately 45% is held
by LaSalle employees.
In LaSalle's first year as a public company, its consolidated revenues were $224,773,000 and its consolidate net revenue, after interest, depreciation and taxes, was $25,840,000. Copies of LaSalle Partners' 1997 Annual Report are included with this proposal. Additional copies can be made available upon request.
LaSalle's financial results (unaudited) for the second quarter ended June 30, 1998 included net earnings of $7.3 million, or $0.45 per share on both a basic and diluted basis, on revenue of $74.2 million. This compared with net earnings of $6.9 million on revenue of $57.9 million in the second quarter of 1997. Revenue in the first six months of 1998 was $125.3 million compared with revenue of $89.6 million in the comparable 1997 period. Net earnings for six months year-to-date totaled $3.9 million, or $0.24 per share on both a basic and diluted basis, compared with $2.2 million in the first six months of 1997.
LaSalle Partners'
Access to Capital
LaSalle's superior access to capital exists by virtue of:
- LaSalle's size and the size of its internally generated annual revenues;
- LaSalle's long-track record of successful projects completed with land and vertical financial partners from a variety of different industries and financial industry segments;
- The fact that LaSalle itself manages over $15 billion in real estate investments for third-party investment clients; and
- The fact that LaSalle has its own real estate investment banking business unit, LaSalle Partners Investment Banking Group which excels at arranging real estate financing for real estate clients, including corporations, governmental entities and third-party developers (15 finance assignments totaling $1.3 billion in 1997).
- LaSalle develops projects both for its own account and for the account of its clients. When developing for LaSalle's own account, LaSalle Partners typically works in partnership with a major corporation or financial institution such as GE Capital, for example.
The Casto
Companies
The Casto Companies are privately held companies that hold
substantial real estate assets - locally, regionally and nationally. Our
organizations have a strong balance sheet and typically bring equity to
the projects they develop. We have an owner perspective about the projects
we develop. We have numerous, excellent, long-term relationships with
lender and equity partner sources. We build for lasting value and long-term
holding periods, and we manage our own properties with intense determination.
We will be happy to provide financial references as requested and further
information as appropriate.
Arshot Investment
Corporation
Arshot Investment Corporation is a privately held company which engages
in numerous real estate management, investment and development activities.
Arshot and its affiliates conduct a wide range of real estate activities
involving high-end commercial, residential and industrial developments,
primarily in Central Ohio. Arshot and affiliated entities own and manage
over 800,000 SF of industrial space, 600,000 SF of retail space and 800,000
SF of office space. The principals of Arshot Investment Corporation are
William J. Schottenstein and Thomas H. Schottenstein.
Arshot projects typically involve substantial equity investments which are made to establish and maintain long-term value. Arshot maintains excellent relationships with a number of equity investment and financing sources. Arshot would be glad to provide any financial references or appropriate additional information which may be requested.
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