EFTA00757651.pdf

From: To: "Jeffrey Epstein" <jeevacation@gmail.com>, "David Stem" al===> Subject: Fw: Standard Chartered Bank Pre Lease Development Opportunity, Burj Downtown Date: Mon, 16 Aug 2010 14:36:54 +0000 Dubai David J. Mitchell Mitchell Holdings LLC 41 East 60th Street, 6th Floor New York, NY 10022 Phone: 212-486-4444 Fax: 212-588-0286 Sent via BlacicBerty from T-Mobile From: "Ken R." <M > Date: Mon, 16 Au 2010 17:07:18 +0400 To: Subject: Standard Chartered Bank Pm Lease Development Opportunity, Burj Downtown David, I hope this finds you well. I know you guys are not fully operational given seasonal matters but this deal has just come across and is entirely 'off market' and strictly confidential. It will tick all of your investment criteria if you guys are actually serious about entering the market. Location plans and the rest are being drawn up but wanted to get this out given the time constraints. Pease find below the basic summary of the Standard Chartered Bank Pre Lease, adjoining Emaar Square, Bud Downtown. There is a large scope of investors, from both regional and international Banks, Pension and Sovereign Funds, real estate Funds, private wealth, etc looking at this deal. One or two offers have been submitted already however the offers were not from entitles that were approved of. Please find below transaction framework as discussed - Project Overview The project is an international Grade A specification office building on a super prime site at Emaar Square in Dubai. The development will be anchored through a pre letting to Standard Chartered Bank for alteast 62% (128,000sqfd of the net office area. They will house their entire Dubai Consumer and Wholesale EFTA00757651 division in this building. Current SCB projections indicate that they will actually require 70% of the building for occupation by mid 2012. In additional SCB will take space for a retail branch on the Ground Floor. SCB is one of the strongest banks in the world today and as such provides unrivalled covenant strength. An institutional lease has been agreed with SCB and is ready to sign. It has a 'water tight' minimum term of 15 years with two extension options of 5 years each. Importantly, as the Dubai business is a Branch of the London based PLC, the lease is guaranteed by the Parent. Site and Building The developer has agreed purchase terms on a prime site at Emaar Square. Emaar Square is the office precinct of the new Bud Downtown district. The site rests on the Defense Interchange on Sheikh Zayed Road, with direct interchange frontage. The site has unrivalled profile and is by far the best in the Burj District. It is about 5 minutes walk from the Burj Khalifa and the Dubai Mall. Once complete in mid 2012 the building will benefit from an established environment where most of the buildings in the area will be completed. The Emaar Square district is highly desirable to international tenants and the proposed building would be the best specified and configured in the market. The building will be designed and built to an international Grade A, institutional form and specification. It will comprise approximately 208,000sqft of net office space arranged over 13 floors. Each floor will have approximately 16,000sqft of net rentable space. SCB are committed to taking the top 8 floors and have definitive options for the two floors immediately above. The remaining space will be leased receiving a premium above any other asset in the area along with SCB as the anchor tenant when it is completed in 2012. There is already significant interest from occupiers for the remaining space although terms have not been agreed. SCB Binding Heads of Terms The key terms of the lease are as follows - I. 15 year fixed term, full repairing and insuring lease with two 5 year extensions. 2. Minimum commitment of 128,000sqft of a total area planned of 208,000sqft. 3. Rent of AED207.5 per sqft fixed for the first 5 years. 4. Escalation fixed at 3% per annum compounded for subsequent years, market review after year 15. 5. Service charge is fixed at AED25 per sqft fixed for 5 years and at cost thereafter. 6. Separate lease for retail branch at AED300 per sqft for approximately 2,500sqft. 7. SCB headcount projections indicate they will need to take at least one additional floor during construction and a further floor before occupation in mid 2012. 8. The developer expects SCB to rent at least one additional floor for a total 144,000 sqft by completion in mid 2012 although there is no guarantee of this. EFTA00757652 Revenue All revenues are quoted net of all management, maintenance and service costs as these are recovered separately. Figures for remaining space are assuming leasing in mid 2012. Minimum revenue from SCB of 8 floors plus retail - AED27,310,000 Remaining space of 80,000sqft @ AED250 per sqft - AED20,000,000 Total - AED47,310,000 There can be discussions had on providing a certain level of return on capital throughout the development phase of the project and a minimum rental guarantee on the non SCB accommodation upon completion. Price The developer is seeking offers in excess of AED450,000,000 for an un-encumbered freehold title and the building that rests above. This will generate a net initial yield of approximately 10.50/0 with built in escalation clauses for 15 years thereafter. Payment The developer is only looking to receive a 25% down payment totaling AED112,500,000 with the remaining capital paid on full handover of the building. Capital Protection The AED112,500,000,000 will be secured via an NBAD guarantee held until the first months rent is received, personal and corporate guarantees from the developer and will have a 2nd lien over the site. Finance There is an approved loan facility on the project through NBAD. Key Investment Criteria EFTA00757653  1. International Grade A building 2. Landmark asset and location 3. Specifically designed office floor plates and facilities geared towards best international practices 4. SCB as anchor tenant 5. Guaranteed annual rental stream for minimum of 15 years. 6. Potential net initial yield of 10.50/0, with annual rental increases 7. Capital guaranteed during construction 8. Extremely experienced international development and asset management Team 9. Both regional and international interest 10. Easy exit to starved real estate Fund/RUT market 11. Excellent potential for yield compression in short term. 12. No comparable asset or structure in the UAE market 13. Perfect corner stone asset for a Fund 14. Easy to refinance and to syndicate to 3rd parties at compressed entry point Basic Exit Strategy Example To forward sell the entire project into the investment FUND/REIT regional OR international markets at a compressed yield. A net initial yield exit price point of net 7.5% is not unrealistic given the transaction that just occurred in Emaar Square with HSBC. That lease had only 5 years remaining and will be a far inferior asset than this on completion. The transaction concluded at net 8%. Assuming an exit of 7.50/0 on the above rental stream then the exit would be AED630,800,000 generating a profit of AED180,800,000. As stated, time is important here as they wish to sign off on the lease with SCB by end of August and complete on the site by latest end of September. An investor will be found prior to this point. Any queries please call. Regards, Ken Rohan, BA Hons, Dip Sury Head of Investments, Dubai Asteco Property Management Tel : +971 4 4037784 Fax : +971 4 4037778 Mobile: Email :- Web : EFTA00757654 Notice to Recipient. This document is confidential; it may also be privileged. Asteco will not accept any liabilities at law In equity or whatsoever for any decision made or influence a result of this document. Asteco shall not be responsible for incomplete or improper transmission of the information contained in this communication. The sender does not accept liability for any errors or omissions. The recipient further acknowledges that the views contained In the e-mail message are those of the sender and may not necessarily reflect those of Asteco Property Management. If you are not the addressee you may not copy, forward, disclose, or use part of this communication. If you have received this message in error, please delete it and all copies from your system and notify the sender immediately by return email. 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