Broadway Center

Phoenix Partners, LLC

David Hansen (Development)

Amy Merritt (Finance)

Thacher Tiffany (Planning)

Yew Chin Tan (Legal)

Phoenix Partners, LLC

Team Objectiveso Create financially viable retail developmento Improve retail shopping options for residents in

underserved areao Understand the New Market Tax Credits program

Development Team

Broadway Center

Development Team

Site OverviewMarket StudyDesign and ProgramNew Market Tax CreditsFinance

A grocery-anchored neighborhood shopping center

BR

OA

DW

AY

Site Overview

30 Miles North of Boston

Location & Context

Outside of Historic Downtown Lawrence

Location & Context

Sit

e

METHUEN

LAWRENCE

Str

eets

Conte

xt

Views from the site

Location & Context

Malden Mills Facility

Location & Context

Zoning

Site Analysis: Zoning

*overlay district under development

Lawrence Methuen% Land Area per City 15% 85%

Permissible as of right No* No

Timeline to obtain permits 12 mos. 9-12 mos.

Special permit required No Yes

Site Plan Review Yes Yes

Public Approval No Yes

Parking Req’d 3.3 / 1,000 4.0 / 1,000 +

Market Study

Primary Trade Area

Market Analysis

o 12,500 Householdso 70% Latinoo 25% Single Mother Familieso $28,500 Median Household Incomeo 13,200 Average Daily Traffic

o Center of Latino business sectoro Neighborhood based on geography and relationships

What this means . . .

Market Analysis

Trade Area Profile

Grocery Stores

BRO

AD

WAY

Grocery Stores

One mile

Grocery Store

BRO

AD

WAY

Super Stop & Shop (2.5miles)

Market Basket (2.5miles)

DeMoula’s (1.8miles)

Market Basket (1.3miles)

Grocery Store Absorption

CAPTURE RATE (Reilly Factor-based)Capture Rate(Reilly Factor / Actual)

Market Basket (on Pleasant Valley) 2.5 1.3 54%Super Stop & Shop 2.5 1.4 55%Market Basket (on Essex) 1.3 0.6 49%De Moula's (on Haverhill) 1.8 1 55%Average 2 1.1 53%

Miles to Competitor

Reilly Distance Factor

Trade Area Sales 34,000,000 Grocery Store Sales 89,180,000 Capture Rate 38%

CAPTURE RATE (Traffic-Based)

Grocery Store Absorption

Traffic Based Reilly FactorTotal Food Spent at Home 71,952,000 50,894,000 Capture Rate 38% 53%Estimate Store Sales 27,432,000 27,135,000

Current Store Average

CAPTURE RATE ANALYSIS

22,295,000

National Chain Pharmacies

0.6 Miles

Pharmacy

BRO

AD

WAY

Walgreen's (1mile)

CVS (0.6miles)

CVS (0.8miles)

Brooks (1.8miles)

Conlin’s (0.7miles)

Walgreen’s (0.6miles)

Pharmacy Absorption

REILLY DISTANCE FACTOR

CVS 0.6 0.3CVS, Walgreens (on Broadway) 0.8 0.4Conlin's, Walgreen's (on J ackson) 1.5 0.8Brooks (on Haverhill) 1.8 1Average 1.2 0.6

Miles to Competitor

Reilly Distance Factor

HH in Reilly Trade Area 3,444 HH in Traffic-based Area 12,509 Capture Rate 28%

CAPTURE RATE (Household Share)

Pharmacy Absorption

CAPTURE RATE ANALYSIS

Total Pharmacy Sales 25,620,000 Capture Rate 28%Estimate Store Sales 7,054,000

Current Store Average 4,270,000

Design and Program

Center Alternatives

Site Planning

Base case 2nd Story 3 Pads Hybrid

3rd 4th 1st 2ndLand Residual

Sit

e P

lan

40’

Anchor45,000 sf

Phar

mac

y13

,440

sf

Inlin

e22

,760

sf

BR

OA

DW

AY

\

Project Timeline

Months0 6 12 18 24 30 36

Due Dil / Negotiations

Permiting / Planning

Sitework

Construction

Leaseup

4

126

1212

New Market Tax Credit

What is the NMTC: Federal tax credit allocated annually to qualifying CDEs

Goal of NMTC: Encourage investment in low income communities

Financial Terms: Credit equal to 39% of equity investment, received over 7-year period

New Markets Tax Credit

o MIHC was allocated $169 million in NMTC credits in 2006

o Leverage tax credit equity with debt in order to fund economic development projects

o Provide a subordinate loan at 1%

Massachusetts Housing Investment Corp

NMTC Structure

Project Finance

CDE

Phoenix Properties LLC

NMTC Fund I

MH

IC

equity

subordinate loan

CDFI Fund (US Treasury)

credits

debt equity

Lender Investor

NMTC Structure

Project Finance

Lender Investor

CDE

Phoenix Properties LLC

NMTC Fund I

MH

IC

$ and credits

$

CDFI Fund (US Treasury)

$ $ and credits

NMTC Structure

Project Finance

CDE

Phoenix Properties LLC

NMTC Fund I

MH

IC

equity

subordinate loan

CDFI Fund (US Treasury)

credits

debt equity

Lender Investor

Investor equity

o $15 billion between 2002 and 2007o 2006 and 2007’s authorization will each

equal $3.5 billiono Applications for 2007 funding are due in

September of 2006o Congressional reauthorization in 2008 is

likely

Future of the NMTC

Project Finance

Finance

Project Finance

Land Price

o Land residual analysis based on alternativesUp to $1.6 million

o Brokers$1 to 5 million

o Lawrence Community Works$1.5 million

o Developers“not much”

RESULT: $1.3 million

Project Finance

Development Cost

Cost Summary Total Cost Cost PSFLand Cost 1,333,000 16 Hard Cost 10,869,845 134 Soft Cost 894,656 11 Developer Fee 326,095 4 Loan Guarantee Fee 147,045 2 Construction Loan Interest 594,345 7 NMTC Loan Interest 46,963 1 Total Development Cost 14,211,950 175

Project Finance

Retail Rents

Rental Rates Summary Rent PSF Annual TotalAnchor Rent 9 405,000 Inline Rent 12 273,120 Pharmacy Rent 24 322,560 TOTAL GROSS ANNUAL RENT 1,000,680$

Project Finance

Capital Structure

Capital Structure Total % of Total RateNMTC Loan 2,985,541 22.0% 1.0%Construction Loan 7,870,972 58.0% 7.0%Permanent Loan (25 Year Amort.) 7,870,972 58.0% 7.5%Equity - Partner (90%) 2,442,715 18.0% N/AEquity - Developer (10%) 271,413 2.0% N/A

Project Finance

Assumptions

DCF Analysis AssumptionsGrocery vacancy 5%Pharmacy vacancy 5%Inline vacancy 10%Inline lease term 5 yearsInline renewal prob. 67%6 months vacancy if no renewal, All leases NNNOperating Expenses (5.90) psfCapital Expenditures (0.30) psfCap rate for reversion event 7.75%Annual rent growth - Anchor 1.0%Annual rent growth - Inline 3.0%Annual expense growth 2.5%Sources: Eastern Development, Linear Retail, Commercial Real Estate Listing Service, Urban Land Institute, Meredith and Grew, COSTAR, Black’s Guide, LoopNet

Project Finance

Financial Results

Summary Financial ResultsProject Level IRR 6.1%Equity IRR 7.9%Year 1 stabilized NOI 906,322 Yr 1 NOI Yield-to-Cost 6.4%Yr 1 DS Coverage Ratio 1.25

Project Finance

Effect of Reduced Land Price

Land Price Equity IRR1,333,000 7.9%1,000,000 9.0%750,000 9.9%500,000 10.7%250,000 11.6%

Year 1 Inline IRR to EquityRetail Rental Rate Investors

12 7.9%14 10.0%16 11.9%18 13.6%

Sensitivity Analysis

Project Finance

Effect of Higher Inline Rents

Land Price Equity IRR1,333,000 7.9%1,000,000 9.0%750,000 9.9%500,000 10.7%250,000 11.6%

Year 1 Inline IRR to EquityRetail Rental Rate Investors

12 7.9%14 10.0%16 11.9%18 13.6%

Sensitivity Analysis

Project Finance

CONCLUSION

o Proposal benefits from large vacant parcelo Site plan fits within urban contexto Capital structure includes application of

NMTCo Tenant mix addresses unmet demand

However…o Insufficient returns to attract private capital

Broadway Center

Broadway Center

Project Finance

Construction Budget Total Cost Cost PSFLand Acquisition 1,333,000 6

Site Work and Landscaping 962,500 12 Anchor Cost 4,500,000 100 Inline Cost 2,503,600 110 Pharmacy Cost 1,612,800 120 Tenant Improvments 812,000 10 Hard Contingency 478,945 5.9

Construction Mgmt 32,256 0.4 Architectural 150,000 1.8 Engineering 50,000 0.6 Legal 100,000 1.2 Entitlements & Permitting 162,400 2.0 Leasing Commissions 100,000 1.2 Construction Loan Fees 100,000 1.2 Permanent Loan Fees 100,000 1.2 Soft Contingency 100,000 1.2

Developer Fee 326,095 4.0 Loan Guarantee Fee 147,045 1.8 Construction Loan Interest 598,907 7.4 NMTC Loan Interest 46,963 0.6

Total Costs 14,216,512 175

Project Finance

BROADWAY CENTER Construction Construction Leaseup LTH Year LTH Year LTH Year LTH Year LTH Year LTH Year LTH Year LTH Year LTH Year LTH Year

DCF Analysis Yr 1 Yr 2 Yr 3 1 2 3 4 5 6 7 8 9 10

DEVPT COSTS

Land Cost (1,333,000) - -

Hard Cost - (9,782,861) (1,086,985)

Soft Cost (417,506) (318,100) (159,050)

Developer Fee - (293,486) (32,610)

Loan Guarantee Fee - (147,045) -

TOTAL COSTS (1,750,506) (10,541,491) (1,278,644)

PGI

Grocery Anchor 636,975 636,975 647,128 657,477 668,027 678,782 689,746 700,924 712,320 723,941 735,790

Pharmacy Pad 231,101 381,763 386,711 391,736 396,841 402,026 407,293 412,645 418,082 423,606 429,219

Inline Retail 237,558 366,664 377,059 387,752 398,749 410,061 421,696 433,663 445,972 458,633 471,656

TOTAL PGI - 1,105,633 1,385,402 1,410,898 1,436,965 1,463,617 1,490,869 1,518,735 1,547,231 1,576,374 1,606,180 1,636,664

Op Ex + Taxes (479,080) (479,080) (491,057) (503,333) (515,917) (528,815) (542,035) (555,586) (569,476) (583,712) (598,305)

NOI (1,750,506) (10,541,491) (652,091) 906,322 919,841 933,632 947,700 962,054 976,700 991,646 1,006,899 1,022,467 1,038,359

Less Cap Ex - (24,360) (24,360) (24,969) (25,593) (26,233) (26,889) (27,561) (28,250) (28,956) (29,680) (30,422)

PBTCF (1,750,506) (10,541,491) (676,451) 881,962 894,872 908,038 921,467 935,165 949,139 963,395 977,942 992,787 1,007,937

Reversion Event - - 13,205,156

Const. Pd Interest

NMTC Loan Interest - (17,219) (29,744) - - - - - - - - - -

Construction Loan Interest - (78,052) (520,855) - - - - - - - - - -

Stabilized Pd. Interest

Less Debt Service (PERM) (697,989) (697,989) (697,989) (697,989) (697,989) (697,989) (697,989) (697,989) (697,989) (697,989)

Loan Take Out (PERM) (6,347,804)

Less Debt Service (NMTC) (29,855) (29,855) (29,855) (29,855) (29,855) (29,855) (29,855) (29,855) (29,855) (29,855)

Loan Take Out (NMTC) (2,985,541)

EBTCF (1,750,506) (10,636,762) (1,227,050) 154,117 167,027 180,194 193,622 207,320 221,294 235,551 250,097 264,942 4,151,903

Net CF to Equity (1,750,506) (963,622) - 110,440 167,027 180,194 193,622 207,320 221,294 235,551 250,097 264,942 4,151,903

IRR to Equity 7.9%