INDUSTRY DAYNOVEMBER 15, 2016

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SSID: GSA-GuestPassword: BigBlue@1st

ECONOMIC OVERVIEW

Source: U.S. Bureau of Labor Statistics, NGKF Research; November 2016

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76.1

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40

80

120

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PAYROLLJOBGROWTH12 Largest Metro Areas | 12 Months Ending September 2016

Source: U.S. Bureau of Labor Statistics, NGKF Research; November 2016

50.2

42.2

25.2

25.9

15.1

0.5

0 10 20 30 40 50 60 70 80

2016

2015

2014

All other sectors Professional and Business Services

P A Y R O L L J O B C H A N G E ( T H O U S A N D S )

PROFESSIONAL/BUSINESS SERVICESDRIVINGJOBGROWTHPayroll Job Change: Washington Metro Area | 12 Months Ending September 2016

Source: Dr. Stephen Fuller, U.S. Bureau of Labor Statistics, NGKF Research; November 2016

-30 0 30 60 90

Financial Services

Federal Government

Manufacturing

Other Services

Information

State and Local Government

Transportation/Trade/Utilities

Construction

Leisure/Hospitality

Education/Health

Professional/Business Services

P A Y R O L L J O B C H A N G E ( T H O U S A N D S )

STURDYJOBGROWTHPROJECTEDTOCONTINUEJob Change Projected by Industry | 2017- 2021

OFFICE AND MULTIHOUSING MARKET OVERVIEW

*2016 YTD through 3rd quarter with 4th quarter projectedSource: NGKF Research; November 2016

DISTRICTOFCOLUMBIAOFFICEMARKETDeliveries, Net Absorption, and Vacancy Rate 2006 – 2016 and Forecast 2017- 2018

6%

8%

10%

12%

14%

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017 2018

Deliveries Net Absorption Vacancy Rate (%)

Forecast

SQ

UA

RE

FE

ET

(M

IL

LI

ON

S)

VA

CA

NC

YR

AT

E

THEWASHINGTONAREAMULTIHOUSINGMARKETHomeowners as Percentage of Total Households: Washington Metro Area vs. U.S. | 2009 - 2015

Source: U.S. Census Bureau, NGKF Research; November 2016

62.0%

62.5%

63.0%

63.5%

64.0%

64.5%

65.0%

65.5%

66.0%

66.5%

2009 2010 2011 2012 2013 2014 2015

Washington Metro U.S.

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ME

OW

NE

RS

AS

A%

OF

TO

TA

LH

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SE

HO

LD

S

DISTRICTOFCOLUMBIAMULTIHOUSINGMARKETNet Absorption | 2006 – 2016 and Forecast 2017- 2018

*2016 YTD through 3rd quarter with 4th quarter projectedSource: NGKF Research; November 2016

0

1

2

3

4

5

6

7

8

9

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017 2018

Forecast

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THEWASHINGTONAREAOFFICEANDMULTIHOUSINGMARKETSWhat’s Next? Opportunities and Challenges in the Market

• Office demand driven by office-using job growth in the private sector, but densification and GSAconsolidation still a limiting factor.

• Multihousing demand driven by continuing decline in homeownership and pent up demand frommillennials living with parents. Demand has remained strong despite significant supply pipeline.

• Mixed-use assets that are highly amenitized and located near Metro stations capture the most demand.

• The sharing economy has begun to reshape demand for commercial real estate.

Source: NGKF Research; November 2016

SOUTHWEST/FEDERALTRIANGLESUBMARKETOpportunities and Highlights

• 12.5 million SF of office space and 4,400 institutional-quality multihousing units.

• Strong demand with 100,000 SF of office space and 562 multihousing units absorbed through 3Q16.

• Multihousing in the submarket has averaged 1.7% rent growth over the past 5 years.

• Due to a significant government presence, overall office asking rents in Southwest average $44.11/SF —significantly lower than the broader market rate — making it well-positioned to capture value-conscious officetenants.

• Successful track record for mixed-use development in the submarket:

• $1 billion mixed-use development The Portals has captured leasing interest from both public andprivate-sector office tenants.

• 2.7 million-SF mixed-use project The Wharf to begin delivery in 2017 with numerous amenities andseveral major private-sector office tenants already signed on.

Source: NGKF Research; November 2016

INDUSTRY DAYNOVEMBER 15, 2016

Lisa Benjamin

LOCATION AND CONTEXT

National Mall View

Southwest Waterfront View

Market Overview

Location

• Cotton Annex is located in Federal Triangle South – a 22 acre submarket of Southwest DC directly south of the National Mall.The boundaries of Federal Triangle South are Independence Avenue to the North, 6th Street to the East, Maryland Avenue andD Street to the South and 12th Street to the west.

• Historically dominated by Federal Office Buildings, tenants in Federal Triangle South include DOE, DHS, FAA and GSA. Many ofthe buildings in need of significant renovation or repurposing.

• Private sector development includes The Portals, a 1.4 million square foot mixed used project with Class A office space, theMandarin Oriental Hotel and future multi-family.

• Redevelopment of Federal Triangle South is highly desirable to revitalize neighborhoods, create cohesiveness and drawpedestrians south from the Mall.

New Development

• The Wharf, being developed by PH Hoffman and Madison Marquette is a 27 acre 3.1 million square foot project with Phase 1opening in 2017.

• 25,000 DC United Soccer Stadium at Buzzard Point which kicked off earlier this year. Additional uses will include a musicvenue, retail and additional residential development.

LOCATION AND CONTEXTMarket Overview

New Development

• Private sector off ice demand is strong. 800 Maine Avenue, SW is under construction. The 223,969 square foot Class A is 60%preleased to American Psychiatric Association, MakeOffices and Van Scoyoc Associates.

• Multifamily development is also booming in Southwest DC. There are 1,700 multifamily units either planned or underconstruction including the Wharf, Waterfront Station, the Portals, Capital Park Tower and others. While most are rentals, PNHoffman and Republic Properties are building condominiums at the Portals. Condo sales prices are in the $800 – $1,000 persquare foot range, rentals average just over $3 per square foot.

• Special purpose building development occurring too. Former Washington Design Center at 409 3rd Street SW is beingconverted to a 430,000 museum at a cost of $400 million named the Museum of the Bible dedicated to bringing the history ofthe bible to life.

• Major advantages of Southwest for new development include connectivity based on the road network and unparalleled Metroaccess, access to the water, proximity to the National Mall, a well-established public park system and over 300,000 squarefeet of new and existing retail development.

LOCATION AND CONTEXTMarket Overview

LOCATION AND CONTEXTMarket Overview

Current QuarterPrior

QuarterYear Ago Period 12 Month Forecast

Total Inventory (SF) 12.5 M 12.5 M 12.5 M

Vacancy Rate 12.1% 12.4% 13.9%

Net Absorption (SF) 47,864 116,553 -45,448

Average Asking Rent (SF) $44.11 $42.51 $41.18

Under Construction (SF) 223,969 223,969 223,969

Deliveries (SF) 0 0 361,935

0%

4%

8%

12%

16%

20%

$30

$35

$40

$45

$50

$55

3Q11 3Q12 3Q13 3Q14 3Q15 3Q16

Average Asking Rent (Price/SF) Vacancy (%)

Asking Rent and Vacancy

-500,000

-250,000

0

250,000

500,000

750,000

3Q11 3Q12 3Q13 3Q14 3Q15 3Q16

Net Absorption(Square Feet)

LOCATION AND CONTEXTMarket Overview

SUBMARKET BUILT SF TYPE TERM RATETI

ALLOWANCE

FREE

RENTESCALATIONS

DC DEPARTMENT OF DISABILITY SERVICES

250 E Street SWSouthwest 1991 101,982 Direct 142 Months $46.75 FS $111.50 10 Months CPI

MAKEOFFICES

800 Maine Avenue SWSouthwest 2017 43,880 Direct N/A N/A N/A N/A N/A

GSA – DEPARTMENT OF ENERGY

950 L’Efant Plaza SWSouthwest 1967 40,000 Renewal 120 Months $38.00 FS N/A 12 Months Flat

SUBMARKET BUILT SF#BLDGS/FLOORS

TYPE PRICE (M) COMMENTS

FUTURE RIVERPOINT

2100 2nd Street SWSouthwest 1973; Reno 1995 606,719

1 Bldg8 Floors

Sale $50.0MOffice - CBD property; existing 606,719 sf Office to be demolished; prior sale: Dec-06($169.0 mil); to be Mixed- Mixed

PATRIOTS PLAZA

355, 375, 395 E Street SWSouthwest 2005-2009 981,116

3 bldgs12 floors

Recap49% sale

$223.949% stake

Office- 90% leased to USDA, HHS and FEMA. Value translates to $465/SF.

SALES

LEASE

SUBMARKET BUILT SF#BLDGS/FLOORS

TYPE PRICE (M) COMMENTS

INDEPENDENT SQUARE TWO

300 E Street SWSouthwest 1992 579,733

1 Bldg9 Floors

Sale $385.6M100% occ.; Office – CBD property; street retail; Tenants: NASA, GSA (Below Mkt Rent); prior sale: Oct-02; includes retail space that's occupied by a deli and dry cleaner

PENDING SALES

LOCATION AND CONTEXTLease and Sales Comps

Site Description

PROPERTY OVERVIEW

Asset Summary

PROPERTY OVERVIEW

• The Cotton Annex is located on the Southeast Corner of 12th and C Street SW in the Federal Triangle South/Southwest market of Washington DC.

• Built in 1937 for the U.S. Department of Agriculture to grade and standardize cotton and tobacco, the L shaped building is 118,400square feet on six floors above ground.

• Designed in the “Stripped Classicism” style, the Cotton Annex represents an architecturally important façade, and the north and westelevations are Included on the National Register of Historic Places.

• The building is located on a 1.4 acre parcel of land. The property is zoned D-8 based on the 2016 zoning code. D-8 is a Downtown Zonewith the purpose of providing a transition from the National Mall to a mixed use area to the south. This zone is designed to foster a mixof residential commercial, cultural, arts and retail uses and promote greater pedestrian and vehicular connectivity.

• The height limit in the D-8 zone ranges from 110- 130 feet depending on the fronting street width and FAR limits range from 6.5.

• The Federal Protective Service (FPS) truck screening operation currently occupies the paved parking area immediately east of thebuilding, but will be vacating prior to the transfer of title.

Exterior Elevations

• Built in 1936-1937 for the U.S. Department of Agriculture

• Historically significant exterior designed by Louis Simon. Approved to be included on theNational Register of Historic Places in 2015.

• Exterior features “Stripped Classicism” architectural style, little ornamentation andvariegated light colored brick. Architectural style similar to Central Heating Plant andDepartment of Agriculture South.

• Built and designed for later expansion to the south and east. Expansions nevercompleted due to WWII, east and south elevations lack architectural ornamentation.

North and West Facades with Historic Designations

PROPERTY OVERVIEW

PROPERTY OVERVIEW

DC0004 01

Building Floorplans

DC0004 02

PROPERTY OVERVIEWBuilding Floorplans

DC0004 04

PROPERTY OVERVIEWBuilding Floorplans

DC0004 06

PROPERTY OVERVIEWBuilding Floorplans

DC0004 07

PROPERTY OVERVIEWBuilding Floorplans

DC0004 B1

PROPERTY OVERVIEWBuilding Floorplans

PROPERTY OVERVIEWBuilding Asset Report

AGE

The Cotton Annex was completed in 1937. Improvements made periodically, most recent major renovations in 1986

HVAC

Mechanical system is central steam plant for heating and central chilled water plant for cooling. Heating and cooling providedby large capacity air handling units throughout the building. Mixing boxes located throughout. Heating and coolingsystems controlled by local thermostats. Two compressors and air dryers located in the basement.

Water

Central hot water system consists of heat exchanger and circulating pump. Main water meter in basement

Electrical

Main electrical supplied from Agriculture South Building. Power is not metered. 1200 amp power distribution

Gas

No gas service supplied to building

Elevators

Two traction passenger elevators with 3500 pound rated capacity.

Washington DC Office1899 Pennsylvania Avenue,NW Suite 300Washington, DC 20006202.331.7000

Tysons Office1410 Spring Hill RoadSuite 600McLean, VA 22102703.448.2000

Baltimore OfficeOne East Pratt StreetSuite 805Baltimore, MD 21202410.625.4200

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Thank you

1801 K Street, NW Suite 1000 Washington, DC 20006 +1 202 719 5000 1600 Tysons Boulevard Suite 1000 McLean, VA 22102 +1 703 485 8800 6701 Democracy Boulevard Suite 201 Bethesda, MD 20817 +1 301 214 1144 www.joneslanglasalle-dc.com

©2012 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

GSA Online Auction Process and Invitation for Bid (IFB)

Tim Sheckler General Services Administration Industry Meeting November 15, 2016

Agenda

I. Introduction

II. Auction Process

III. Transaction Terms

IV. Notices and Covenants

V. Additional Information

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• GSA Online Auctions – A Proven Sales Methodology - A fair and transparent way to dispose of excess real property - Sold approximately 3,000 properties worth over $5.7 billion dollars in the last 10

years

• Auctions are administered through www.RealEstateSales.gov

• Participation requires prior registration and posting of a bid deposit

• Information about sale terms is provided in the Invitation for Bids (IFB)

• Additional information about GSA property sales is provided at https://propertydisposal.gsa.gov

I. Introduction

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II. Auction Process Terms • All Cash Sale; “As-Is, Where-Is” • Auction Start Date: December 1, 2016 • Auction End Date: January 31, 2017 (Soft Close) • Bid Deposit: $1,000,000 • Minimum Bid $5,000,000 • Bid Increment: $250,000 (subject to change at any time)

• Bid Interval: 24 hours (subject to change at any time)

• GSA reserves the right to - modify the bid increments at any time - suspend or stop the auction for any reason and without award - resume the auction or start a new auction at any time - cancel the sale at any time

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II. Auction Process Bidder Registration

• Bidders must register online at www.RealEstateSales.gov

• Bidder Registration: 1. Create an online User ID and Password (Note: the User ID is used to

publicly identify bids on www.RealEstateSales.gov 2. Complete Bid Form 3. Post a one-time Registration Deposit

• Approval for bid is contingent upon verification of Registration Deposit

• Bidders must allow GSA up to five (5) business days to complete the registration process

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II. Auction Process Bidder Registration

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Click on ‘Register’

II. Auction Process Bidder Registration

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II. Auction Process Registration Deposit

• A $1,000,000 Registration Deposit will be required

• Cashiers Check and Certified Check are acceptable

• Personal checks are not acceptable • Registration Deposits:

- may be forfeited in case of revocation of bid and/or default

- will be refunded to all but the highest and the backup bidder after auction close

- bidder may request refund at any time prior to auction close

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II. Auction Process Bidding Process

• Types of Bids - Flat Bid - Automatic (Proxy) Bid - Bids executed on behalf of a bidder by an agent require an authenticated

Power of Attorney on file with GSA

• Bids may be increased online by the specified bid increment (or greater) at any time until the auction closes

• Submitted bids will be posted to the website immediately, in real time

• Posted bid amounts and associated bidder user names are visible to the public on www.RealEstateSales.gov

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II. Auction Process Bidding Process

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II. Auction Process Auction Closing and Award

• Auction employs a ‘soft close’ • On soft close date, if there is any activity within the last Bid Increment,

the auction ‘rolls over’ for an additional Bid Increment Period - e.g. if bid increment is 24 hours, and there is activity in the last 24 hours prior to

auction close, the auction continues for another 24 hour period

• Auction continues to ‘roll over’ until a Bid Increment period ends with no bidding activity

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II. Auction Process Auction Closing and Award

• Upon auction closing, GSA evaluates high bid

• If GSA accepts bid, purchaser must produce an additional cash deposit to increase earnest money to at least 10% of the total winning bid within three (3) business days of award

- The registration deposit counts towards the 10% requirement

- Failure to provide funds may result in rejection of bid and forfeiture of registration deposit

• The second-highest bidder (backup bidder) may be considered for award for the Continuing Offer period of 90 calendar days

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• Transaction closing must occur within 90-120 calendar days after acceptance of bid

• All previously paid monies will be credited toward total purchase price

• Remaining balance of purchase price is payable in the form of - Cashier’s check - Certified check, or - Electronic wire transfer

• Purchaser is responsible for all closing costs, including any escrow and financing fees

• Government’s interest in the property is conveyed via Quitclaim Deed

III. Transaction Terms Closing Process

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IV. Notices and Covenants Overview

The following Notices and Covenants will be inserted in the Deed: • Environmental

1. Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

2. Lead-Based Paint 3. Asbestos-Containing Materials 4. Polychlorinated Biphenyls (PCBs) / Mercury 5. Mold

• Historic and Cultural Preservation • Transaction Terms

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IV. Notices and Covenants Environmental – Site

• United States gives notice that no hazardous substances have been released or disposed of or stored for one year or more on the Property

• GSA warrants that all remedial actions necessary to protect human health and the environment has been taken before the date of this conveyance pursuant to CERCLA

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IV. Notices and Covenants Environmental – Building

• Lead Based Paint

- A risk assessment or inspection for possible lead-based paint hazards is recommended prior to converting the Property to a residential dwelling

• Asbestos Containing Material - Bidders are warned that the Property contains asbestos-containing materials

• Polychlorinated Biphenyls (PCBs) / Mercury

- The Property may contain polychlorinated biphenyls (PCBs) resulting from former operations of transformers & light ballasts / gauges

• Mold

- Bidders are notified that mold is present in various locations in the building

• The Buyer agrees that in its use and occupancy of the Property it will comply with all Federal, state, and local laws relating to the above mentioned environmental conditions

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IV. Notices and Covenants Historic and Cultural Preservation

• The Property is - Listed on the National Register of Historic Places (October 2015)

• GSA will place covenants in the Deed of Sale requiring the buyer to - obtain the approval of the District of Columbia State Historic Preservation Officer

(SHPO) for their development plans

- comply with applicable local historic preservation law

- alterations, restoration, rehabilitation, or modification to be done in accordance with Secretary of the Interior’s Standards for Treatment of Historic Properties as determined by SHPO

- Covenants will be made available as part of the IFB

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IV. Notices and Covenants Transaction Terms

• Access Easement - Property will be conveyed with

an access easement for Buyer to utilize former C Street Right of Way to access the property

- For routing maintenance / repair only

- Other changes would require GSA approval / Section 106 consultation

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V. Additional Information

• Additional details are provided in the Invitation for Bid (IFB) document posted at www.realestatesales.gov and

• For any other additional info: Mr. Tim Sheckler U.S. General Services Administration Director, Property Disposal and Utilization Division National Capital Region 301 7th St. SW, Room 7600 Washington, DC 20407 202-401-5806 tim.sheckler@gsa.gov

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Thank you

1801 K Street, NW Suite 1000 Washington, DC 20006 +1 202 719 5000 1600 Tysons Boulevard Suite 1000 McLean, VA 22102 +1 703 485 8800 6701 Democracy Boulevard Suite 201 Bethesda, MD 20817 +1 301 214 1144 www.joneslanglasalle-dc.com

©2012 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

Thank you

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