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The CASE 2016: The Caribbean Way

TheCASE2016:TheCaribbeanWay

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The subject site and case, although based on an actual situation, has been preparedexclusively for theMITAlumniAssociationof the Center for Real Estate CASECompetition.PortMiami has not issued a Request for Proposal and some liberties have been taken inpreparingthiscasewrite-up.

The information below has been compiled from publicly available information and thefollowingsources:

PortMiami;Skanska;CoStarGroup;CityofMiami;CountyofMiami-Dade.

Finally, wewould like to thank the sponsors following sponsorswhose generous help andsupporthavemadethisCASEcompetitionpossible:

BostonProperties–LeadSponsor

NAREIM–FinalsSponsor

Goulston&Storrs–LegalSponsor

Skanska–DevelopmentandConstructionSponsor

CoStarGroup–ResearchandMarketDataSponsor


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CASEMaterials

TeamswillfindthefollowingmaterialsintheirDropboxFolders:

1. TheCASE2016a. BackgroundInformationandRequestforProposal(RFP)

2. Guidelinesa. Rules&SubmissionInstructionsb. Judges’Scorecard(forreferenceonly)

3. SubmissionRequirementsa. LOITemplate(tobefilledoutbasedonacquisitionstrategy)b. ‘MajorAssumptions’Excelworksheet(mustbefullycompletedandincludedin

finalsubmission;pleaseseetheSubmissionInstructionsformoreinformationonhowtousethisworksheet)

4. Addendaa. AccessInstructionsforaCoStarUniversityAccountb. DowntownMiamiEconomicReportc. DowntownMiamiRealEstateDevelopmentReportd. ConstructionCostData(providedbySkanska)e. Residential,Office,Hotel,RetailandIndustrialMarketData(providedbyCoStar)f. PortMiami2035MasterPlan:ExecutiveSummaryg. ZoningSummary:T6-36andCIzonesh. ZoningSummary:PublicBenefitsProgrami. PortofMiamiContextualVideo

(https://www.youtube.com/watch?v=kKgLx54PABk)


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DevelopmentTeam

Yourteamisthedevelopmentarmofalarge-scale,mixed-use,full-servicerealestatecompany.Forthepast20yearsyourfirmhasbeenanactiverealestateinvestor,developer,andmanagerin projects spanning across all asset classes, and you have earned a strong reputation forexecution inallof theabove.Duringthiscurrentcycle,mostofyour firm’sactivity inmakingnew investments is focused on development projects; your colleagues in other parts of thecompanyarespendingmostoftheirtimemanagingyourfirm’sexistingportfolio.Yourcurrentinternal sourceof investment capital is equity providedby the firm’s partners,meaning thatyouhavetoraise(or“syndicate”)thelion’sshareofcapitalyouplantoinvestintheexecutionofthisstrategy.

These days, your team is focused on new infillmixed-use development opportunitieswithinmajormetros intheSoutheast.ForthepastdecadeyouhavebeentrackingthedevelopmentopportunitiesinMiami,Florida,broughtaboutbythecity’sburgeoningartseconomy,itsstrongconnections to Latin America, and the growth of its tourism industry. You like Miami’seconomic forecast and its position as a major hub of international banking and shipping,especially in lightof thePortofMiami’s ability to acceptpost-Panamax ships as soonas thePanama Canal expansion is completed in 2016. Unfortunately, these factors have not goneunnoticedbyyourcompetitors,bothdomesticandforeign.Youhavebeenfrustratedbyyourteam’s inability to latch onto opportunities at a reasonable basis given lack of developableparcels,andinflatedassetprices–butyoucertainlydon’tplanongivingupnow.

An opportunity has presented itself for a parcel on Port ofMiami land and identified in thePort’smasterplan for futurecommercialdevelopment.Thereareanumberof reasons tobeexcitedaboutthissite,andyourteamshouldbeginpreparingitsresponsetoacompetitiveRFPthatthePortofMiamihasjustreleased.

Image1–ViewofDowntownMiami,PortofMiamiandMiamiHeatStadium


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TheCityofMiami

TheCityofMiamiishometoanestimated417,650residentsasof2013.Miamiisthecountyseat ofMiami-Dade County and is themost populous city in the southeastern region of theUnited States after Washington, DC. The Miami-Dade metropolitan area population ofapproximately5.5millioninhabitantsistheeighthmostpopulousandfourthlargesturbanareaintheUnitedStates.MiamiislocatedinsoutheastFloridaonabroadplainbetweentheFloridaEverglades to the west and the Atlantic Ocean to the east. DowntownMiami straddles theMiamiRiver and is connectedby a seriesof bridgesoverBiscayneBay to the famousMiamibeachestotheeast.

Miami’seconomy isprimarilydrivenby tourism, finance,and international trade. Inaddition,conventions,beaches,andeventsdrawmorethan36millionvisitorsannuallytothecityfromacrossthecountryandaroundtheworld,spendingapproximately$17billionperyear.Miamihas a Gross Metropolitan Product of $121 billion and boasts an unemployment rate of 5.7percent.Thenumberofjobsgrewby2.9percentin2014.Fourcompaniesonthe2014Fortune500 list are headquartered in Miami: diversified wholesaler World Fuel Services (#68),homebuilderLennar(#364),truckingcompanyRyder(#407),anddiversifiedwholesalerWatsco(#624). Due to its proximity to Latin America, Miami serves as the headquarters of LatinAmericanoperations formore than1,400multinationalcorporations includingAIG,AmericanAirlines,Disney,FedEx,KraftFoods,Microsoft,andWal-Mart.

RecognizedasthecargogatewaytotheAmericas,thePortofMiamiaccountsfor207,000jobsandhadanannualeconomicimpacttoMiamiof$28billionin2014.Itisthe11th-largestcargocontainer port in the United States and recently invested more than $1 billion towardexpansions.ThePortofMiamihasbeenthenumberonecruisepassengerportintheworldformorethan20yearswithmorethan4.9millionpassengersin2014.

Miamicontinuestosetmixed-useprecedentswithnotabledevelopmentsincludingMidtown,BrickellCityCentre,andtheproposedManaWynwooddevelopment.However,althoughthecityhasrecoveredfromthedepthsofthe2007GreatRecessionandiscurrentlyenjoyingaperiodofstrongeconomicperformance,investorsarecautiousaboutthecurrentdevelopmentcycle’slongevityandhowthecitywilladapttotheeffectsofclimatechangeandrisingsealevels.


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IntroductiontothePortofMiami

ThePortofMiamiisa520-acreman-madeislandincentralBiscayneBay.Itisboundedtothenorth by theMain Channel and theMacArthur (I-395) Causeway, to thewest by downtownMiami,totheeastbyMiamiBeachandFisherIsland,andtothesouthbyFisherman’sChannelandBiscayneBay.

The island isalsoknownasDodge Island,an islandcreatedfromthreesmaller“spoil islands”that were combined into a single island in the 1960s. The island is located directly east ofdowntownMiamiwithautoandlargeshipaccess.Itisanaturalintermodaltransportationhubfor both cargo and passenger cruise lines. Miami is simultaneously considered the “CargoGatewayoftheAmericas”andthe“CruiseCapitaloftheWorld.”

Image2–UrbanContextMap


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MajorPortActivities

CommercialactivityinthePortiscurrentlydominatedbythreemajorcontainercargoterminaloperatorsandthreeofthetoppassengercruiselinesintheworld.

CargoTerminalOperators:

• Seaboard Marine - an ocean transportation company that provides direct, regularservicebetweentheUnitedStatesandtheCaribbeanBasin,CentralAmericaandSouthAmerica

• South FloridaContainer Terminal (SFCT) - a joint venture (betweenTerminal Link andAPMTerminals)terminaloperatorandstevedoringcompany

• Port ofMiami Terminal Operating Company (POMTOC) – terminal operator who hasbeenoperatingatthePortformorethan10years.

Over7milliontonsofcargoishandledannuallytheportandthisisexpectedtosubstantiallyincreaseaftertheexpansionofthePanamaCanalin2016.

PassengerCruiseLines:

• CarnivalCorporation(principalMiamibrand–CarnivalCruiseLine)• Royal Caribbean Cruise Lines (Royal Caribbean International, Celebrity Cruises and

AzamaraClubCruises)• NorwegianCruiseLine

Cruise facilities are primarily located on the north side of the island, including six cruiseterminals with 744,784 square feet of interior operational space plus ancillary loading andserviceareas.Additionally,TerminalJislocatedontheSouthwestsideofthePortandisableto accommodate cruise vessels up to 800 feet in length based upon current pilot standards.Parkingandlandsideoperationsofallcruiseterminalsutilizeapproximately52acres,or10%ofthetotalislandarea.Theremainderoftheislandispredominantlydedicatedtocargoloadinganddistributionoperations.

CurrentPortVisitors

Currentvisitorstotheislandincluderoughly4millioncruiselinepassengersannuallyandmorethan 176,000 workers supporting the cruse and cargo industries. Cruise line passengervisitation typically peaks in the “cruise season” between November and April, with 62% ofannual traffic arrivingduring thatperiod.Historicallymost cruisepassengershavearrivedontheislandonSaturdaysandSundaysastheyembarkanddisembark,butpassengertraffichasbeensmoothingoutovertheweekrecentlyduetobroadercruiselinescheduleofferings.


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Image3–ViewofCargoandCruiseoperationslookingWesttowardsDowntownMiami

ProjectedGrowth

The PortMiami 2035Master Planmakes the case for $2 billion in capital and infrastructureimprovements over the next 25 years to accommodate growthdue to the nearly completedexpansion of the Panama Canal, the expected increase in cruise passengers (due in part toincreasedtraveltoCuba)andregionalcommercialgrowth.Specifically,theplancallsfor:

• ContinuedexpansionofberthsizesandchanneldredgingtoaccommodatelargercargoshipscomingfromthePanamaCanalandthenextgenerationoflargercruisevessels

• Significantlandimprovementstointermodalinfrastructure(utilities,rail,roads,cranes,configurationimprovements,etc.)

• New marina, ferry, hotel, restaurant, office and other commercial development to“anchor” the Port to the tourism industry and create a “unified waterfront globaldesignation.”

Inadditiontothethousandsofadditionaljobsfromcommercialandcargodistributiongrowthresultingfromtheseimprovements,theplanprojectsanincreaseincruisepassengervisitationata rateof1.79percentgrowthperyear, trending towardapproximately5.9millionvisitorsannuallybytheyear2035.Substantialadditionaldailyvisitationtotheislandisexpectedalsoasagreatervarietyofusesandamenitiesaredeveloped.


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PortMiami2035MasterPlan

In2011,PortMiami,theorganizationinchargeofthePort’soperationsandland,undertookamasterplanningprocesswiththegoalofmaximizingitslong-termcompetitiveness.Projectionscalled for significant growth in both cruise passengers (4.1million in 2011 to 5.9million by2035)andcargo(847,249unitsin2010tobetween1.7and3.3millionby2035).ThePortisalsoreadyingitselffor largerpost-Panamaxshipsandsuchconstructionissettocoincidewiththecompletion of the Panama Canal expansion in 2016. Faced with restricted space and acompetitive marketplace, PortMiami seeks a sustainable plan for its future in three ways:Cargo,CruiseandCommercial.

Cargo

ThePort’sMasterPlanfocusesonthreemajorprojectsrelatedtocargo:

• ConstructionofthePortofMiamiTunnelo WillconnectPorttrafficdirectlytotheInterstatehighwaysystem

• Dredgingofthechanneltoaccommodatepost-Panamaxshipso UnderstoodasessentialtoPortcompetitiveness

• ReintroductionofrailservicetothePorto Willhelptoreducetrafficandemissions

The Master Plan also calls for an off-site distribution center to handle excess containers,consolidation of accessory uses, increasing efficient use of cargo gates, and the purchase ofnewcranesthrough2035.

Cruise

TheMasterPlanexplicitlystatesitsgoalofmaintainingthePort’spositionastheleadingcruiseterminal in the world. The industry is one of the County’s biggest economic drivers and isexpected to grow in the future. As cruise ships get ever larger, the Port must expand itsterminalcomplexesandtransitcenters.

• IncreasingSizeandNumberofBerthso Three new berths will be added plus the extension of another berth to

accommodate larger ships. After improvements, the Port will be able toaccommodatenineoftheworld’slargestshipssimultaneously.

• ConstructionofNewCruiseTerminalso To increase passenger capacity and provide operational efficiencies to cruise

lines.• ConstructionofaNewMulti-modalTransitCenter


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o Consolidating transportation in order to reduce public way footprint to allowmorelandforthecorebusinessesofcargoandcruise.

Commercial

TheMasterPlanenvisionscommercialdevelopmentatthePort’ssouthwestcorner.ThissiteisthesubjectoftheRFPandisconsideredkeytothePort’sfuturevibrancyandfinancialhealth.

“ThisdevelopmentistheanchorthatwillconnectthePortandthetourismindustrythatit serves to the community. By working together wewill create a unified waterfrontglobaldestination.”–PortMiami2035MasterPlan

This iswhere yourdevelopmentexpertise comes in. TheMasterPlan calls for a lot, andyoumayormaynotbeabletoprovideallofit.Buttobegin,youmustfirstreadPortMiami’sRFPforDevelopmentfortheSouthwestCornerofDodgeIsland.

Image4–ExistingfunctionalusesofPortofMiami


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REQUESTFORPROPOSALSFORCOMMERCIALREALESTATEDEVELOPMENT

SouthwestCornerofDodgeIsland

1.0 Introduction

ThisRequestforProposals(RFP)forthesouthwesterncornerofDodgeIsland(the“Site”)hasbeenissuedtodevelopmentteamswhosesubmissionstotheRequestforQualifications(RFQ)qualifiedthemforthisRFPstage.ThisdocumentarticulatesthePortofMiami’sintentionsforthis important site, provides additional information, describes submission requirements,selectioncriteria,and theprocess fordeveloper selection,and identifies requirementsof thedevelopmentagreementandgroundleasetobeenteredintowiththeBidder.

The Port ofMiami expects the teams to define and substantiate a compelling developmentvision for the Site. Its scale, location proximate to both Port activities and the adjacentdowntown financial and entertainment districts, existing and planned nearby transitconnections, and its tax revenuegeneratingpotential can supportaproject thatanchors thenewcommercialcoreofDodgeIsland,not justaddsto it.TheRFParticulatesasetofProjectObjectivesfortheSiteinSection4.0.ThePortbelievestheseProjectObjectivesareaggressivebutachievable.Proposing teamsmustdevelopaprogram,design,development strategyandgroundrentproposalthatmeettheseProjectObjectives.Theproposal,whichmustincludealltheelementsintheSubmittalRequirementsoutlinedintheCASE2016Rules,aredueat12:00noononJanuary10,2016.

Image5–AerialviewofSiteandPortofMiami


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2.0 TheOpportunity

ThePortofMiamiSiteisapproximately9.0acresdividedintotwoparcels,A(2.4acres)andB(6.6acres),ownedbyMiami-DadeCountyunderthesupervisionofthePortofMiami.TheSiteis located in the southwestern corner of Dodge Island; the Island houses all of the Port ofMiami’scargo,cruise,andcommercialactivities.

Image6–SiteMap

Overthepastdecade,theexpansionofPortactivitiesthroughthegrowthofthecruiseindustryandtheexpansionofthePanamaCanalhascausedthePorttore-examineitscapitalneedsandpotential sources of additional revenue. In the December 2011 publication of the Port ofMiami’s2035MasterPlan,theSitewasidentifiedasaprimeopportunityforre-developmenttoahighestandbestuseofdensecommercial,hospitality,and/orresidentialprogramming.ThePortrecognizesthescarcityofhighdensitydevelopablelandindowntownMiamiandintendstoretaintitletothepropertyandenjoylong-termvaluegrowth.Accordingly,thePortofMiami


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requires thatallRFPs structure this transactionasa long termground lease fora termof75years.ThePortvaluesmaximizingfinancialreturnswhilebalancinginherentdevelopmentrisk.ThisapproachwouldenablethePort tosecureasteadystreamof long-term incomewithouthavingtorelinquishownershipofthelandortakeonexceptionalrisk.

Submittingteamsareencouragedtodevelopcreativeground leaseproposalsso longas theyprovidethePortwithareasonablereturnfortheeffortandrisktheyaretakingon.Proposalsmayutilizebaserent,participationand/orpromotedrents,andanyotherapplicablestructures,suchasthosebasedonprojectphasing,projectcompletionandoccupancy,orcapitalevents.Further, current income fromPort activities throughoutDodge Island and the importance ofhaving the right mix of uses on this highly visible corner makes holding the land a viableinvestmentstrategyshouldresponsesfailtoimpress.

Inadditiontothisfirst,purelyeconomicmotivation,thePorthasexpresslystatedasecondaryone to which you will need to be sensitive in order to remain competitive. The RFP placesconsiderable emphasis on the principles of sustainability outlined in the PortMiami 2035MasterPlan.Theseprinciplesseektoensurethelong-termviabilityoftheprojectandmaximizecoordinationwith existing commercial users on Dodge Island. The quality of design and thepositiveimpactonthebuiltenvironmentarealsoimportanttoPortMiami.Yourdevelopmentapproach, in other words,must embody an exercise of responsible and sustainable design,appropriateusemix relative to thePort and itsdowntownadjacency, and civicengagement.Submissionsshouldincludeataminimumagroundfloorsiteplanandmassingstudyillustratingheightsandsetbacks.


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Image7–Localcontextmap


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3.0 Site-RelatedInformationandConditions

Image8–ParcelMap

3.1 ParcelA–SurfaceParkingSite

ParcelA is a 2.4 acre, 104,544 square foot surface lot that has historically housed accessoryfacilities,constructionstaging,surfaceparking,andoverflowPortoperations,noneofwhichareknown to have caused any significant environmental contamination on the site. The site isboundedbyBiscayneBaytoitswestandsouth,CaribbeanWaytothenorth,andParcelBtoitseast.Thesite isaccessedbyCaribbeanWay,a surface road thatconnects to thebaseof thePortBoulevardbridge.CaribbeanWaydead-endsatadefunctbridgeonthewesternedgeofParcel A, which the Port envisions transforming into a pedestrianwalkway that will provideadditionalaccessbetweendowntownMiamiandtheSite. 3.2ParcelB–MarineSpillResponseCorporationSite

The neighboring 6.6 acre, 287,496 square foot site to the east, houses the 2-story, 59,000square foot Marine Spill Response Corporation (MSRC) warehouse. The site also includes a


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130,000square foot laydownareaused for thepreparationofequipmentandsupplies tobeloadedonanMSRCvessel in theeventofa spill, aswell asa300 footberth.TheMSRChasleased the land from the Port ofMiami since 1991, andmost recently exercised a five-yearrenewalrightinFebruary2013.MSRC’sLeasewasextendedthroughMay31,2018,withthreeadditionalfive-yearrenewalrightsremaininginthecurrentLeasethroughMay2033.ThetermsoftheMSRCLeasearenominal:MSRCpays$1.00persquarefootof landannually,with10%escalations at eachof the remaining three renewal periods. ThePort recognizes that the re-developmentofthisparceltoitshighestandbestusemusttakeintoconsiderationrelocatingtheMSRCandshouldexceedthecurrentreturnsgeneratedbyhavingMSRConthesite.

ThePortofMiami values the relocationofMSRC to analternative locationat a costof $6.2million,acostthatmustbetakenintoconsiderationwhenprovidinganoffertothePortfortheparcel. This structure is not considered capable of supporting vertical improvements orhistorically significant, and it is assumed thatanydevelopmenton theparcelwill involve thedemolition of the MSRC warehouse. The site is flat and bounded by Parcel A to the west,Caribbean Way to the north, the headquarters of the Royal Caribbean Cruise Line and itsadjacentsurfaceparkinglottotheeast,andBiscayneBaytothesouth.

3.3PlanningandLandUse

TheCity ofMiami originally zonedDodge Island asGovernment/Institution (G/I) prior to thereleaseof its Form-BasedCode. In theMiami21 Form-BasedCode codified inMay2010, theentiretyofDodgeIslandwaschangedtoazoningofCivicInstitutional(CI).

WhilebothparcelsarecurrentlyzonedCI,thePortofMiamianticipatesthatthe6.6-acreParcelB sitewill be rezoned,with a target zoningof T6-36. ParcelA is expected to remain asCivicInstitutional (CI). Details related to allowed heights, FAR, and uses on the T6-36 and the CIzoningdesignationscanbefoundinADDENDUMG,ZONING:SUMMARIES,T6-36andCI.FortheT6-36zoningdesignation,additionalFARcanbeobtainedonsiteifcertainpublicbenefitsare achieved. For the purposes of this RFP, the only public benefit that may be consideredapplicable for additional FAR is the provision of on-site affordable/workforce housing, thedetailsofwhichcanbefoundinADDENDUMH,ZONING:PUBLICBENEFITSPROGRAM.

Importantly,becauseoftheecologically fragilestateoftheMiamiwaterfrontandthePortofMiami’s desire to enhance sustainabilitymeasures in all future commercial development, allproposalsshouldincludea150’setbackfromthewaterfrontalongBiscayneBay.


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3.4 SiteStakeholders

ThePortofMiamiisasubdivisionoftheMiami-DadeCountyGovernmentandislocatedwithintheboundariesoftheCityofMiami.Asaresult,thereareanumberofstakeholderswhowillbeinvolved inevaluatingthedevelopmentproposals,andyourteam’sproposalshouldtake intoconsideration the desires and interests of each party. Successful proposals will balance theeconomic,environmental,andsocialneedsofeachofthefollowinggroups.

• Port of Miami: The Port is interested in financial returns balanced with financialsecurity,aswellasthelong-termviabilityoffundamentalPortactivities.

• Miami-DadeCountyCommission:CountyCommissionersareinterestedintaxrevenuesandpromotingsustainabilitymeasures.

• City of Miami: The City is interested in protecting the interests of the adjacentdowntown business community, alleviating the traffic impacts of new developmentthroughtransitimprovements,maintainingrealestatemarketvalues,andtheprovisionofaffordablehousing.

• Miami-DadeCountyTrade&TourismCommittee:TheT&TCommittee,whichwilltakeup the development proposal at public hearings for approval, are interested inpromotingtourismtotheCountyandinapprovingaprojectwithcomplementaryusestoexistingPortactivities.

• RoyalCarribbeanCruiseLines:TheRCCLHeadquartersarelocatedimmediatelytotheeastofParcelB,andRCCLhasbeenvocalaboutitsdesiretobeinvolvedintheplanninganddevelopmentprocessfortheSite.RCCLmaybeinterestedinanoptiontoexpandtoeitherparcelinthefuture.

• MarineSpillResponseCorporation:MSRCcurrentlyleasesParcelBfromthePortandisinterestedinre-locatingelsewhereonPortland,tothecostof$6.2million.

Image9–CurrentCommercialandCruiseuses


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3.5 Sustainability

WhilethePortofMiami’s2035MasterPlanconsidersthethreemajorareasofCargo,Cruise,andCommercialactivity,allthreeareasmustcomplywithsustainabilitymeasuresdescribedinthe Master Plan. A successful proposal will take into consideration some of the followingelements,whichwillhelp toprotect thewaterfrontandensure the long-termviabilityof thePort:

• LEED Building: All new buildings should strive to meet a minimum of LEED Silvercompliance.

• Green Energy Initiatives: Initiatives including photovoltaic panels, electric vehiclecharging stations,multi-modal transitenhancements suchas shuttlesandbus lines toconnecttheSitetoothercommercialareasofthePort,aswellasassistanceinfinancinga lightrail lineacrossthePortBoulevardbridgewouldallbeviewedfavorablybyPortofficials.

• Waterfront Setback: All proposals should adhere to a 150’ waterfront setback onBiscayneBayandidentifyresiliencyinitiativestoensurethelong-termsafetyoftheSitefromstormsurgesandwaterfronterosion.

3.6 Marina

ItisthegoalofthePortofMiamitoprovidea200-slipmarinainBiscayneBaytohouseprivateboats.ForthepurposesofthisRFP,yourdevelopmentteamhaspartneredwithamarinaoperatoranddeveloperwhowillhandlethefinancingandconstructionofthemarinaseparatefromyourteam.PleaseincludeamarinainyourprojectdesignbutexcludeitfromallfinancialanalysisrelatedtotheSite’sdevelopmentplan.

4.0 ProjectObjectives

DevelopmentteamsshouldnotethatthePortofMiamiintendsthatalloftheobjectivesbelowbemetandisseekingapartnerwiththevision,commitmentandcapabilitytodoso:

• AsubstantialandpredictablefinancialreturntothePort,paidoverthetermoftheleasethrough a ground lease structure that addresses the pace and amount of anticipateddevelopment.

• An outstanding team that has demonstrated experience developing complex, urbanmixed-useprojectswiththeflexibilitytoworkcooperativelywiththePort.

• Acreative,mixed-usedevelopmentprogramthat:o Addslong-termfinancial,civicanddesignvaluetothesurroundingdevelopment

andcommunitywithconsiderationofariskprofilerequiredbyapublicagency;


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o Takes advantage of the Site’s large area and flexible morphology, prominentwaterfrontlocationandcityskylineviews,andtransitaccessibilitytocreateherewhatcannotbeeasilycreatedelsewhereontheMiamiwaterfront;

o Establishes a year-round destination serving employees, local and regionalresidents,cruisevisitors,hotelguests,conventionattendees,andothervisitors;

o Includes an activated public realm and supports pedestrian activity andwaterfrontengagementalongBiscayneBay;

o Createsa rangeofemploymentopportunities,potentially including jobs in21stcentury industry and production, office and research, hospitality, retail,recreation,and/orentertainment.

• ExcellenceofdesignthatcreatesadistinctiveimageforthePortofMiamiandrespondsto surroundings by providing active street level public accommodations to the extentpractical, taking advantage of the waterfront, and providing prominent views to andfromtheSite.

5.0 SelectionCriteria

ProposalswillbeconsideredbythePortbasedonthefollowingcriteriainorderofimportance:

• All-inpresentvalueofconsiderationtothePort;• Theoverallfinancialfeasibilityoftheproposedredevelopment;• Thecreativityandfeasibilityofthedealstructure;• Thestrengthoftheredevelopmentprogram;and• TheprojectdesignandattractivenesstothePortandCity.

Proposalswillneedtoproposespecificleaseterms(i.e.BaseRentalRateincludingescalations,Cash Flow Percentage Rent and/or Capital Event Participation Rent). The ground lease rentconsiderationshouldatminimumbetterthePort’sexistingfinancialpositionbothonafuturevaluebasis relativetotheNOIgeneratedbyexistingoperationsontheSiteandonapresentvalue basis using a rigorously defended discount rate (opportunity cost of capital) that isconsistentwiththereturnthatthePortcouldexpecttoreceivebyinvestingtheproceedsofanoutrightsaleinthemarketforinvestmentswithasimilarriskprofile.

Finally,itisalmostcertainthatteamswillnothavesufficientinternalcapitaltofundthecostsof this development. To be awarded this project, teams must identify potential sources ofcapitalandpresentcompellingreasonstobelievethattheywillactuallybeabletofinancetheproposedproject.Todothis,teamsmustshowtheanticipatedreturnsonthecapitalinvestedinthisdevelopmentandidentifythelikelysourceofsuchcapitalbasedonboththequantitativeandqualitativecharacteristicsofthisinvestment.Ifteamsbringanequitypartnerorpartners


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intothisdealtheywillneedtoclearlydescribethatjointventurestructurewithrespecttotheallocationofthedevelopment’scashflows.

6.0 Conclusion

To summarize the foregoing, there are a few important interests at play for the Port:investmentreturn,acohesiveandwellplannedurbanredevelopmentproject,andconsistencywiththePortMiami2035MasterPlanvisionincludingsustainabilitymeasures,complementaryuses, and accessibility. Proposalsmustmeet the needs of the Port while at the same timecreating a compelling core investment opportunity for the development company andinvestors.Accordingly,theproposalsubmittedonJanuary10,2016at12:00noonmustbewellconceivedandcarefullydrafted.

Althoughthedevelopmentprogramming,design,andfinancialfeasibilitywillbeimportant,thePort will be most interested in delicately balancing the maximization of their return whileminimizingrisk.Acompellingbidwillachievefairrisk-adjustedinvestmentreturns.ThePortofMiami desires a clear understanding of the phasing and programming of the redevelopmentplan and the financial benefits to all parties. They are also keenly interested in ability toexecute. Complete transparency throughout the negotiation will be extremely important tofacilitatingamutuallybeneficialdeal.

Additionalmaterial isavailabletodevelopmentteamsthankstoSkanskaforconstructioncostdata (ADDENDUM D) and CoStar Group for Office, Retail, Hotel, Multifamily and Industrialmarketinformation(ADDENDUME).

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