OPPORTUNITY

Monday Properties acquired 1812 North Moore Street from Westfield Realty in January 2006, recognizing the development potential of the parcel based on its in-depth knowledge of the Rosslyn, VA submarket. This property is directly adjacent to the Rosslyn Metrorail station, the second most utilized station in the entire Washington, D.C. metro system, and positioned within the Rosslyn two-block boundary that permits rezoning up to a height of 490 feet and a buildable floor area ratio (FAR) of 10.0 (versus 158 feet and a 3.8 FAR currently allowed). In utilizing its strategic long term relationships within the submarket, Monday was able to identify and successfully negotiate the purchase of additional air rights from Virginia Electric and Power Company (VEPCO) resulting in an overall 60,000 square foot parcel or 600,000 square foot developable site. Once completed, 1812 North Moore Street will be the tallest building in the Washington, D.C. metropolitan area.

TRANSACTION

Monday purchased 1812 North Moore Street from Westfield Realty in January 2006 for $31,500,000 ($101 PSF) and subsequently purchased the VEPCO air rights in October 2006 for $7,408,875 ($27 PSF).  These deals were funded all-cash and created a combined average land price of $67 PSF.

RESULTS

In December 2007, the County approved 1812 North Moore Street as a 580,759 GSF, thirty-five-story office building to be constructed to a Platinum-LEED level, the highest certification offered by the U.S. Green Building Council’s Leadership in Energy and Environmental Design program and the first of its kind for the Commonwealth of Virginia.  The approval was a strong testament to Monday’s ability to successfully navigate the significant demands placed on developers seeking entitlement for high-profile urban commercial projects.

BUSINESS PLAN

As Washington, D.C. supply constraints exacerbate and rents for new construction eclipse the $75 PSF threshold, Rosslyn has become a highly desirable location for high-profile, private-sector tenants seeking more cost-effective locations to the District with comparable, if not better, quality, proximity, transportation, and amenity packages.  The submarket has historically offered users over $20 PSF in annual savings to Washington, D.C as a result of lower base rent and operating expense occupancy costs.  When combined with the spectacular views offered from the west bank of the Potomac River, unrivaled ease of access to Washington, D.C., and new development pipeline, Rosslyn is a primary destination for tenants seeking new construction alternatives.

This demand is best evidenced by the Corporate Executive Board lease at the Waterview Building in Rosslyn (1901 N. Lynn Street).  Signed in January 2005, Corporate Executive Board committed to a 20 year term at the 625,000 square foot Waterview Building, the newest Rosslyn, Virginia office development.  This lease is the largest private-sector deal in Washington, D.C. history and exemplifies the relocation of major users from the District to Rosslyn. Waterview was sold to The Paramount Group in 2007 for $685 PSF based on the overall submarket fundamentals.

1812 North Moore Street will be developed based on the same expectation of continued large-block user migration to Rosslyn.  Now that Monday has successfully completed the entitlement process with Arlington County, we are finalizing the tenant market analysis, preparing the overall project budget, and evaluating financing alternatives in order to commence the development.  Construction is expected to commence in the 2^nd quarter of 2008 and last approximately 34 months.  The overall development cost is projected to be approximately $345 million ($594 PSF) and the venture is expecting to finance the construction with approximately $250 million (72% LTC) of debt.  Upon completion, ownership is projecting to achieve rents ranging between $65-$75 PSF, which generate a proforma return of 8% stabilized return on cost, 30% overall IRR, and 2.84x multiple on equity invested.

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