1400 18th Ave

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Confidential Offering Memorandum 1400 18 th avenue south | nashville, tennessee 37212 81,041 SF Class A Office Building

Disclaimer

Cassidy Turley, has been retained as exclusive advisor to Sony Music Entertainment (the “Owner”) regarding 1400 18 th Avenue South (the “Property”) located in Nashville, Tennessee.

The enclosed information has been prepared by Cassidy Turley for use by a highly selected number of parties and does not purport to be all inclusive or to contain all of the information which prospective investors may need or desire. All projections have been developed by Cassidy Turley, the Owner, and designated sources and are based upon assumptions relating to the general economy, competition, and other factors beyond the control of the Owner, and therefore are subject to variation. No representation is made by Cassidy Turley or the Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is, or shall be relied on as a promise or representation as to the future performance of the Property. Although the information contained herein is believed to be correct, the Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, Cassidy Turley, the Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from the enclosed information or any other written or oral communication transmitted or made available to the recipient. The enclosed information does not constitute a representation that there has been no change in the business or affairs of the Property or the Owner since the date of preparation of the enclosed information. Analysis and verification of the information contained in the enclosed information is solely the responsibility of the prospective investor.

Additional information and an opportunity to inspect the Property will be made available upon written request to interested and qualified prospective investors. Contact with any of the Property’s employees and tenants without prior approval of the Owner is strictly prohibited.

The Owner and Cassidy Turley each expressly reserve the right, in their sole discretion, to reject any and all expressions of interest or proposals to invest in the Property and/or terminate discussions with any entity at any time with or without notice.

The Owner shall have no legal commitment or obligation to any entity reviewing the enclosed information or making a proposal to invest in the Property unless and until a written agreement for the investment in the Property has been fully executed, delivered, and approved by the Owner and its legal counsel, and any conditions to the Owner’s obligations thereunder have been satisfied or waived. Cassidy Turley is not authorized to make any representations or agreements on behalf of the Owner. The enclosed information and its contents, except such information which is a matter of public record or is provided in sources available to the public, (such contents as so limited herein called the “Contents”) are of a confidential nature. By accepting the enclosed information, you agree (i) to hold and treat it in the strictest confidence, (ii) not to photocopy or duplicate it, (iii) not to disclose the enclosed information or any of its contents to any other entity (except to outside advisors retained by you, if necessary, for the completion of your Due Diligence) without the prior written authorization of the Owner or Cassidy Turley, (iv) not to use the enclosed information or any of the contents in any fashion or manner detrimental to the interest of the Owner or Cassidy Turley, (v) not to have any contact with any of the tenants and/or employees of the Property without prior approval of the Owner, and (vi) to return the enclosed information and other materials furnished to you to Cassidy Turley immediately upon request of Cassidy Turley or the Owner.

If you have no further interest in the Property, please return the enclosed information and all other materials furnished to you forthwith and continue to abide by the provisions herein. By accepting the enclosed information you agree to abide by the terms and conditions herein.

Investment Advisors

Crews Johnston III, SIOR 615.301.2901 crews.johnston@cassidyturley.com

Perry Gooch 615.301.2923 perry.gooch@cassidyturley.com

Peter Buckey 212.318.9794 peter.buckey@cassidyturley.com

Table of Contents

Section 1: Executive Summary Executive Summary

Section 2: Investment Highlights Investment Highlights

6 7

Aerial

Section 3: 1400 18 Avenue South Property Highlights

Stacking Plan

11 12

Floor Plans

Section 6: Market Overview

Section 7: Comps Lease Comps

18 20

Sales Comps

Section 8: Financial Information Offering Summary

22 23 24 26

Assumptions

Operating Proforma

Rent Roll

Executive Summary

Cassidy Turley is pleased to offer for sale an iconic Nashville office building: 1400 18 th Avenue South. The 81,041 square foot office building is located on 2.7 acres in the heart of Music Row and Vanderbilt area. This property represents a rare opportunity to purchase a building in a core location that currently has a stabilized rent roll and strong-credit tenants. Among the tenants that call 1400 18 th Avenue home are Sony Music Entertainment, the current owner, and Vanderbilt University. The asset, originally built in 1916 as a convent, was meticulously converted to a Class A office building in 1999 and has been home to one of Nashville’s top country music labels ever since. The property’s attributes make it unique not only to the submarket, but to the Nashville market as a whole. Located across the street from Vanderbilt University’s newly constructed freshman dorms and having a sweeping view of Music Row and the Nashville Skyline, the 3-building property is serviced by a 3-story, 201-stall parking structure (as well as 21 surface spaces). This one of a kind property represents an excellent opportunity as an owner occupied or multi- tenanted facility. The buildings combine the charm of historical architectural features with modern building systems and technology critical for operating in today’s economy. Current systems include T-1 redundant fiber, a back-up generator and the latest in security systems. The state- of-the-art HVAC system not only controls the utility costs for the building as a whole, but also helps individual tenants keep track of their utility usage and allows the landlord to accommodate varying utility needs among

the building’s tenants. The 10 to 12 foot high ceilings, flexible floor plates and architectural detail, combined with the common area features of a chapel/auditorium and cafeteria, create a first-rate leasing environment. In addition, the grounds, outdoor entertaining area and motor court make an impeccable first impression. Music Row is located between Nashville’s premier residential neighborhoods, Vanderbilt University and Downtown Nashville. 1400 18 th Avenue South is an accessible and convenient location for companies seeking space in the Midtown office market. The area is popular for music, educational and local professional firms. It has recently seen numerous residential and urban retail development projects come on-line as both Belmont and Vanderbilt Universities continue to expand their borders. Terms of Offering 1400 18 th Avenue South is being presented to selected investors on an exclusive basis without an asking price. Cassidy Turley intends to conduct a call-for-offers bid deadline and will notify interested parties accordingly with further bidding instructions. Please note that ownership reserves the right to accept offers and withdraw the property from the market at any time.

4 | Cassidy Turley

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Investment Highlights

Rare Mid-Town Nashville Office Investment 1400 18 th Avenue South represents the first mid-town office investment of significant size to come to the market in recent years. The area has always been attractive to investors due to strong valuations and proximity to Vanderbilt University. The area, otherwise known as Music Row, sits among the most prominent neighborhoods in Nashville. Opportunities to invest here are coveted. Positive Market Dynamics Nashville continually ranks among the premier cities for corporate relocations, quality of life and pro-business government. Despite the recent downturn in the national economy, the city has weathered the economic storm far better than its peers. Demand for office buildings such as 1400 18 th Avenue South has been and is expected to remain strong as investors seek well- located assets with potential for long term rent growth. These advantages coupled with a highly visible location in the heart of Music Row has the building poised to outperform its peer properties over the long term. Barriers to Entry Despite the strength of the Nashville economy, the region has seen little new speculative construction in recent years. The challenging topography surrounding much of the city limits the cost effectiveness and viability of new projects. While there are some nearby development parcels, it is unlikely that there will be significant speculative construction in the near term without substantial pre-leasing.

Stabilized Near-Term Cash Flows with Strong Upside The property offers both substantial and consistent near term revenue with a tenant base of strong credit companies, Sony and Vanderbilt University. The building is situated in a submarket experiencing significant rental growth due to high demand and the cost of new construction. The asset is expected to generate higher returns after the in-place leases expire. Numerous Area Amenities There are numerous amenities within walking distance of the building including banks, restaurants and general services typically found in a Class A office environment. Given its location close to Vanderbilt University, the area has a higher than average concentration of unique and high-end retail establishments. Discount to Replacement Cost This offering represents a significant discount to replacement costs. Current estimates for comparable new Class A construction in the area are in excess of $275 per square foot.

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Aerial

1400 18 th Avenue South

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1400 18 TH Avenue South

8 | Cassidy Turley

Property Highlights

Ceiling Heights Finished ceilings vary from 7'8" on the 1st floor, 10'3" on the 2nd floor, 8'9" on the 3rd floor and 8'8" on the 4th floor Slab to Slab Height 10' to 12' slab to slab height allowing for an exposed ceiling environment of 1'-2' for easy access to the mechanicals, i.e., VAV boxes, pulling cabling, etc. Parking 202 existing spaces for employees. 14 visitor parking spaces & 7 service center spaces Roof Slate roof with clay ridge caps on both the A wing and C building, the B-wing consists of Carlisle 60-mil EPDM with rocks placed on it for the placement of the roof-top chiller unit Life Safety The building is fully sprinkled. The fire pump was replaced in 1998 with jockey pump and controller with 750GPM, 80PSI, 50HP, 460/3/60, the new controller was also replaced with a 208V. All fire extinguishers are located every 75' on each floor as required by codes. Fire pump, sprinkler, strobes and horn tests are done annually and semi-annually on the Liebert units. Current Occupancy 100%

Property Information

Owner Sony Music Entertainment

Property name 1400 18 th Avenue South

Square Footage 81,041 RSF

Address 1400 18 th Avenue South Nashville, TN 37212

Land Area 2.66 Acres

Year Built 1916 (Renovated 1999)

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Property Highlights

Site Plan Doors Main entrance doors to both buildings are solid cherry wood doors Interior doors throughout the building are cherry wood with insulated glass tops and side panels with a stained glass coding on each floor All stairwell and service center doors throughout the building are aluminum and fire rated as required by codes Elevators Two elevators are located in the main building with the smaller elevator accessing the 5th floor. There is no elevator in the C Building HVAC Air cooled chiller, air handler units on each floor, variable freq drive, 2 boilers, 4 Liebert units (1 for comm room), fan coil units, pumps (4), 4 FM 200 units. There are strategically placed VAV boxes throughout the building for managing controlled temps. Electrical Electrical services provided by Nashville Electric Service with electrical rooms on each floor

Plumbing The building consists of 14 bathrooms. The Chairman has a private bathroom, while there are two single unisex bathrooms located on the west side of the 4th and 3rd floor of the main building. There are also 3 unisex bathrooms located on each floor of the C building. Each floor of the main building consists of a kitchenette, which includes refrigerator, microwave, dishwasher and ice maker. There are also coffee bars located on each B-wing and West side of the building, including each tenant having their own isolated coffee bar, microwave and refrigerator for privacy. Generator The building contains 1 (one) back-up generator. The generator was replaced in 1998 to a 100KW Natural gas generator also included was a new transfer switch panel. All batteries were replaced on the UPS system in 2010 Cafeteria Fully furnished with tables/chairs, including soft seating, 600 pound ice maker, television, refrigerator and freezer. This space is also available for private company lunches catered by outside venues. There is also an outside picnic area available with outdoor lawn furniture, including umbrellas for shade.

Energy Management System There are light sensors installed in each office, bathrooms and private areas. Also available is a Digital Control Center with a start/stop optimizer for heating and air conditioning including ease of temperature changes when needed. ADA Compliance The building is currently compliant with the Americans with Disabilities Act Auditorium 2,400 SF available for leasing and/or hosting events such as listening parties, presentations, meetings, seminars, etc. Security System The building consists of a secure card-key access program. The security system is monitored by ACS Monitoring. Historical Landmark The building is also registered as a Historical Landmark .

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Stacking Plan

Vacant

2013

2016

Common Area

Building A

SONY 6,970 SF 6/30/2016

ATTIC

1 2 3 4 1 2 3 4 1 2 3

SONY 11,749 SF Expire: 6/30/2016

Vanderbilt University Suite 6,148 SF Expire: 1/31/2016

SONY Suite 6,162 SF Expire: 6/30/2016

Vanderbilt University Suite: 4,728 SF Expire: 1/31/2016

Vanderbilt University Suite: 5,838 SF Expire: 1/31/2016

Auditorium (Sony) 4,467 SF 6/30/2016

Vanderbilt University Suite 2,405 SF Expire: 1/31/2016

Cafeteria 3,172 SF No expiration

SONY Storage Vault 8,407 SF 6/30/2016

Building B

SONY Entire Floor 3,775 SF Expire: 6/30/2016 SONY Entire Floor 3,774 SF Expire: 6/30/2016 Vanderbilt University 3,906 SF Expire: 1/31/2016 Vanderbilt University Entire Floor 3,601 SF Expire: 1/31/2016

Building C

ROAR 661 SF Month to Month

Debra McCloud 902 SF Month to Month

Live Nation 1,214 SF Month to Month Live Nation 1.683 SF Month to Month

*Actual total square footage for the three buildings is 81,041. The square footage referenced in the leases for Building C results in a discrepancy of 527 RSF. It is assumed this RSF is corrected after the first year of tenancy.

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Floor Plans

Vacant

Month to Month 2016

Vacant

2013

2014

2015

2016

2017

2018

First Floor

Live Nation 1,683 SF Exp: Month to month

ic t

micro

intern

counter

copier

B G R U U B G R U B G R U

36 36

Vanderbilt University 3,601 SF Exp: 1/2016

counter

worktable

iltn bl e

18"

built-incounter i-ic er

sidedsorter

built-indouble

Vanderbilt 2,405 SF Exp: 1/2016

(N.C.I.)

bench

Sony 8,407 SF Exp: 6/2016

telephoneracks

computerracks

island

sorter

counterformonitors

copier

flatfiles

counter

copier

drafting (NIC) table

water copier

Cafeteria 3,172 SF

refrig

ice dw

counter

Second Floor

copier

Live Nation 1,214 SF Exp: Month to Month

36 36 30 30

micro

1/64" = 1'-0" 1 Level 1- Rentable SF

Sony Auditorium 4,467 SF Exp: 6/2016

lowbookcase

desk

36 36 36 36

-hig -hi

3-high

Vanderbilt University 3,906 SF Exp: 1/2016

flatfiles

copier

3-high

flatfiles

ic e

micro

copier

intern

counter

copier

built-inbar

counterwithshelvesabove

counter

36 36

built-in desk

ice dw

bench

copier

Vanderbilt University 5,838 SF Exp: 1/2016

1'-2"

2'-2"

micro

A/Vcabinets

R R

bartop

built-in desk

Vanderbilt 4,728 SF Exp: 1/2016

shelves above l

copier

counter

worktable

18"

sidedsorter

built-indouble

built-incounter

I.)

12 | Cassidy Turley

DN 1/64" = 1'-0" 4 Level 2 Gross SF

1/64 1 level

tl n c

(N.C.I.) (N.I.)

(N.C.I.)

bench

telephoneracks tele n c

telephoneracks

computerracks comper s

computerracks computerracks

island

sorter

counterformonitors

Floor Plans

Vacant

Month to Month 2016 Common Area

A t t i

Third Floor

Debra McCloud 902 SF Exp: Month to Month (ROAR 661 SF) Exp: Month to Month

Fifth Floor

None

B R

Buil Gro Ren Usa

Sony 3,774 SF Exp: 6/2016

DW R

B R

6.75"R

T"57.11

ice dw

7.25"R 11"T

copier bench bench bench

11"T 7.25"R

built-indesk

SONY 6,162 SF Exp: 6/2016

Attic - SONY 6,970 SF Exp: 6/2016

7"R

T"21 T

T"21

Vanderbilt 6,148 SF Exp: 1/2016

copier

B R

built-inmedia

sorter

2' 36 36

micro R

Fourth Floor

1/64" = 1'-0" 2 Attic - Gross Sf

1/64" = 1'-0" 1 level 3 - Rentable SF 1/64" = 1'-0" 1 Attic - Rentable SF

Build Gros Rent Usab Build Gros Rent Usab Build Gros Rent Usab 1

None

Vacant

2013

2014

2015

2016

2017

2018

existing files,over files,and flats in

file room

SONY 3,775 SF Exp: 6/2016

3'-6"

3';

copier

elgnis

elgnis l

flat

flats

stacked flats

stacked

copier

ice dw

DW R

SONY 11,749 SF Exp:6/2016

shelvesabove

copier

6.75"R

T"57.11

built-indesk

copier

counterw/shelvesabove

banquet

16'-6" (3pieces)

A/Vcabinets

ice dw

shlvs.

coats

copier bench bench bench

Att Pr

built-indesk

7.25"R 11"T

11"T 7.25"R

copier

7"R

T"21

built-inmedia

micro R 1/64" = 1'-0" 2 Level 4 - Gross SF

sorter

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2' 36 36

2' 1/64" = 1'-0" 1 level 4 - Rentable SF * micro R

Market Overview

Nashville, Tennessee Nashville is the capital of Tennessee and a vital transportation, business and tourism center for North America. The Nashville MSA, in the state’s center, comprises 13 counties for a total population of just over one and a half million. Nashville continues to impress business leaders and real estate investors alike for its overall quality of life, its pro business government and its rich offering of cultural and entertainment options. Nashville’s strength as a community truly rests on one solid foundation—its economic diversity. It has a high level of entrepreneurial activity, with self-employment above the state and national average and higher than most major metros in the country. With one of the nation’s most diverse economies, Nashville is anchored by health care management, tourism, music and entertainment, auto manufacturing, higher education, and publishing. Regional Highlights & Accolades • Nashville Ranked #3 Overall in America’s Best Cities Travel and Leisure, November 9, 2012 • Tennessee Ranked 8th Best State for Business Climate Site Selection, November 1, 2012

• Tennessee Ranked #1 in Top 10 States for Low Business Taxes & Regulations US Chamber of Commerce, Jan 9, 2012 • Nashville Named One of 11 U.S. Comeback Cities Kiplinger.com, April 11, 2012 • Tennessee Ranked One of the Top 10 Business Climates in U.S. Site Selection, Nov 1, 2011 • N ashville Ranked One of America’s Best Cities Businessweek.com, Sep 22, 2011 • Nashville Named One of Seven Top Spots in Nation for Start-Ups Wall Street Journal, Aug 25, 2011 • Nashville Ranked #3 Next Big Boom Town Forbes, July 06, 2011 • Tennessee Ranked #1 State Most Friendly to Business US Chamber of Commerce, June 23, 2011 • Tennessee #6 for 2010 Economic Growth U.S. Bureau of Economic Analysis, June 13, 2011 • Nashville Named One of the Top 10 U.S. Cities for College Grads Livibility.com, June 08, 2011 • Nashville Has ‘Best Music Scene’ in the Country Rolling Stone, April 20, 2011

• Nashville Ranked #13 of America’s 50 Best Cities Businessweek, September 28, 2012 • Nashville Listed as One of 10 Underrated Hotbeds of American Innovation Fast Company, August 28, 2012 • Nashville Ranked #9 on the List of Cities with Brain Gain Forbes, August 13, 2012 • Top City for Global Trade Global Trade, August 13, 2012 • Nashville Ranked #10 Best Place for Business & Career Forbes, June 27, 2012 • Nashville Ranked #9 of the Hottest American Cities of the Future Business Insider, June 25, 2012 • Ranked #1 Best City for Job Growth Kiplinger, June 12, 2012 • 4th in Job Creation in U.S. Gallup, April 3, 2012 • 2nd Most Cost-Attractive Business Location KPMG, March 27, 2012 • 5th Fastest Growing Job Market in U.S. Bureau of Labor and Statistics, March 19, 2012

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dersonville Hen

431

Top Area Employers

112

Old Hickory

109

1. Vanderbilt University and Medical Center 2. HCA

Mount Juliet

40 3. Nissan North America, Inc. 4. St. Thomas Health Services 5. CBRL Group, Inc. 6. Gaylord Entertainment 7. Asurion 8. VA Medical Center 9. Dell Inc. 10. AT&T Inc. 11. Verizon Wireless 12. Bridgestone Americas Holding 70

Nashville

440

1400 18 th Avenue South

431

840

LaVergne

Brentwood

Smyrna

840

Nolensville

Franklin

Murfree

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431

Market Overview

Nashville MSA Office Market Overview For most office markets around the country, commercial real estate leasing has been in a holding pattern that is beginning to recover. The timing and strength of the recovery is dependent on a number of factors: consumer confidence, increased employment, capital constraints, and commercial and consumer expenditures. Nashville’s office market only saw a small bump in the road from 2008-2009, and has been moving forward ever since. The diversification of industries has provided insulation to adverse changes in the economy, and has been the key to strong leasing and absorption. Direct vacancy for the office market is 8.7%, down from 14.4% in 2009. After small negative net absorption in 2009, absorption has been positive since. Both 2010 and 2011 had absorption figures well above 500,000 SF, and 2012 reported a positive number just over 1.0 MSF.

First quarter 2013 posted positive 146,394 SF – a relatively flat number considering the recent historical absorption figures. The reason for this low figure is simply that there is very little space to absorb and little speculative construction under way. Large users such as Tractor Supply, Amsurg and LifePoint Hospitals are building new headquarters within the MSA and will add to the vacancy rate when they move. Landlords are diligently pre-marketing their existing space with hopes of leasing the space before it hits the vacancy and absorption figures in early 2014. Interest in Nashville remains high, and new relocations are always a possibility. With strong tenant demand and lack of quality “large blocks” of space, the pressure has shifted to the developers to add speculative space, with an emphasis on LEED certification and higher end Class A product both inside the city and in the suburbs.

Construction, Absorption & Vacancy t i , rption, and Vacancy

1,500,000

20.0%

18.0%

1,250,000

16.0%

1,000,000

14.0%

750,000

12.0%

500,000

10.0%

250,000

8.0%

6.0%

-250,000

4.0%

Construction

Absorption

Vacancy

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Market Overview

Green Hills - Music Row Submarket The Green Hills - Music Row submarket of Nashville, where the 1400 18 th Avenue South Building is located, has been one of the strongest submarkets in the city over the past several decades. While somewhat smaller than most of the submarkets, it commands the highest rents in the MSA. In fact, as of the most recent quarter, Class A asking rents have exceeded $30.00 PSF for the first time. Music related industries and Vanderbilt or Belmont Universities are the leading occupiers of space. Complementing the strength of the office market is the tremendous growth of high-end single family and multi- family residences. Single family residential pricing has surpassed $200 PSF in the area, with builders frequently tearing down older homes as no suitable land exists. The multi-family component has close to 3,000 units in vary- ing stages of construction in the immediate area. All of this residential activity bodes well for office product in the submarket.

The continued growth of Belmont and Vanderbilt Univer- sities has also been a large driver for office demand in recent years. Vanderbilt has expanded their residential campus, one of which sits directly across the street from the subject property, and their Medical Center. Belmont has added, among other facilities, new law and pharmacy schools. The Green Hills – Music Row submarket consists of ap- proximately 1,928,000 SF (626,470 of which is consid- ered Class A). The current vacancy rate overall is 8.1% and 3.4% for Class A space, down considerably from their peak in 2009 of 12.3% overall and 8.1% for Class A. Due to the limited construction in the area, absorption has been relatively light. It should be noted the submarket has not experienced a year of negative absorption in over 10 years.

Class A Rental Rate Growth Class A Rental Rate Growth

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

Green Hills / Music Row Overall

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Lease Comps

Property Name Address

Submarket Building Class

Sign Date Start Date Square Footage Starting Rate Rate Type

Bumps Term

Free Rent TI

Picture

Comments

Palmer Plaza 1801 West End Ave.

West End Class A

11/2012 1/2013

$26.50 FS

2.0% / Year 60 Mos

0 Mos $14.00/PSF

6,608 SF

New lease

Roundabout Plaza 1600 Division St.

West End Class A

8/2012 10/2012

$28.50 FS

2.0% / Year 60 Mos

2 Mos $20.00/PSF

3,248 SF

New lease

Terrazzo 700 12th Ave. S

CBD / Gulch Class A

3/2012 6/2012

$26.91 FS

2.5% / Year 62 Mos

2 Mos $45.07/PSF

New lease in first generation space

7,659 SF

The Scene Building 210 12th Ave S.

CBD / Gulch Class B

2/2012 4/2012

$21.12 FS

3.0% / Year 45 Mos

0 Mos $6.92/PSF

Renewal and Expansion

2,451 SF

Braid Building 124 12th Ave. S

CBD / Gulch Class B

2/2012 3/2012

$22.50 FS

1.5% / Year 75 Mos

5 Mos $4.00 PSF

8,452 SF

New lease

1101 McGavock St. CBD / Gulch Class B

12/2011 2/2012

$20.00 FS

2.0% / Year 61 Mos

1 Mos $7.00 PSF

7,935 SF

New lease

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Palmer Plaza

Roundabout Plaza

Terrazzo

The Scene Building Braid Building

1101 McGavock Street

1400 18 th Avenue

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Sale Comps

Total Square Footage

Sale Price PSF

Year Built

Bldg Class

Sale Date

Sale Price

Picture

Property Name

SubMarket

Comments

75K of office/20K of retail 100% occupied at time of sale. New construction. Building was sold as part of a condo regime.

Terrazzo 700 12th Ave South Nashville, TN 37203

CBD/Gulch 95,000 2009 A 10/24/2012 $19,000,000 $200

The Carothers Building 9009 Carothers Parkway Franklin, TN 37067

Property includes excess land with 600K of potential class A office development

Cool Springs 498,961 1997 A/B 10/20/2012 $96,100,000 $193

The McEwen Building 1550 W McEwen Dr Franklin, TN 37067

Cool Springs 173,044 2009 A 5/1/2012 $40,000,000 $231

Does not include excess land.

Baker Donelson Center 211 Commerce Nashville, TN 37201

CBD 225,000 2000 A 3/16/2012 $47,130,000 $209 100% Occupancy at time of sale.

Sale also included 71 acres of land for a total sale price of $42 mil. ($28 mil for bldg and $14 mil for land)

Nine Corporate Centre 6550 Carothers Pkwy Franklin, TN 37067

Cool Springs 155,919 2008 A 9/7/2011 $28,000,000 $180

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Terrazzo

The Carothers Building

The McEwen Building

Baker Donelson Center

Nine Corporate Center

741 Cool Springs

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Financial Information

Offering Summary

Price This asset is being marketed without an asking price.

Current Occupancy 100%

Projected Net Operating Income Year 1:

$988,730

Year 2: Year 3:

$1,072,685

$998,203

Investment Overview 1400 18 th Avenue offers an investor the opportunity to purchase an office building in one of the most sought after areas of Nashville. The building offers strong in-place income with good credit tenants, Sony and Vanderbilt University. More importantly, the building offers tremendous upside to a potential investor. Upon Sony’s departure, much of the building could be re-tenanted with higher rents. Additionally, the owner is currently not charging for covered parking in its 202 space onsite garage which could generate an additional $125,000 in annual revenue for the building owner.

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Assumptions

Property Assumptions

Market Leasing Assumptions

Analysis Start

August 1, 2013

Rentable Building Area

Initial Lease-Up Period

12 months

Occupied

76,390

94.26% 5.74% 100.00%

Vacant

Office Renewal

4,651

Total

2013 Market Rental Rates

81,041

$23.00

Growth Rates

Rent Structure

Full Service

General Growth Rate Operating Expenses Real Estate Taxes

3.00% 3.00% 3.00%

Rent Adjustment

2.50% annually

Annual Market Rent Growth Rate

Lease Terms

36 months

Yr 1 Yr 2 Yr 3

3.00% 3.00%

2013 Tenant Improvements

3.00% New 3.00% Renewal

$15.00

Yr 4+

$5.00 $7.50

Weighted

Miscellaneous Revenue

Future Leasing Commissions New

6.00% 3.00% 3.75%

2013 Miscellaneous Revenues

Renewal Weighted

Parking

$100,000 $100,000

Total 2013 Misc. Revenues

Free Rent (Outside)

0 Month(s) Free

Operating & Capital Expense Assumptions

Renewal Probability

75%

Management Fee (% of EGR)

Downtime Period New

3.00%

6 Month(s) 2 months

Weighted

Capital Reserves

$0.35 psf

FOOTNOTES: Actual total square footage for the three buildings is 81,041. The square footage referenced in the leases for Building C results in a discrepancy of 1,479 RSF. It is assumed this RSF is corrected after the first year of tenancy for the tenants in Building C.

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Operating Pro-Forma

Year Ending

PSF

Apr-2014

Apr-2015

Apr-2016

Apr-2017

Apr-2018

Apr-2019

Apr-2020

RENTAL INCOME

Base Rental Revenue

$20.56 ($0.53) $20.04

$1,666,451 ($42,566) $1,623,885

$1,724,950

$1,756,173 ($108,282) $1,647,891

$1,941,314 ($248,161) $1,693,153

$1,985,730 ($25,624) $1,960,106

$2,038,302 ($118,323) $1,919,979

$2,107,260 ($207,364) $1,899,896

($8,805)

Absorption & Turnover Vacancy

Total Rental Income

$1,716,145

Per Square Foot

$20.04

$21.18

$20.33

$20.89

$24.19

$23.69

$23.44

OPERATING EXPENSE RECOVERIES

$0.08

$6,609

$19,236

$29,592

$21,434

$44,693

$56,041

$29,029

Per Square Foot

$0.08

$0.24

$0.37

$0.26

$0.55

$0.69

$0.36

MISCELLANEOUS INCOME Parking Total Miscellaneous Income

$1.54 $1.54

$125,000 $125,000

$128,750 $128,750

$132,612 $132,612

$136,591 $136,591

$140,689 $140,689

$144,909 $144,909

$149,257 $149,257

Per Square Foot

$1.54

$1.59

$1.64

$1.69

$1.74

$1.79

$1.84

EFFECTIVE GROSS INCOME

$21.66

$1,755,494

$1,864,131

$1,810,095

$1,851,178

$2,145,488

$2,120,929

$2,078,182

Per Square Foot

$21.66

$23.00

$22.34

$22.84

$26.47

$26.17

$25.64

OPERATING EXPENSES

Repairs and Maintenance

$1.23 $0.40 $0.85 $1.09 $2.18 $0.65 $0.25 $0.44 $2.37 $9.46

$100,000 $32,416 $68,885 $88,725 $176,600 $52,665 $20,000 $35,658 $191,815 $766,764

$103,000 $33,389 $70,951 $91,387 $181,898 $55,924 $20,600 $36,728 $197,569 $791,446

$106,090 $34,391 $73,080 $94,128 $187,355 $54,303 $21,218 $37,830 $203,497 $811,892

$109,273 $35,422 $75,272 $96,952 $192,976 $55,535 $21,855 $38,965 $209,601 $835,851

$112,551 $36,485 $77,531 $99,861 $198,765 $64,365 $22,510 $40,133 $215,889 $868,090

$115,927 $37,579 $79,856 $102,857 $204,728 $63,628 $23,185 $41,337 $222,366 $891,463

$119,405 $38,707 $82,252 $105,942 $210,870 $62,345 $23,881 $42,578 $229,037 $915,017

Landscaping

Cleaning

Security and Safety

Utilities

Management Fee

Administrative Expense

Insurance

Real Estate Taxes

Total Operating Expenses

Per Square Foot

$9.46

$9.77

$10.02

$10.31

$10.71

$11.00

$11.29

NET OPERATING INCOME

$12.20

$988,730

$1,072,685

$998,203

$1,015,327

$1,277,398

$1,229,466

$1,163,165

Per Square Foot

$12.20

$13.24

$12.32

$12.53

$15.76

$15.17

$14.35

CAPITAL EXPENDITURES Tenant Improvements

$0.00 $0.00 $0.35 $0.35

$0 $0

$34,453 $12,186 $29,215 $75,854

$211,856 $74,933 $30,092 $316,881

$428,409 $143,447 $30,994 $602,850

$50,133 $17,732 $31,924 $99,789

$231,501 $81,881 $32,882 $346,264

$405,716 $143,499 $33,869 $583,084

Leasing Commissions

$28,364 $28,364

Capital Reserve

Total Capital Expenditures

Per Square Foot

$0.35

$0.94

$3.91

$7.44

$1.23

$4.27

$7.19

CASH FLOW

$11.85

$960,366

$996,831

$681,322

$412,477

$1,177,609

$883,202

$580,081

$11.85

$12.30

$8.41

$5.09

$14.53

$10.90

$7.16

Per Square Foot

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Rent Roll

Current Rent Roll

Future Rent Increases

Aug-2013 Rent

Tenant

Suite

Recoveries

Commencement

Expiration

% of Building

Date

Amount

A301, A200, B100 and 200 A400, A302, A100S, B300 and 400

$24.00 $24.50 2.5% bumps

Vanderbilt University

26,626

$23.50

2/14 2/15

$5.62 base stop

2/1/2011

1/31/2016

32.85%

Sony Music

37,382

$23.00

Annual

Base Stop

8/1/2013

7/31/2016

46.13%

Sony Attic

Building A

6,970

$5.00

None

8/1/2013

7/31/2016

8.60%

2.5% bumps

Sony Cafeteria

Building A

952

$23.00

Annual

Base Stop

8/1/2013

7/31/2016

1.17%

Live Nation

C100 and 200

2,897

$17.00

None

7/1/2013

MTM

3.57%

Debra McCloud

C301

902

$17.00

None

7/1/2013

MTM

1.11%

ROAR

C302

661

$26.05

None

7/1/2013

MTM

0.82%

Total Occupied Space:

76,390

Occupancy:

94.26%

Vacancy/Non-Revenue Space

Tenant

Suite

Rent

Escalator

Expense Recoveries

Commencement

Term % of Portfolio

Vacant space

1,479

$23.69

Annual

2.5% bumps

8/1/14

36 months

1.83%

Cafeteria (non-revenue)

3,172

3.91%

Total Vacancy/Non-Revenue Space:

4,651

* Actual total square footage for the three buildings is 81,041. The square footage referenced in the leases for Building C results in a discrepancy of 1,479 RSF. It is assumed this RSF is corrected after the first year of tenancy for the tenants in Building C.

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