FabFitFun - Proposal

A Proposal For Integrated Real Estate Services

Prepared for FabFitFun 04. 25. 19

cushmanwakefield.com

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CONTENTS

EXECUTIVE SUMMARY

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ABOUT CUSHMAN & WAKEFIELD

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OUR TEAM

13

ECOMMERCE CAPABILITIES

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ST. ONGE – NETWORK OPTIMIZATION

18

LABOR CONSULTING

22

BUSINESS INCENTIVES

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SITE SELECTION & BROKERAGE

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PROJECT & DEVELOPMENT SERVICES

32

WHY CUSHMAN & WAKEFIELD?

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APPENDIX

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Cushman & Wakefield | FabFitFun

EXECUTIVE SUMMARY We are excited to present our solution to support FabFitFun in evaluating a possible East Coast fulfillment center. We understand that as your business rapidly grows, you face an array of supply chain decisions. What parts of your current model do you keep, and what do you leave behind? Where do you expand, and when? Finetuning the shape of your distribution network will be key to continued success. But you need the right data and plan in place before taking that first step. Our team is ready to tackle this challenge. Driven by world-class research and the industry’s top logistics platform, Cushman & Wakefield (C&W) will carry out a rigorous process to find the right strategy for your needs. And at every point along the way, our team of eCommerce, supply chain and labor experts will mobilize to put the plan into action. As part of this approach, we will leverage our deep partnership with St. Onge Company, a top supply chain engineering firm. When needed, we will also engage top C&W talent in brokerage, financial reporting, and project management to ensure your real estate footprint is optimized for cost and efficiency. Below are the stages of our solution and our proposed steps to meet FabFitFun’s goals, from understanding feasibility and selecting the best location, to creating the physical operation. These steps and the resources used to support them are explained further throughout our proposal. We trust this proposal will show the value of our approach and reveal Cushman & Wakefield as the right choice to help you navigate this important decision.

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ITERATION 1: DELIVERY SERVICE OPTIONS AS A DRIVER FOR LOCATION Using the proposed outbound service requirements, identify which key U.S. locations could service 75% of the U.S. demand most cost effectively, and how. C&W SOLUTION: + + St. Onge Company performs full U.S. planned network analysis + + Analysis draws, among many data sets, on existing U.S. customer data, SKU profiles, delivery SLA, planned growth drawing on other sources + + Analysis also draws on existing distribution network currently serving U.S. customers Study identifies top target markets to optimize metrics, operation goals and customer service objectives, based on data inputs

ITERATION 2: LOCATION

Product, people, property.

C&W SOLUTION: + + C&W Strategic Consulting team performs iterative review and analysis for targeted markets including labor availability and sustainability, cost of labor, competitive review of other comparable employers, labor organizing etc. + + Labor analytics performed to one of multiple levels of detail as iterative review process continues + + C&W teams collaborate to identify specific sites and/or existing buildings that meet agreed- upon requirements; both available opportunities and off-market opportunities that may fit timing requirements + + Network optimization model is run iteratively adjusting variable as indicated from labor analysis to refine search from region level down to specific sites + + Comprehensive comparative cost model is developed and refined constantly capturing all costs associated with each potential site; including, among others rent vs. own occupancy cost, real estate taxes and operating expenses, labor, inbound and outbound transportation, drayage, duties, etc. + + Led by C&W’s Business Incentives Practice, available economic incentives—both statutory and those subject to negotiation—are identified and incorporated in operating and financial analyses throughout the process; potential incentives depend heavily on employment levels, capital investment and other factors + + See full explanation of these services in Labor Consulting, Business Incentives, and Site Selection sections herein

Cushman & Wakefield | FabFitFun

ITERATION 3: OPERATIONS

ITERATION 4: RECOMMENDATIONS

Explore how the operation could physically work in the further shortlist of identified locations – facilities, lease/ ownership, sole use/shared use, manual/automated, supply chain and how the business would operate it. C&W SOLUTION: + + C&W’s Financial Analysis team prepares rigorous lease vs. own analyses for each identified location, incorporating relevant tax, cash and P&L impacts + + St. Onge performs analysis of tradeoffs between manual fulfillment vs. greater automation for planned volumes and SKU profile + + C&W/St. Onge provides FabFitFun ongoing support as needed for FabFitFun’s sourcing efforts for the new U.S.-based facility + + See full explanation of these services in St. Onge – Network Optimization section herein

Develop strategic recommendations for vertically integrated services.

C&W SOLUTION: + + C&W/St. Onge provides FabFitFun ongoing support for preparation of final recommendations for location, design, costing, MHE and real estate transaction terms for internal approvals + + C&W performs final site selection, negotiation of contract terms, finalizing incentives and engages other resources to complete all facets of the transaction + + St. Onge can be engaged to manage the design / implementation of theMHE through commissioning and First Receive.

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ABOUT CUSHMAN & WAKEFIELD

LOGISTICS & INDUSTRIAL SERVICES

Through a consistent, client-focused approach, we provide executable real estate strategies, helping clients maximize cost saving opportunities and improve business success. Cushman & Wakefield’s 840+ logistics and industrial professionals in the Americas provide local market expertise to clients around the globe. With our extensive knowledge, we are able to execute strategies around any property type or challenge. We have in-house professionals who specialize in global supply chain solutions, build-to-suit, eCommerce, food and beverage, 3PL, agency leasing, ports and intermodal, and automotive. We invest the time to understand your short- and long-term business goals, allowing us to collaborate with you and our in-house specialists, and then deliver highly customized industrial real estate solutions. We help clients identify the business and economic drivers that factor into supply chain requirements and the infinite variables of manufacturing, transportation, warehousing, and delivery of products to end-users.

#1 INDUSTRIAL LEASING U.S. MARKET SHARE

For the third consecutive year, we hold the #1 position in Industrial leasing in the U.S., based on CoStar data.

INDUSTRIAL MARKET SHARE

3 YEARS IN A ROW U.S. LEASING

2015 2016 2017

*According to data sourced by Costar Group

Cushman & Wakefield | FabFitFun

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INDUSTRY’S MOST COLLABORATIVE PLATFORM

Our collaborative culture ensures that we share best- in-class products, services, and innovations across the enterprise, connecting and leveraging key information on our clients’ behalf. VALUE BEYOND THE REAL ESTATE. We help clients identify not only the business and economic drivers that factor into supply chain requirements, but also the infinite variables of manufacturing, transportation, warehousing, and delivery of products to end users. IMPACT ON CORPORATE PERFORMANCE. Services designed to improve speed to market, reduce cost and risk, and maximize location and labor requirements. Cushman & Wakefield’s Logistics & Industrial Services has over 660 dedicated professionals in the U.S. and over 840 in the Americas. We provide services to industrial clients in all major markets and in many secondary and tertiary markets across the country. C&W is #1 in Industrial Leasing Market Share for the U.S. In 2018, our industrial professionals completed over 6,182 transactions in the Americas comprising over 260.3 MSF. We provide services to many top industrial companies, including Unilever, BMW, Mercedes, DHL, GE, Advance Auto Parts, United Technologies, and Wayfair. SIZE AND SCOPE

Cushman & Wakefield | FabFitFun

MARKET RESEARCH

Our specialized national research team focuses on the logistics & industrial real estate market and its unique trends.

+ + Quarterly market reports

+ + Tracking of industrial economic indicators and drivers

+ + Tracking of major lease and sales transactions across U.S. markets

+ + Historic trends on vacancy, absorption, construction activity, leases, sales, and rental rates Market rankings and trends in warehouse/DC space

SCOPE OF SERVICES TENANT REPRESENTATION

LANDLORD REPRESENTATION

+ + Market Assessment

+ + Property Analysis

+ + Strategy Development

+ + Location Analysis

+ + Labor/Demographic Analysis

+ + Market Analysis

+ + Site Selection Strategy

+ + Target Market Analysis

+ + Occupancy Cost Analysis

+ + Property Positioning

+ + Acquisition/Disposition

+ + Marketing & Leasing Strategy

+ + Build-to-Suit Planning

+ + Marketing & Sale Disposition Strategy

+ + Negotiations

+ + Marketing Program Execution

+ + Negotiations

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PROVIDING SUPPORT ACROSS THE INDUSTRIAL PLATFORM

Supply chain, logistics, and transportation Supply chain network design, warehouses and manufacturing plants location, product moves between facilities, and how the client ultimately moves product to market for consumption New facility construction, project planning and execution, and considerations for selecting a new facility (versus existing buildings) Decision support for BTS, and initiation, management and successful completion of BTS projects on-time and on-budget Latest trends and innovative solutions for online purchase fulfillment Ongoing evolution of support for supply chain to meet the demands of changing consumer buying patterns Greater levels of online shopping are challenging the status quo, and pushing retailers and e-tailers to consider new and innovative ways of both delivering product to customers and using their distribution centers, stores and delivery partners A subsector of the supply chain industry; fulfillment, logistics, and/or transportation services Supply chain benefits from 3PL/4PL relationships, when and why to consider leveraging a 3PL/4PL firm, and relationship optimization Supply chain benefits from 3PL/4PL relationships, when and why to consider leveraging a 3PL/4PL firm, and relationship optimization 3PL/4PL firms benefit from understanding what their clients may need and how to manage their own real estate strategy to maximize opportunities presented by client contact Skills and capabilities in meeting the unique needs of landlord clients Property marketing strategy and execution to effectively attract and retain creditworthy tenants, minimize downtime and maximize return on investment Maritime and inland ports, global ocean shipping, rail and intermodal Supply chain networks’ impact on transportation modes, port location for product movement, and how global shippers and rail companies are changing Labor issues, logistics, unique requirements of real estate Ensuring a complete scope of supply chain services fromstrategy to implementation, site selective and comparative analyses, transaction management, project management, build-to-suit, facilities management, and property appraisals Knowledge and experience to support all aspects of rail-related real estate Acute knowledge of rail properties, sites, easements, and right-of-ways can help monetize under-utilized rail properties and provide rail-served site selection

Global Supply Chain Solutions (GSCS)

Build-to-Suit (BTS)

eCommerce & Electronic Fulfillment

3PL/4PL

Agency Leasing

Ports & Intermodal

Automotive

Rail

Cushman & Wakefield | FabFitFun

OUR TEAM

MARQUES WILLIAMS Director Single Point of Contact

BEN CONWELL Sr. Managing Director - Practice Leader

BETHANY CLARK Sr. Managing Director Strategy & Operations - Logistics & Industrial Services

newCommerce Advisory Group Logistics & Industrial Services

CRAIG VORSE Partner & Director Supply Chain Strategy St. Onge Company

RANDY THOMPSON Sr. Managing Director Industrial Build to Suit Advisory Project & Development Services

MATT POREBA Manager Labor Consulting

JANE ORLIN Sr. Managing Director Business Incentives Practice

*Team bios provided in the appendix

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ECOMMERCE CAPABILITIES

NEWCOMMERCE

With the retail landscape ever-evolving with new technology and ways to shop, many retail occupiers, owners, and investors are searching for the next move in the quest to maximize bottom lines and maintain growth through the evolution. Cushman & Wakefield’s experts from Retail Services, Logistics & Industrial Services, and the eCommerce advisory group have developed an integrated approach to address the challenges currently faced by the retail industry—an approach we call newCommerce. We are equipped to support long-standing, bricks-and-mortar retailers looking to adapt supply functions for eCommerce

NO FIRM HAS DONE MORE ECOMMERCE LOGISTICS TRANSACTIONS THAN C&W

integration, or eCommerce-only organizations (Pure Players) ready to hit the ground with a test “pop- up” store or full store roll-out strategy. We can assist owners and investors with an effective portfolio optimization plan that attracts and retains occupiers by creating facilities that are relevant to occupier needs. Cushman &Wakefield’s newCommerce experts provide network planning, supply chain consulting, site selection, labor analytics, material handling engineering, incentives, brokerage, valuation, and asset services—a seamless approach to enter or grow in the world of eCommerce.

Cushman & Wakefield | FabFitFun

THE TOP TEAM IN ECOMMERCE

RETAIL + + #1 Ranking in the U.S. by Retail SF Leased

INDUSTRIAL + + #1 Ranking in the U.S. by Industrial SF Leased

+ + 90+ Markets

+ + 120+ Markets

+ + 800+ Professionals

+ + 840+ Dedicated Industrial Professionals in North America

+ + 20.2 M Aggregate SF

+ + 260.3 M Aggregate SF in 2018

CUSHMAN & WAKEFIELD HAS COMPLETED OVER 650 ECOMMERCE LOGISTICS TRANSACTIONS, TOTALING OVER 100M SF.

COLLABORATIVE NEWCOMMERCE SERVICE OFFERINGS Cushman &Wakefield has extensive knowledge in retail services relating to eCommerce, logistics, and supply chain. Our collaborative list of service offerings includes: (See following page)

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NEWCOMMERCE

Engineering management, sustainability consulting, facilities management, and facilities audits & assessments

ASSET SERVICES

CAPITAL MARKETS SERVICES

Acquisition and disposition of properties/assets

CLICKS-TO-BRICKS TRANSITION

Location consulting, logistics network strategy, facility design, and adaptation

Visualize the entire network, including inbound, supply chain, stores, and direct-to-consumer

FULL NETWORK PLANNING

HIGH-PERFORMANCE FACILITY DESIGN

Optimize facility design to maximize process efficiencies and capital deployment

Negotiate, secure, and administer relocation and investment incentives from state and local agencies

INCENTIVES CONSULTING

INVENTORY OPTIMIZATION & PLACEMENT

Where to store/stage inventory, how to use inventory to meet service expectations

MATERIAL HANDLING EQUIPMENT (MHE)

Effectively leverage labor with MHE design and layout

Construction programming, planning, design, bid, and procurement; vendor management; POS installation; new construction; remodels; improvements Lease advisory and negotiation, site selection and transaction management

PROJECT & DEVELOPMENT SERVICES (PDS)

RETAIL AND INDUSTRIAL BROKERAGE SERVICES

STRATEGIC RETAIL & INDUSTRIAL CONSULTING SUPPLY CHAIN CONSULTING, SITE SELECTION, LABOR ANALYTICS TRANSACTION & PORTFOLIO MANAGEMENT

Market entry, store expansion, portfolio optimization, and brand entry

Identify the optimal location/size/properties for distribution centers, fulfillment centers, and stores based on geography and demographics

Manage and support transactions across a portfolio—regionally, nationally, or globally

TRANSPORTATION SUPPORT

Transportation operations and sourcing

Valuation of property and equipment, property tax services, appraisal management, and portfolio evaluation

VALUATION & ADVISORY

Cushman & Wakefield | FabFitFun

SELECT COLLABORATIVE NEWCOMMERCE CLIENT ROSTER

+ + Auto Zone

+ + Indochino

+ + Petco

+ + Confidential Leading Online Retailer

+ + Best Buy

+ + Jaguar/Land Rover

+ + Rue La La

+ + UNTUCKit

+ + Chewy.com

+ + L.L. Bean

+ + Saks Fifth Avenue

+ + Urban Outfitters

+ + Crate & Barrel

+ + Levi’s

+ + Sears

+ + Vans

+ + Dick’s Sporting Goods

+ + Lowe’s

+ + Starbucks

+ + Walmart

+ + Fresh Direct

+ + Mercedes

+ + Target

+ + Wayfair

+ + H&M

+ + Nordstrom

+ + The Home Depot

+ + Wrangler

+ + HSN

+ + One Kings Lane

+ + The North Face

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ST. ONGE – NETWORK OPTIMIZATION

A PARTNERSHIP FOR SUCCESS

Cushman & Wakefield has partnered with St. Onge Company for over twenty years, collaborating to develop and execute supply chain and real estate strategies for hundreds of clients. Network Optimization is an integral part of the site selection process and involves identifying, capitalizing, and achieving cost savings and efficiencies through the optimization of the supply chain. St. Onge Company is an independent supply chain engineering consulting company that not only allows for a deeper and highly customized dive into the supply chain, but also ensures we can evaluate and deliver the implementation of the most appropriate solutions for our clients. The process simultaneously considers a host of logistics considerations, including: (i) product sourcing, (ii) inventory carrying costs, (iii) fixed and variable facility costs, and (iv) transportation costs. Additionally, it accounts for constraints, including: (i) distribution center flow, (ii) throughput or storage capacities, and (iii) inbound flow and outbound delivery time limits.

St. Onge has an extensive track record of success as an independent consulting engineering company. Headquartered in York, Pennsylvania, St. Onge has over 140+ Consultants, Engineers, Account Managers, and Support Professionals that are purely focused on building and deploying optimal strategies for clients. Additionally, St. Onge International, the international arm of the business has regional offices in North and South America, Europe, China and the Middle East. As an independent strategic partner, St. Onge is conflict free with no incentive to sell software, equipment, real estate or 3PL services. As an agnostic partner, St. Onge’s objectivity has led to a reputation built on trust, information, strategy, and utterly unbiased performance.

HOW FABFITFUN WILL BENEFIT

+ + TYPICAL SAVINGS OPPORTUNITIES OF 10 TO 20% OF TOTAL SUPPLY CHAIN COST MODELED + + ABILITY TO QUICKLY TEST THE IMPACT OF ALTERNATIVE OPERATING SCENARIOS + + REUSABLE TOOL TO MODEL THE IMPACT OF FUTURE BUSINESS CHANGES

St. Onge’s offerings are built on an integrated service model for success, in which St. Onge builds a customized approach toward FabFitFun’s specific business needs. Our clients benefit from knowledge- based experience, which provides the vision to create a curated approach toward the deployment of best in class supply chain optimization software needed to support the decision. This unbiased approach allows St. Onge to utilize the following (i) Llamasoft SCG and LNP for network optimization, (ii) Toolsgroup, SlimStock and Llamasoft for strategic and tactical level inventory optimization, (iii) ArcLogistics and Llamasoft for transportation route optimization, and a host of proprietary facility sizing and design tools.

Cushman & Wakefield | FabFitFun

TASKS AND/OR FUNCTIONS INCLUDED

+ + Supply Chain

+ + Design

+ + Labor Analytics

+ + Inventory Optimization/Deployment

+ + Information Technologies

+ + 3PL Selection & Assessment

+ + Supply Chain Visibility

+ + Intelligent Planning and Scheduling

+ + Warehouse Management Systems

+ + Transportation Management Systems

+ + Supply Chain Network Modeling

+ + Facility Modeling

+ + Simulation

+ + Truck Routing, Planning, Scheduling, Execution

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CASE STUDY

Sephora

Distribution Network Optimization

Sephora needed to conduct a network analysis to optimize store and networks in concert, including evaluation of the best third DC location, and determine the value of second and third D2C facilities and location.

RESULTS + + Identified the optimal number and location of distribution center to accommodate future growth + + Evaluated service level/cycle time calculations + + Investigated combo center versus stand-alone facilities (retail versus D2C). + + Evaluated multiple distribution center capacity alternatives (expansion, automation, etc.) + + Investigate alternative distribution strategies

+ + Developed detailed rollout plan based on annual growth

Cushman & Wakefield | FabFitFun

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LABOR CONSULTING C&W Strategic Consulting employs labor economists who are adept at helping clients identify the optimal city in which to operate. Labor strategy engagements begin with a detailed understanding of a client’s cost saving, workforce, access, and operating objectives. Using these criteria, the team screens the entire country to develop a list of viable cities. The team then analyzes viable cities in greater detail to understand labor market supply and demand, business climate, and infrastructure. Finalist locations are identified and on-the-ground analysis is conducted to validate findings and test assumptions with peer employers. C&W employs extensive spatial analytic tools such as Alteryx and Tableau as well as geographic information systems (GIS) mapping to generate special, geodemographic models which require recent, accurate, and unique geo-demographic and lifestyle segmentation data as input each time they are executed for any geography. C&W also utilizes its licensed datasets from the U.S. Census provided by Experian, as well as MOSAIC segmentation data and Moody’s Economy.com for purposes of analysis. Additionally, the resources and tools of our Research Services Group can provide additional market insight analytics and client support including market research (data on average asking rents, absorption, vacancy, construction deliveries and pipeline, etc.), market overviews and market trends.

LABOR ANALYSIS - PEER REVIEW

To quantify the labor value of the East Coast facility, C&W will quickly integrate and compare statistics provided by ManpowerGroup in each regional labor market. Using these statistics, we will evaluate and conduct a peer review to assess the depth of the modeling to date and offer recommendations accordingly.

Cushman & Wakefield | FabFitFun

OUR PROCESS

PHASE 1 – DETAILED STATISTICAL COMPARISON The comprehensive labor study begins with an assessment to rank order locations on their basis of anticipated labor supply, demand and projected costs specific to facility job functions.

Considerations:

+ + 4 Peak Seasons

+ + 300-400 Full-Time Employees

+ + 1,000-1,200 Temporary Labor

+ + Manufacturing Background

+ + New Business Verticals

Purpose:

+ + Screen and identify finalist locations for additional due-diligence (e.g. labor market interviews, occupancy negotiations, and cost analyses)

Content + Deliverable:

+ + A desktop evaluation and index-rating comparison of prospective locations

+ + Projected labor costs and differentials/savings between the prospective locations

+ + Executive dashboard of key market findings and supporting thematic maps

PHASE 2 – EMPLOYER INTERVIEWS The next step in the labor consulting process involves field studies and employer interviews to further understand the real-world operating environment for the specific business needs.

Purpose:

+ + Field-validate Phase 1 findings through peer company employer interviews

+ + Confirm top-performing locations from a labor market perspective and reveal risks

Content + Deliverable:

+ + Aggregate information gathered from employer interviews

+ + Provide insight on local wage offering, applicant volume, quality, attrition, unionization, benefits practices, etc.

PEER REVIEW + VALIDATION OF STRATEGY

As a vertically integrated strategic partner, Cushman & Wakefield’s labor consulting group would be pleased to conduct a peer-review and provide comments and/or recommendations to the approach. If the C&W labor consulting group determines that the studies/reports are insufficient for the depth of the project, our team will prepare an a la carte menu of offerings to supplement any missing information and support full visibility.

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CASE STUDY

Chewy.com

eCommerce Fulfillment Center Labor Market Validation

Increasing online sales have prompted the need for Chewy.com to expand their existing fulfillment center footprint in the central U.S. In partnership with C&W brokerage, six candidate properties were identified throughout the State of Indiana. C&W Business Consulting evaluated each option’s ability to support the 1,000-employee operation with respect to labor market considerations (i.e., labor supply, quality, competition and cost) in order to narrow the list of candidate properties for subsequent real estate due diligence and negotiation.

THE SOLUTION C&W performed a desktop labor market evaluation specific to assessing distribution-center labor supply, demand, competitive exposure, union membership/activity levels, and expected wages.

Unique to C&W, custom target workforce profiles for hourly warehouse workers are developed to identify common demographic household traits most frequently exhibited in its current workforce (i.e., age, income, education, occupation orientation). Results quantify the depth and concentration of similar targeted demographics within the primary commute shed. The desktop analysis facilitated the selection of three properties for further labor market due-diligence. The additional activity entailed interviewing distribution center employers to gain their perspective on:

+ + Workforce recruiting, retention and quality experiences in the market;

+ + Recruiting strategies (i.e., temp-to-perm, advertising, use of staffing agencies for placements);

+ + Applicant volumes, quality, pre-employment testing standards;

+ + Wage structures and benefits practices (i.e., starting wage, progression and premiums/bonus programs, time off with and without pay, vacation, cost of medical, dental, vision, and attendance policies);

+ + Union solicitation or, if already organized, historical frequency of grievances; and

+ + Satisfaction with overall operating environment.

Cushman & Wakefield | FabFitFun

RESULTS + + C&W evaluated three submarkets throughout the Indianapolis metro area. Clayton, Indiana (southwest corridor) was selected as the preferred location based largely on labor market considerations. + + Employer interviews confirmed the desktop study indicators throughout the submarkets. Ultimately, the Clayton region was preferred due to lower labor competition for warehouse-related skillsets with little compromise on labor supply.

+ + C&W provided recommended starting wages for various positions in addition to guidance on wage progression, shift premiums and other incentive pay practices based on local market conditions.

Key Project Figures

+ + Jobs: 600 to 1,000

+ + Building Size: 1.2 million square feet

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BUSINESS INCENTIVES Cushman & Wakefield’s Business Incentives Practice implements strategies for the development, expansion, consolidation or relocation of facilities. A firm’s presence in a location has tremendous financial implications, not only for the company but also for the local municipality and state. We create competition for that residency, unearthing financial opportunities through the procurement of local and state economic incentives. We identify, evaluate, and negotiate incentives such as cash grants, infrastructure improvements, tax reductions, and job training. We evaluate local labor and area amenities to ensure that a business can be properly scaled.

PROCESS OVERVIEW:

FEASIBILITY Confidentially identify and analyze incentive opportunities available to the project

IMPLEMENTATION Prepare applications, attend public meetings and finalize formal incentive contracts.

1

3

NEGOTIATION Prepare negotiation strategy, execute and obtain formal incentive offers.

ADMINISTRATION Prepare administration work plan, monitor and assist reporting and compliance.

2

4

+ + Tasks and/or Functions Included:

+ + Revenue Bonds

+ + Tax Abatements, Credits, and Refunds

+ + Infrastructure Grants

+ + Recruitment & Training Assistance

+ + Transportation Improvements

+ + Relocation Expense Reimbursement

+ + Fixed Asset Grants

+ + Favorable Utility Rates

+ + Low Interest Loans

+ + Tax Increment Finance (TIF)

+ + Forgivable Debt

+ + Taxable and Tax Exempt Industrial

+ + Expedited Permitting, Variances, etc.

HOW FABFITFUN WILL BENEFIT

+ + EXPERTLY ENGAGE LOCAL AND STATE OFFICIALS THROUGH OUR TIME-TESTED RELATIONSHIPS TO CREATE COMPETITION FOR RESIDENCY + + EFFECTIVELY COMPARE MULTIPLE INCENTIVE OFFERS AGAINST A WIDE RANGE OF QUANTITATIVE AND QUALITATIVE FACTORS + + NEGOTIATE TO ENSURE ALL POSSIBLE BENEFITS ARE SECURED AND MONITOR TERMS FOR COMPLIANCE

Cushman & Wakefield | FabFitFun

C&W INCENTIVES BY THE NUMBERS:

2,900 Average Annual Projects

12.1% Average Incentive % of CAPEX

$26,261 Average Incentive per New Job

$4.9M Average Incentive Award

CASE STUDY

CVS Health

MIDWEST DISTRIBUTION CENTER 363 Jobs | $100.0 Million Investment | 800,000 SF

CVS Health, together with its subsidiaries, provides integrated pharmacy health care services. CVS is a pharmacy innovation company with a simple and clear purpose: Helping people on their path to better health.

APPROACH + + C&W-BIP was engaged to help CVS Health identify the optimal location for its new “Midwest Distribution Center.” The facility was intended to help CVS support its rapid growth and allow the Company to offer expedited shipping to its stores and pharmacies. + + C&W-BIP was engaged to negotiate potential incentives related to this Project. C&W-BIP secured incentives offers from each of the Candidate Locations (Kansas and Missouri) with the Company ultimately choosing Missouri as the state for its growth.

RESULTS + + C&W secured incentives offers from each of the Candidate Locations with CVS ultimately choosing Kansas City, MO as the site for its new fulfillment center. + + Assisted CVS through the incentives approval andagreement negotiations process with the state and local governments.

+ + C&WBIP secured an incentives package in excess of $25.0 Million, Including a 22-year property tax exemption on the land and the building and a 10-year exemption on equipment for the distribution facility.

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SITE SELECTION & BROKERAGE

SITE SELECTION APPROACH

Site selection is not the first step in the optimal transaction process but rather the culmination of process execution, research, and analytics used to identify the target markets. C&W is an experienced partner in developing best practices to analyze and define FabFitFun’s needs, and to create the appropriate go-to-market strategy. It’s not a generic, off-the-shelf approach, but an intelligent data-driven recommendation. When a new facility is needed, we must look at the entire portfolio to assess where a new facility fits in and what size it needs to be. Then the labor analytics piece needs to be considered, in close integration with transportation costs and incentives feasibility. C&W employs a holistic and objective approach focused on critical business issues to identify optimal locations. Cross-functional collaboration is essential for project success.

The role of our Site Selection Team varies depending on our client’s mandate:

++ Ultimate Goal - Identify and secure optimal location, incentives, and property

++ Optimal Location Should Secure Competitive Advantage: - Minimize startup and recurring costs - Efficient implementation (hiring, construction, permitting, etc.) - Best operating conditions (labor, infrastructure, real estate, supply chain, transportation etc.) ++ Responsibilities and Guidance Along the Way: - Maintain confidentiality - Represent client interests to property owners, developers, governments, utilities, etc. - Avoid risks (physical, financial and operational - Deliver objective process and defensible outcomes - Identify client resource gaps (data, design, team, outside expertise, etc.

Cushman & Wakefield | FabFitFun

C&W’s site selection process is time-tested and proven to provide successful cost-saving results for our clients. Using a sophisticated analysis, based on our client’s requirements, we can differentiate among properties/cities/ regions to compare statistics on each candidate property’s available labor pool, potential business incentives, representative land and building costs, and annual costs for major operating expenses (especially labor and occupancy costs). ++ Phase 1 – the objectives of Phase 1 are to identify preferred regions for the facility and, within those regions, suitable properties meeting our clients’ criteria, with the ultimate goal to qualify a short list of three preferred properties that merit additional due diligence in Phase 2; ++ Phase 2 – entails additional due diligence to better understand the properties’ real estate and labor market attributes, and major operating costs, as well as incentives and real estate negotiations, to select a single, optimal location for the proposed facility. The below table outlines a typical two-phase site selection process. Please note that project phasing and tasks would be adjusted appropriately to address FabFitFun’s goals and objectives: Site selection services are typically delivered in two sequential phases:

The result of this process is an optimal facility configuration in a cost- and operationally-effective location.

Specifically, the process to identify, evaluate, and screen sites typically follows the following four steps:

1. Requirements translated to Request for Information (RFI) issued to search area

2. RFI responses received and catalogued

3. Properties evaluated versus facility needs and grouped: Retain, Marginal, Eliminate

4. Property inspections conducted to select preferred sites, typically with clients in attendance

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LEASE NEGOTIATIONS Once a city or region is selected, a local broker will be selected for the assignment and will be highly integrated into the process. The project team identifies the local broker and works with that professional to obtain a detailed market analysis. The local broker is closely involved with all due diligence related to the transaction, but their focus is primarily on market-based knowledge with a core account team transaction manager running the project to assure consistency. The financial analysis, final LOI and lease negotiations are all headed up by the core account team transaction lead with the support of the local broker. This ensures that FabFitFun gets consistent service regardless of market, and that each transaction is approached strategically, as the core team running the project is an extension of FabFitFun. Including the best broker in the market ensures the best negotiated lease terms are obtained. By leveraging FabFitFun’s tenancy, we can create competition within the marketplace during negotiations.

CASE STUDY

Confidential Leading Online Retailer

CONFIDENTIAL

eCommerce Fulfillment

Client was unable to keep pace with the rapidly scaling business relying solely on an adequately resourced in-house real estate planning, search and transaction function. The risk of failure to deliver sufficient fulfillment capacity on time was potentially disastrous to the value proposition, customer experience and the brand. Planning was done peak-to-peak resulting in zero competitive leverage in the market and less than ideal lease terms. RESULTS + + Cushman & Wakefield team was embedded with Client’s HQ operations offices to work seamlessly as extension to Client’s small operations real estate organization. + + C&W created planning tools to help Client adopt greater discipline in identifying markets of future interest for fulfillment operations. Through early identification, Client could quietly control multiple sites and create competition between multiple markets to drive the most favorable terms. + + Lack of available existing product that was suitable for Client’s state-of-the-art fulfillment technologies demanded C&W develop and run a predominantly build-to-suit (BTS) expansion program; C&W periodically managed full national RFPs for BTS projects to all leading regional developers, while separately running a capital solicitation program to match optimal sites, developers and capital providers. + + In conjunction with evaluating feasibility of hundreds of potential sites each year, C&W managed all due diligence including entitlements analysis; labor availability, quality and sustainability; incentives opportunities; and fit with existing and future transportation needs. + + Client’s internal approval process had been extensive and slow, resulting in costly schedule compression to meet First Receive date commitments. C&W team created a standard set of communication tools to preflight key issues to executive management throughout lease negotiations. Final approval for execution was shortened significantly due to identification of key issues along the way.

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PROJECT & DEVELOPMENT SERVICES The decision to relocate into a new property or undergo a renovation to existing space can be a daunting one. C&W provides expert, end-to-end Project Management services that remove the risk for our tenant clients. The key to our success is early involvement. Our Project Management team assists transaction teams with initial building selection activities while providing advice and input on work letters and related lease provision. Our goal is to ensure that the property and the landlord’s lease language align with what is possible from a design and construction perspective. Cushman & Wakefield will manage the entire design and construction process from upfront strategic planning to move and relocation services.determines that the studies/reports are insufficient for the depth of the project, our team will prepare an a la carte menu of offerings to supplement any missing information and support full visibility.

TASKS AND/OR FUNCTIONS INCLUDED: + + Project Definition and Strategy

+ + Bid Procurement and Contract Negotiations

+ + Build-to-Suit

+ + Construction Management

+ + Strategic Planning and Benchmark Services

+ + Furniture, Fixtures and Equipment (FF&E) Management + + Relocation Services including Move Management and Decommissioning Services

+ + LEED and Well Building Services

+ + Workplace Building Selection, Lease and Workletter Analysis

+ + Project Close-Out and Acceptance

+ + Design and Engineering Management

C&W’S PROJECT & DEVELOPMENT SERVICES BY THE NUMBERS:

16,093 Total Projects

354.7M Total Square Feet Managed

$14.2B Total Projects Managed

2,146 Professionals

HOW FABFITFUN WILL BENEFIT

+ + INTEGRATION WITH OTHER SERVICE LINES OFFERS CLIENT-DRIVEN VALUE THROUGHOUT THE REAL ESTATE LIFE CYCLE + + CONSISTENCY AND SHARED BEST PRACTICES WHICH LOWER CLIENT RISK AND MINIMIZE COSTS + + SCALABLE AND FLEXIBLE OFFERINGS TRANSLATE INTO A CLIENT-SPECIFIC SOLUTION

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CASE STUDY #1

LEVI STRAUSS & CO. Project Management Distribution Center, NV

To meet increased consumer demand, Levi Strauss commissioned a significant capital improvement project designed to more than double throughput at their distribution center in Henderson, NV. When the initial vendor was unable to cite specific causes or bring functional solutions to the assignment, Levi Strauss engaged Cushman & Wakefield’s Project Management Team, in conjunction with our strategic partner, St. Onge Company. Our assignment was to assess the site and determine what could be done to raise performance to the required levels.

THE SOLUTION Henderson is a complex site. The 1,000,000-square- foot facility houses thousands of feet of conveying equipment; sorting equipment; rack storage and pick operations; and packing and shipping. Over a four- month engagement, the Cushman & Wakefield/St. Onge team examined floor plans and flow diagrams, reviewed equipment cut sheets, examined software design from patches and custom code, and evaluated processes and people. As a result, we developed a comprehensive understanding of Henderson’s operations which enabled us to advise on: + + Recruiting strategies (i.e., temp-to-perm, advertising, use of staffing agencies for placements);

+ + Applicant volumes, quality, pre-employment testing standards;

+ + Wage structures and benefits practices (i.e., starting wage, progression and premiums/bonus programs, time off with and without pay, vacation, cost of medical, dental, vision, and attendance policies);

+ + Union solicitation or, if already organized, historical frequency of grievances; and

+ + Satisfaction with overall operating environment.

RESULTS Changes to the building infrastructure (power, lighting, floor repairs) were completed in 2017. Equipment upgrades and software development are being rolled out from 2017-2019. Upon completion, Levi Strauss will migrate capacity from Hebron, Kentucky to the Henderson site. At that time, a similar upgrade process will take place in Kentucky. In all, the projects are expected to fully support Levi Strauss’ omni-channel needs well into the future.

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BUILD-TO-SUIT ADVISORY GROUP

ACHIEVING COST REDUCTION THROUGH INNOVATION Combining consulting and transactional expertise, the Cushman & Wakefield Build-to-Suit Advisory Group provides strategies, process, and execution management expertise for occupiers needing a multimarket approach that integrates their supply chain network with bricks-and-mortar facilities. Our proven methodology that combines strategy, process development, transaction execution, and project management into one integrated process is specifically designed to benefit the client by:

+ + Generating Speed to Market

+ + Mitigating Project Risks

+ + Increasing Client Control

+ + Targeting Multiple Cost Savings Points

Why Use a Build-to-Suit Group?

Many companies have internal construction management teams that handle internal construction, maintenance, and building improvements. However, build-to-suit requirements are more unique and complex, requiring a unique set of skills, tools, and processes. Our team removes the risk that accompanies these “uncommon” real estate transactions by providing superior results and cost savings.

Our Methodology

For large, industrial build-to-suit projects, C&W deploys to the field specialized practitioners, led by a Project Executive, where and when build-to-suits are being considered. These initial key team members are highly experienced in working with transactional leaders, clients, and their extended teams of developers, contractors, third party logistics providers (as appropriate), and local jurisdictions having authority. The C&W team is responsible for setting the governing rules for a given assignment and ensuring the project’s foundational documents have within them the language needed to ensure a positive outcome for our client. Initially, leadership is provided by a Project Executive, while themarket-based Project Manager and Assistant Project Manager provide support. Together, these team members drive the assignment from initial concept discussions all the way through the completion of construction documents, bidding, construction, and occupancy. In addition, they play a pivotal role in building the overall team, establishing communications protocols (type, frequency, format), developing and/or reviewing scopes of work for each team member, and working, as appropriate, with our clients’ procurement, logistics, operations, finance, and HR teams.

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As construction on-site approaches, a seamless a transition takes place between the Project Executive and our local Project Manager (“PM”). In this way, by the time construction actually starts, we have two skilled resources, both of whom have full knowledge of the project, the participants, contract terms, etc. From that point forward, while the local PM attends weekly construction meetings, monitors job site performance and progress, reviews subcontractor RFI’s, General Contractor invoices, safety procedures, etc., the Project Executive continues to participate in weekly calls, visits the site monthly, inspects the progress while there, and attends the construction meeting.

Our Process

C&W’s Build-To-Suit Advisory Group has a defined and tested process for build-to-suit projects. This process provides expertise and innovation at every stage of the project – from concept to implementation. At a conceptual level, our projects follow the steps described below:

What is needed of us? What is the timing & schedule? Who are the critical interest groups and how do we engage with them? The Financial Equation

DEFINE the Requirements

DOCUMENT the Needs

RFPs for external supporters Scopes of work for internal team members

Internal Team: Client, PM, Facilities, HR, IT, and Office Management External Team: Architect, GC, Consultants, Furniture Vendor, Mover, AV, Cable Security, MHE Equipment Provider, etc.

ORGANIZE the Overall Team

Ensure construction permits are in place Manage weekly construction meetings and site inspections Oversee integration work of the team and spend management Project documentation and close out

IMPLEMENT the Plan

Construction auditing, all contracts completed per scopes As-built drawings; all OEM manuals; all permits, certificates, and warranties in place List of contractors, equipment providers, and specialty training manual, as needed Final invoices accounted and paid and one year check-up/transition to maintenance

AUDIT the Results

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CASE STUDY #2

Unilever

Covington, TN Manufacturing & Storage Facility 500,000 SF Building Construction Management Services

Cushman & Wakefield’s Project Management Team was appointed to help select the developer, general contractor, and to coordinate Unilever’s vendors and internal resources in the development of a 500,000-square- foot, -20-degree F distribution center in Covington, Tennessee. The facility, attached to Unilever’s existing manufacturing plant via an overhead conveyance system, utilizes state-of-the-art material handling systems to move product from the Unilever side to the 3PL side.

THE SOLUTION Cushman & Wakefield first worked with the developer and local authorities to site the building in such a way as to minimize truck traffic on the main highway, moving the initial ingress to a side road where trucks could queue without blocking traffic. In addition, due to the seismic ratings in Covington, the site needed significant soil remediation and reinforcement which consumed roughly six (6) weeks of time to drill and fill more than 5,000 crushed rock piers. Then during the design phase, we challenged the architects and engineers to think creatively about how to convey finished goods in the existing building directly to the

distribution center. What resulted was a highly advanced robotics system using Automated Guided Vehicles (AGV’s) which accept product from the end of the production line, bring it to the lift system which raises pallets up thirty (30) feet to the conveyance tunnel (also -20F). In addition, after the design was completed, Unilever expressed an interest in adding a solar array to the roof, thus changing the previously designed structural steel package and foundations. By promoting aggressive competition and focused value engineering, we were able to absorb these two significant changes while keeping the project in budget. Project highlights include: Integrate operations with existing manufacturing plant without any disruption; fully fenced with 24x7 Welcome Center (guard house); 20,000 SF of office space between the 2 operators in the building; completed project on time. RESULTS Working in concert with the GC and key trades, we were able to keep to the original schedule and budget. Unilever’s commitment to sustainability was taken to new heights by creating a Sustainability Trail that highlights the nearly two dozen eco-friendly elements throughout.Satisfaction with overall operating environment.

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