Self-Storage Feasibility in Foreign Markets. Presented by: David Blum President, Better Management Systems LLC

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2 Self-Storage Feasibility in Foreign Markets Presented by: David Blum President, Better Management Systems LLC

3 Feasibility Evaluating the viability of a self-storage project Challenges of a complete feasibility report: In the United States: Detailed demographics Competitive statistics Market-absorption analysis Outside the United States: Lack of good demographics Limited competition with poor data

4 Feasibility: Demographics

5 Feasibility: Demographics

6 Feasibility: Demographics

7 Feasibility Suggested solutions: Work with a local marketing company to research A/A-B population locations. Identify a cross section of high-end residential with a good retail shopping near commercial centers.

8 Feasibility: Competitive Analysis Typically identify market trading area 2, 3, 5, 10 miles depending on population density and number of competitors Detail review of rates, occupancy, overall size, rentable square feet (meters), features (A/C, individual door alarms, hours of operations, access hours, etc.) Subjective ranking (A, B, C, D)

9 Feasibility: Competitive Analysis Typical Map

10 Feasibility: Competitive Analysis # 3 Location Public Storage 786 Kinnear Road # 3 Location Columbus, OH Public Storage (614) Kinnear Road Columbus, OH (614) Comparison Sheet place x in box (A) actual Security Gate X place Resident x in boxmanager (E) estimate Units (A) 700actual E Camera's Security Gate X X Retail Resident Display Manager X (E) estimate Units 700 E Sq. Ft., 87,480 A Camera's X Retail Display X Climate Control Room For Expansion Sq. Ft., 87,480 A Climate Control0% Room For Expansion Occup. 90% E R. V. Spaces 0% 24 hour Access Occup. 90% E R. V. Spaces 24 hour Access Yr Built 1981 A Covered R.V. Spaces Access Hours 9AM-6PM Yr Built 1981 A Covered R.V. Spaces Access Hours 9AM-6PM Office 300 A Office 300 A Door Alarms Door Alarms Office Office Hours Hours M-F M-F 9:30-6 9:30-6 S-S 9:30-9: Truck Truck Rentals Rentals RATES Over all Rating ( A - D ) Size Sq. Ft Price $ / Sq. Ft / yr Access Over all Rating D( A - D ) C/C Size Sq. Ft Price $ / Sq. Ft / yr Access D C/C 5X5 25 $0.00 Curb Appeal C 5X5 5X $0.00 Curb Appeal C 5X15 5X $0.00 $0.00 Drive Aisles B 10X $0.00 5X15 75 $0.00 Drive Aisles 10X $0.00 General Condition B B 10X1010X $0.00 $ X1510X $0.00 Management General Condition C+ B 10X $0.00 Non C/C 10X $0.00 Office Management Quality C C+ 5x5 25 $0.00 Non C/C 5x10 50 $0.00 Visability D Office Quality 5X15 75 $0.00 C 5x510X $ $13.44 $0.00 5x1010x $ $13.36 $0.00 Visability D 5X1510X $ $13.02 $0.00 Overall Rating C 10X1010X $ $13.44 $ x $ $ X $ $13.02 Overall Rating C 10X $0.00

11 Feasibility: Competitive Analysis Rate Summary Location #1 Location #2 Location #3 AVERAGE ALL Mile Radius Amlin Self Storage Uncle Bob's U-Haul 1 Mile 1 0 Size Rate RPSF Rate RPSF Rate RPSF Rate RPSF A/C 2 Mile 2 157,945 5x x Mile 3 157,945 5x x x x A/C Mile Radius 10x Mile Mile 2 23,503 Non A/C 5x Mile 3 23,503 5x x x "B" Mile Radius 10x Mile 0 10x x Mile 67, Mile 67,150 Blended Rate Rentable Square Feet 35, ,945 within 1, 1.5, 2 mile radius OVERALL RATING C+ A_ C

12 Feasibility: Competitive Analysis Absorption Absorption Analysis (Square Analysis Feet/Population) (square feet / population) 1 Mile 1.5 Mile 2 Mile 2015 Population Total Sq. Ft. RATE (Ft. per Person) 2015 Population Total Sq. Ft. RATE (Ft. per Person) 2015 Population Total Sq. Ft. RATE (Ft. per Person) 9, , , , , , ,999 57, , , , ,118 * Mile 1.5 Mile 2 Mile 2020 Population (projected) Total Sq. Ft. RATE (Ft. per Person) 2020 Population (projected) Total Sq. Ft. RATE (Ft. per Person) 2020 Population (projected) Total Sq. Ft. RATE (Ft. per Person) 11, , , , , , , , , , , ,918 * 5.42 * 5 year projection includes 57,600 net for Stor-All

13 Feasibility: Competitive Analysis In most instances, none of this will be available in your market. Attempt to visit as many competitors as possible, no matter how far away they are. Disregard all I ve shown you because it s not available where you re looking.

14 Metrics United States: Best guess = 320 million people 50,000-plus self-storage facilities Equilibrium = Seven-plus square feet per person

15 Metrics According to a Self Storage Association demand study: Awareness = 90% Used self-storage = more than 50% Currently using self-storage = 10-11% 32 to 35 million people using a self-storage unit today

16 Metrics Outside the United States: Take 20% of population as target audience Use 2 square feet times the 20% population This should equal estimated demand

17 Evaluating Location

18 How to Identify Potential Locations The ideal target is a building of 6,000 to 8,000 square meters (10,000 on the high side). Raw land: On or very close to high-traffic roads Good access, corner or whole block parcels for good traffic flow Depending on parking, setback and landscape requirements, you typically need a minimum of acres or more. Sites should be in dense residential or retail areas, in upper-scale markets, or on the fringe of a warehouse or commercial district. You need enough land to accommodate a building footprint of at least 1,500 to 3,000 square meters, depending on the height restrictions and FAR (floor-area ratio).

19 How to Identify Potential Locations Buildings for conversion: All the above (previous slide) The building must have at least the equivalent floor-load weight of 125 pounds per square foot, which is around 610 kilograms per square meter. The space between the top of the floor and the ceiling above is at least 11 feet, or 3.2 meters There should be at least one freight-style elevator. There should be loading docks or areas for receiving. For São Paulo, consider the overall cost per square meter: Land is at about 1,000 to 1,500 R$, and buildings at about 3,000 to 4,000 R$. (Of course, this continues to be a moving target.)

20 Customer Segments U.S. (consistently): 75% consumer 25% commercial Outside U.S. (initially): 25% consumer 75% commercial Ultimately, this levels off at around 50/50.

21 Financial Evaluation

22 Financial Evaluation Two types of analysis: Construction costs Operating pro forma

23 Financial Evaluation Land and construction costs will vary from country to country and city to city. As a guide, in the U.S., a single-story, ground-up project should run, excluding land, approximately $35 to $45 per foot for the building plus about $5 to $10 per foot for site work (or considerably more when including paving costs for drive aisles). Multi-story buildings, usually 100% climate-controlled, cost roughly $50 to $65 per foot depending on the specific design elements. Conversions can run $25 to $35 per foot (plus building costs) depending on the extent of the renovations.

24 42 ENTRANCES & STOREFRON Financial Evaluation: Construction Budget CONTINUATION SHEET AIA Document G702, APPLICATION AND CERTIFICATION FOR PAYMENT, containing Contractor's signed certification is attached. In tabulations below, amounts are stated to the nearest dollar. Use Column I on Contracts where variable retainage for line items may apply. A B C D E COSTS TO ITEM DESCRIPTION SCHEDULED CHANGE DATE NO. OF WORK VALUE ORDERS SCP CONDO BLDG. A - SQ. FT. GENERAL CONDITIONS 1 PROJECT MANAGER 2 SUPERINTENDENT 3 GC GENERAL REQUIREMENTS 4 OVERNIGHT MAIL/POSTAGE 5 MISC LABOR 6 TEMP.ELECTRIC-TRAILER 7 TEMP. OFFICE/TRAILER 8 TEMP. TOILETS 9 TEMP. SIGN 10 SMALL TOOLS 11 TEMP. EQUIPMENT 12 POWER TEMPORARY/INST. 13 TELEPHONE 14 TEMPORARY WATER 15 TOILET (2) 16 ENGINEERING 17 SURVEY & FINAL SURVEY 18 TESTING 19 PLANS/PRINTS 20 ARCHITECT 21 DAILY CLEANING 22 FINAL CLEAN 23 DUMPSTERS 24 BUILDING PERMIT&IMPACT FEE 25 OTHER-(OFFICE SUPPLIES) 26 BUILDERS RISK INSURANCE 27 GC LIABILITY INSURANCE BUILDING 2 SQ. FT. TOTAL GENERAL CONDITIONS PER SQUARE FOOT BUILDING CONSTRUCTION 28 STRUCTURAL SHELL&SLAB 29 CONCRETE & REINFORCE 30 TERMITE CONTROL 31 DUMPSTER ENCLOSURE 32 DUMPSTER GATE 33 STRUCTURAL STEEL 34 CARPENTRY-ROUGH(MATER 35 CARPENTRY-ROUGH(LABOR 36 EXT INSULATION FINISH SYS 37 BUILD-UP MEMBRANE ROOF 38 ENTRY DOOR SYSTEMS 39 JOINT SEALANTS 40 H.M.DOORS/FRAMES 41 LABOR TO INSTALL 42 ENTRANCES & STOREFRON 43 ALUMINUM WINDOWS 44 DOORS,HARDWARE,TRIM&M 45 DOORS,HARDWARE,TRIM LA 46 GARAGE DOORS 47 CERAMIC TILE 48 PAINTING TEXTURE FINISH 49 SPECIAL WALL SURFACES 50 MAILBOXES 51 PLUMBING 52 FIRE SPRINKLERS 53 FIRE ALARM 54 ELECTRICAL 55 EXT LIGHTING 56 PROJECT FEE 57 GC FEE 58 TENANT BUILDOUTS W/GC FEE 59 SIGNS 60 INSULATION 61 OFFICE PARTITION WALLS 62 LANDSCAPING 41 LABOR TO INSTALL 43 ALUMINUM WINDOWS 44 DOORS,HARDWARE,TRIM&M 45 DOORS,HARDWARE,TRIM LA 46 GARAGE DOORS 47 CERAMIC TILE 48 PAINTING TEXTURE FINISH 49 SPECIAL WALL SURFACES 50 MAILBOXES 51 PLUMBING 52 FIRE SPRINKLERS 53 FIRE ALARM 54 ELECTRICAL 55 EXT LIGHTING 56 PROJECT FEE 57 GC FEE 58 TENANT BUILDOUTS W/GC FEE 59 SIGNS 60 INSULATION 61 OFFICE PARTITION WALLS 62 LANDSCAPING 63 HVAC 64 SECURITY SYSTEM 65 SECOND FLOOR 66 TWO ELEVATORS TOTAL BLDG A BUILDING A PER SQ. FT. BUILDING B - GENERAL $4.50 PER SQ. FT. BUILDING CONSTRUCTION $5.75/ SQ. FT. GARAGE DOORS FIRE SPRINKLERS HVAC GC FEE TOTAL BUILDING TOTAL BUILDING B BUILDING B PER SQ. FT. BUILDING C - TOTAL BUILDING GENERAL PER SQ. FT. BUILDING CONSTRUCTION $5.75/ SQ. FT. GARAGE DOORS FIRE SPRINKLERS HVAC GC FEE TOTAL BUILDING TOTAL BUILDING B BUILDING B PER SQ. FT.

25 Financial Evaluation Operating pro formas should be as detailed as available. Research, as best as possible, line-item expenses. Don t just assume a flat percentage of revenue. As in most countries outside the U.S., little or no debt financing is available for self-storage projects. I typically use 25% annual absorption, just to be on the conservative side. We ve seen, in most cases, depending on the size of the project, fast fill-up. Look at a minimum of seven projected operating income.

26 Financial Evaluation Goodale Blvd-Columbus-4-16 PROJECTED NET OPERATING INCOME FOR FIRST 36 MONTHS OF OPERATIONS (Years 1-3 by Month) RATE INCREASE 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.0 RENT-UP YEAR 1: Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan OVERALL OCCUPANCY 8.00% 14.00% 19.00% 23.00% 27.00% 30.00% 32.0 MONTH EXPECTED INCOME(NRI+WRITEOFFS) $7,430 $13,003 $17,647 $21,362 $25,077 $27,864 $29,7 GROSS POTENTIAL $100,956 $100,956 $100,956 $100,956 $100,956 $100,956 $100,9 LESS VACANCY ($92,880) ($86,822) ($81,774) ($77,736) ($73,698) ($70,669) ($68,6 RENTAL INCOME $8,076 $14,134 $19,182 $23,220 $27,258 $30,287 $32,3 DISCOUNTS * 8.0% ($646) ($1,131) ($1,535) ($1,858) ($2,181) ($2,423) ($2,5 WRITEOFFS * 0.2% ($16) ($28) ($38) ($46) ($55) ($61) ($ NET RENTAL INCOME $7,414 $12,975 $17,609 $21,316 $25,023 $27,803 $29,6 OTHER INCOME LOCK & PACKAGING * 2.0% $148 $259 $352 $426 $500 $556 $5 ADMIN. FEES * 1.5% $111 $195 $264 $320 $375 $417 $4 LATE & NSF CHARGES * 1.0% $74 $130 $176 $213 $250 $278 $2 MISC/TRUCK RENTAL INC. $0 $0 $0 $0 $0 $0 $0 TOTAL OTHER INCOME $334 $584 $792 $959 $1,126 $1,251 $1,3 TOTAL REVENUES $7,748 $13,559 $18,401 $22,275 $26,149 $29,054 $30,9 OPERATING EXPENSES ($26,290) ($26,290) ($26,290) ($26,290) ($26,290) ($26,290) ($26, NET OPERATING INCOME ($18,542) ($12,731) ($7,889) ($4,015) ($141) $2,765 $4,7 DEBT SERVICE $0 $0 $0 $0 $0 $0 BEFORE CASH TAX FLOW ($18,542) ($12,731) ($7,889) ($4,015) ($141) $2,765 $4,7 RATE INCREASE 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.0 RENT-UP YEAR 2 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan OVERALL OCCUPANCY 47.00% 50.00% 53.00% 55.00% 57.00% 58.00% 59.0 MONTH EXPECTED INCOME(NRI + WRITEOFFS) $44,825 $47,687 $50,548 $52,455 $54,363 $55,316 $56,2 GROSS POTENTIAL $101,461 $101,461 $101,461 $101,461 $101,461 $101,461 $101,4

27 TOTAL REVENUES $7,748 $13,559 $18,401 $22,275 $26,149 $29,054 OPERATING EXPENSES Financial ($26,290) Evaluation ($26,290) ($26,290) ($26,290) ($26,290) ($26,290) NET OPERATING INCOME ($18,542) ($12,731) ($7,889) ($4,015) ($141) $2,765 DEBT SERVICE $0 $0 $0 $0 $0 $0 BEFORE CASH TAX FLOW ($18,542) ($12,731) ($7,889) ($4,015) ($141) $2,765 RATE INCREASE 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% RENT-UP YEAR 2 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 OVERALL OCCUPANCY 47.00% 50.00% 53.00% 55.00% 57.00% 58.00% MONTH EXPECTED INCOME(NRI + WRITEOFFS) $44,825 $47,687 $50,548 $52,455 $54,363 $55,316 GROSS POTENTIAL $101,461 $101,461 $101,461 $101,461 $101,461 $101,461 LESS VACANCY ($53,774) ($50,730) ($47,687) ($45,657) ($43,628) ($42,614) RENTAL INCOME $47,687 $50,730 $53,774 $55,803 $57,833 $58,847 DISCOUNTS 6.0% ($2,861) ($3,044) ($3,226) ($3,348) ($3,470) ($3,531) WRITEOFFS 0.5% ($238) ($254) ($269) ($279) ($289) ($294) NET RENTAL INCOME $44,587 $47,433 $50,279 $52,176 $54,074 $55,022 OTHER INCOME LOCK & PACKAGING 1.0% $446 $474 $503 $522 $541 $550 ADMIN. FEES 1.5% $669 $711 $754 $783 $811 $825 LATE & NSF CHARGES 2.0% $892 $949 $1,006 $1,044 $1,081 $1,100 MISC/TRUCK RENTAL INC. $0 $0 $0 $0 $0 $0 TOTAL OTHER INCOME $2,006 $2,134 $2,263 $2,348 $2,433 $2,476 TOTAL REVENUES $46,593 $49,567 $52,541 $54,524 $56,507 $57,498 OPERATING EXPENSES ($36,264) ($36,264) ($36,264) ($36,264) ($36,264) ($36,264) NET OPERATING INCOME $10,329 $13,303 $16,277 $18,260 $20,243 $21,234 DEBT SERVICE $0 $0 $0 $0 $0 $0 BEFORE CASH TAX FLOW $10,329 $13,303 $16,277 $18,260 $20,243 $21,234

28 Financial Evaluation Goodale Blvd-Columbus-4-16 UNIT MIX AND PRICING ANALYSIS (MIX) Total Square Ft. 67,304 Average Unit Size 107 GPI $100,956 RPSF $18.00 CC PREM. #DIV/0! UNITS SQ FT. CURRENT SQ FT GROUND 2ND FLR. TOTAL % % RATE RPSF % OF GPI NON CLIMATE % 0% $0 $ % CLIMATE % 100% $100,956 $ % RV % $0 #DIV/0! 0.0% TOTALS % 100% $100,956 $ %

29 Financial Evaluation Goodale Blvd-Columbus-4-16 PROJECTED OPERATING EXPENSES (EXPENSES) YEAR 1 YEAR 2 YEAR 3 YEAR ADVERTISING PREM. OTHER ADVERTISING-OTHER 75.0% $2 $200 $24, $12,000 $9,000 $6, ADVERTISING-YELLOWPAGES 2 books in colum listing only $5,000 $5,000 $5,100 $5, TOTAL ADVERTISING Cost / Sq. Ft. Year 1= $0.43 $29,000 $17,000 $14,100 $11, AUTO EXPENSE $300 $306 $312 $ BANK CHARGES/SERVICE CHARGE. $600 $612 $624 $ BANK CHARGES- VISA/MC $5,038 $10,350 $15,383 $15, COMPUTER SUPPORT $900 $918 $936 $ DUES & SUBSCR. $65 $295 $360 $367 $375 $ FORECLOSURE $900 $918 $936 $ INSURANCE-LIABILITY/UMBRELLA $4,000 $4,080 $4,162 $4, INSURANCE - PROPERTY $50,000 $51,000 $52,020 $53, INVENTORY-LOCKS/PACK. 50% $500 $3,301 $4,907 $5, LICENSES & FEES $300 $306 $312 $ MGMT FEE EXPENSE/ANNUALLY 6.0% $3,000 $33,000 $41,399 $61,533 $70, MISCELLANEOUS $1,200 $1,224 $1,248 $1, DEFERRED START UP COSTS PERSONNEL WKLY WEEKS/PAYS SALARIES $1, $104,313 $106,921 $109,060 $111, INCENTIVES $9,000 INVENTORY 15% $9,964 $10,163 $10,367 $10, BONUS/RYDER 25% + $2,000 $2,000 $2,040 $2,081 $2, OTHER(i.e.TRAINING) $1,500 $1,530 $1,561 $1, TOTAL PERSONNEL COSTS Cost / Sq. Ft. Year 1= $1.75 $117,777 $120,655 $123,068 $126, MID YEAR ANTICIPATED RAISE % 5.0% PEST CONTROL $1,200 $1,224 $1,248 $1, POSTAGE 40% $0.44 $1,126 $1,148 $1,171 $1, PRINTING/COPIES Lease Pak, Handout $1.00 $0.35 $726 $741 $756 $ PROFESSIONAL FEES $600 $612 $624 $ REPAIRS/MAINTENANCE: BUILDING $2,400 $2,448 $2,497 $2, ELEVATOR $7,200 $7,344 $7,491 $7, EQUIPMENT $1,200 $1,224 $1,248 $1, GROUNDS $3,600 $3,672 $3,745 $3,

30 MISCELLANEOUS $1,200 $1,224 $1,248 $1, DEFERRED START UP COSTS PERSONNEL Financial WKLY WEEKS/PAYS Evaluation SALARIES $1, $104,313 $106,921 $109,060 $111, INCENTIVES $9,000 INVENTORY 15% $9,964 $10,163 $10,367 $10, BONUS/RYDER 25% + $2,000 $2,000 $2,040 $2,081 $2, OTHER(i.e.TRAINING) $1,500 $1,530 $1,561 $1, TOTAL PERSONNEL COSTS Cost / Sq. Ft. Year 1= $1.75 $117,777 $120,655 $123,068 $126, MID YEAR ANTICIPATED RAISE % 5.0% PEST CONTROL $1,200 $1,224 $1,248 $1, POSTAGE 40% $0.44 $1,126 $1,148 $1,171 $1, PRINTING/COPIES Lease Pak, Handout $1.00 $0.35 $726 $741 $756 $ PROFESSIONAL FEES $600 $612 $624 $ REPAIRS/MAINTENANCE: BUILDING $2,400 $2,448 $2,497 $2, ELEVATOR $7,200 $7,344 $7,491 $7, EQUIPMENT $1,200 $1,224 $1,248 $1, GROUNDS $3,600 $3,672 $3,745 $3, SNOW REMOVAL $0 $0 $0 SECURITY SYS/GATE $1,200 $1,224 $1,248 $1, TOTAL R&M Cost / Sq. Ft. Year 1= $0.23 $15,600 $15,912 $16,230 $16, SUPPLIES- OFFICE $600 $612 $624 $ SUPPLIES- CLEANING $600 $612 $624 $ SUPPLIES-OTHER(i.e.RED LOCKS) $600 $612 $624 $ TAXES - PROPERTY (ESTIMATED) $15,000 $125,000 $125,000 $125, TELEPHONE / INTERNET $2,400 $2,448 $2,497 $2, TRASH PICK-UP $1,800 $1,836 $1,873 $1, TRUCK RENTAL EXPENSE $0 $0 $0 UNIFORMS $900 $918 $936 $ UTILITIES ELECTRIC/GAS $30,000 $30,600 $31,212 $31, WATER/SEWER $450 $459 $468 $ TOTAL UTILITIES Cost / Sq. Ft. Year 1= $0.45 $30,450 $31,059 $31,680 $32, REPLACEMENT RESERVES $0 $9,000 $10, TOTAL EXPENSES Cost / Sq. Ft. Year 1= $4.69 $315,477 $435,169 $472,806 $486,

31 Financial Evaluation Goodale Blvd-Columbus-4-16 PROJECTED OPERATING EXPENSES (EXPENSES) YEAR 1 YEAR 2 YEAR 3 YEAR ADVERTISING PREM. OTHER ADVERTISING-OTHER 75.0% $2 $200 $24, $12,000 $9,000 ADVERTISING-YELLOWPAGES 2 books in colum listing only $5,000 $5,000 $5,100 TOTAL ADVERTISING Cost / Sq. Ft. Year 1= $0.43 $29,000 $17,000 $14,100 AUTO EXPENSE $300 $306 $312 BANK CHARGES/SERVICE CHARGE. $600 $612 $624 BANK CHARGES- VISA/MC $5,038 $10,350 $15,383 COMPUTER SUPPORT $900 $918 $936 DUES & SUBSCR. $65 $295 $360 $367 $375 FORECLOSURE $900 $918 $936 INSURANCE-LIABILITY/UMBRELLA $4,000 $4,080 $4,162 INSURANCE - PROPERTY $50,000 $51,000 $52,020 INVENTORY-LOCKS/PACK. 50% $500 $3,301 $4,907 LICENSES & FEES $300 $306 $312 MGMT FEE EXPENSE/ANNUALLY 6.0% $3,000 $33,000 $41,399 $61,533 MISCELLANEOUS $1,200 $1,224 $1,248 DEFERRED START UP COSTS PERSONNEL WKLY WEEKS/PAYS SALARIES $1, $104,313 $106,921 $109,060 INCENTIVES $9,000 INVENTORY 15% $9,964 $10,163 $10,367 BONUS/RYDER 25% + $2,000 $2,000 $2,040 $2,081 OTHER(i.e.TRAINING) $1,500 $1,530 $1,561 TOTAL PERSONNEL COSTS Cost / Sq. Ft. Year 1= $1.75 $117,777 $120,655 $123,068 MID YEAR ANTICIPATED RAISE % 5.0% PEST CONTROL $1,200 $1,224 $1,248 POSTAGE 40% $0.44 $1,126 $1,148 $1,171 PRINTING/COPIES Lease Pak, Handout $1.00 $0.35 $726 $741 $756 PROFESSIONAL FEES $600 $612 $624 REPAIRS/MAINTENANCE: BUILDING $2,400 $2,448 $2,497 ELEVATOR $7,200 $7,344 $7,491

32 MISCELLANEOUS $1,200 $1,224 $1,248 $1,27 DEFERRED START UP COSTS Financial Evaluation BONUS/RYDER 25% + $2,000 $2,000 $2,040 $2,081 $2,12 PERSONNEL WKLY WEEKS/PAYS SALARIES $1, $104,313 $106,921 $109,060 $111,78 INCENTIVES $9,000 INVENTORY 15% $9,964 $10,163 $10,367 $10,57 OTHER(i.e.TRAINING) $1,500 $1,530 $1,561 $1, TOTAL PERSONNEL COSTS Cost / Sq. Ft. Year 1= $1.75 $117,777 $120,655 $123,068 $126,07 MID YEAR ANTICIPATED RAISE % 5.0% PEST CONTROL $1,200 $1,224 $1,248 $1,27 POSTAGE 40% $0.44 $1,126 $1,148 $1,171 $1,19 PRINTING/COPIES Lease Pak, Handout $1.00 $0.35 $726 $741 $756 $77 PROFESSIONAL FEES $600 $612 $624 $63 REPAIRS/MAINTENANCE: BUILDING $2,400 $2,448 $2,497 $2,54 ELEVATOR $7,200 $7,344 $7,491 $7,64 EQUIPMENT $1,200 $1,224 $1,248 $1,27 GROUNDS $3,600 $3,672 $3,745 $3,82 SNOW REMOVAL $0 $0 $0 $ SECURITY SYS/GATE $1,200 $1,224 $1,248 $1,27 TOTAL R&M Cost / Sq. Ft. Year 1= $0.23 $15,600 $15,912 $16,230 $16,55 SUPPLIES- OFFICE $600 $612 $624 $63 SUPPLIES- CLEANING $600 $612 $624 $63 SUPPLIES-OTHER(i.e.RED LOCKS) $600 $612 $624 $63 TAXES - PROPERTY (ESTIMATED) $15,000 $125,000 $125,000 $125,00 TELEPHONE / INTERNET $2,400 $2,448 $2,497 $2,54 TRASH PICK-UP $1,800 $1,836 $1,873 $1,91 TRUCK RENTAL EXPENSE $0 $0 $0 $ UNIFORMS $900 $918 $936 $95 UTILITIES ELECTRIC/GAS $30,000 $30,600 $31,212 $31,83 WATER/SEWER $450 $459 $468 $47 TOTAL UTILITIES Cost / Sq. Ft. Year 1= $0.45 $30,450 $31,059 $31,680 $32,31 REPLACEMENT RESERVES $0 $9,000 $10,00 TOTAL EXPENSES Cost / Sq. Ft. Year 1= $4.69 $315,477 $435,169 $472,806 $486,10

33 Financial Evaluation STANDARD WEEKLY HOURS RATE WEEKLY BI-WEEKLY Monthly Health MONTHLY ANNUAL PRIMARY MANAGER 40.0 $18.00 $20.51 $ $1, $ $4, $46, ASST. Manager 27.0 $12.00 $13.67 $ $ $0.00 $1, $19, ASST. 0.0 $12.00 $13.67 $0.00 $0.00 $0.00 $0.00 $0.00 Maintenance 0.0 $10.00 $11.39 $0.00 $0.00 $0.00 $0.00 $0.00 Maintenance 0.0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TOTAL: 67.0 $18.78 $1, $2, $5, $65, April Sample Schedule Monday Tuesday Wed Thurs Friday Sat Sun Primary 1Manager Manager 40 Off Off Spouse / 1Assistant Asst OFF OFF Off Off Maintena 0.2nce Maintenance 0.2Supervision Total

34 Financial Evaluation Goodale Blvd-Columbus-4-16 PROJECTED NET OPERATING INCOME FOR YEARS 1 THROUGH 7 (Years 1-7 Annual) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 ANNUAL RPSF $18.03 $18.03 $19.53 $19.92 $20.32 $20.72 $21.14 GROSS POTENTIAL INCOME $1,213,491 $1,217,529 $1,278,406 $1,303,974 $1,330,053 $1,356,654 $1,383,788 LESS VACANCY- $ ($863,381) ($511,362) ($234,374) ($130,397) ($133,005) ($135,665) ($138,379) VACANCY- % 71% 42% 18% 10% 10% 10% 10% RENTAL INCOME $350,110 $706,167 $1,044,031 $1,173,577 $1,197,048 $1,220,989 $1,245,409 DISCOUNTS ($28,009) ($42,370) ($52,202) ($35,207) ($35,911) ($36,630) ($37,362) WRITEOFFS ($700) ($3,531) ($10,440) ($23,472) ($23,941) ($24,420) ($24,908) NET RENTAL INCOME $321,401 $660,266 $981,390 $1,114,898 $1,137,196 $1,159,940 $1,183,138 OTHER INCOME LOCK & PACKAGING $6,428 $6,603 $9,814 $11,736 $11,970 $12,210 $12,454 ADMIN. FEES $4,821 $9,904 $14,721 $17,604 $17,956 $18,315 $18,681 LATE & NSF CHARGES $3,214 $13,205 $19,628 $23,472 $23,941 $24,420 $24,908 MISC/TRUCK RENTAL INC. $0 $0 $0 $0 $0 $0 $0 TOTAL OTHER INCOME $14,463 $29,712 $44,163 $52,811 $53,867 $54,945 $56, TOTAL REVENUES $335,864 $689,978 $1,025,552 $1,167,709 $1,191,063 $1,214,884 $1,239,182 OPERATING EXPENSES ($315,477) ($435,169) ($472,806) ($486,108) ($497,190) ($508,486) ($520,003) PERCENT OF GPI 26.0% 35.7% 37.0% 37.3% 37.4% 37.5% 37.6% NET OPERATING INCOME $20,387 $254,809 $552,747 $681,600 $693,873 $706,398 $719,179 DEBT SERVICE CASH FLOW BEFORE DEBT AND TAX $20,387 $254,809 $552,747 $681,600 $693,873 $706,398 $719,179 ********************** ********************** ********************** ********************** ********************** ********************** ********************** ********************** ********************** ********************** ********************** ********************** ********************** ********************** DISCOUNT % YEAR % WRITEOFF % YEAR %

35 Summary It s rare for a developer to fail if he follows some basic guidelines and builds a quality product in a quality location. There s a lot of help available in our industry. Anyone looking to invest $1 million-plus shouldn t be shy about seeking experience and guidance.

36 Contact the Presenter David Blum President Better Management Systems LLC

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