KEARNY POINT: FROM SHIPYARD TO FULLY

INTEGRATED COMMUNITY

PHASES 3 & 4 REDEVELOPMENT PLAN

HIGHBRIDGE PARTNERSFRANK FARINELLA JR., ALEX KESZELI, SARAH ANN ROZSA, MATTHEW FANELLI, STEPHEN ALY, CHRISTOPHER BOYLAN

Strictly Confidential

Table of Contents• Kearny Point Overview

• Market Research

• Comparable Projects

• Phase 3 and 4 Development

• Construction Timelines

• Financials

• Investment Conclusion

• Appendix

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I. Kearny Point Overview

Kearny Point, a former site of American industrialism and home of the Federal

Shipbuilding and Drydock Company, is being transformed into an innovative

hub for modern workspace. Through its evolution, it is now seen as a place of

flexibility, invention and entrepreneurship, attracting tenants from various

industries.

Along with its history and future potential, Kearny Point will provide tenants of

all sizes the opportunity to be part of a developing ecosystem. From startups

and non-profits to industry leading companies, Kearny Point will provide space

for office, laboratory, artwork, hospitality, dining, and recreational enjoyment for

all of the employees in the community.

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II. Location

Kearny Point is centrally located, featuring easy access to the major population centers of Newark,

Jersey City, and Manhattan, while being conveniently located just 10 minutes from Newark Liberty

International Airport.

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II. Transportation

Kearny Point is located in close proximity multiple highways and local thoroughfares.

There is easy access to the New Jersey turnpike via the Lincoln Highway, in addition to

nearby connections to throughways such as Route 9, Interstate 280, and Interstate 78.

Along with vehicular transportation, there are multiple transit options in Newark and

Jersey City, including, New Jersey Transit Passenger Rail, Hudson-Bergen Light Rail,

PATH, and Hudson River Ferries. In addition, New Jersey Transit Bus Services are

available in the area, while new stops and expanded schedules will be added for the

future redevelopment of Kearny Point.

KPIP is working with NJ Transit to arrange a shuttle bus service that would link with the

Light Rail station at West Side and Claremont Avenue in Jersey City.

The redevelopment site will be pedestrian and bike friendly with walking paths as well as

designated bike lanes connecting all buildings and amenities.

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II. Greater Kearny Economy

With investments surpassing $1 billion over the next several years in Kearny, NJ, 10,000 new jobs will be generated,

accumulating millions in Local, County and State tax revenues. Since the site is deemed an opportunity zone, the redevelopment

of Kearny Point further encourages diverse economic growth, allowing its innovative atmosphere to attracts highly educated and

skilled workers.

Household Income

Kearny, NJ: $61,558

Hudson County, NJ: $63,808

USA Avg: $59,039

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II. Labor Pool

The surrounding workforce has increased dramatically in step with the revitalization

of Kearny Point. Individuals are moving to Kearny because of its opportunistic

environment. Dynamic spaces are attracting forward thinking companies and

entrepreneurs who value innovation.

The liveliness and of the area has created a neighborhood composed of both

families and a growing white-collar population. The recent influx of workers was

noted through a strong housing market and high population density. This is expected

to further increase as Kearny Point’s development will create thousands of jobs.

In close proximity to renowned colleges and universities, Kearny Point will benefit

from an increased talent pool, matriculating from STEM and business programs.

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II. Incentives

New Jersey offers numerous incentives that help promote economic growth and

opportunity for entrepreneurs, startups, as well as established companies, allowing

businesses to thrive. The NJ Ignite program provides grants that subsidize the rent of

early stage technology and life science companies in collaborative workspaces, while

the NJ Co-Vest Fund and NJ Founders and Funders program help propel innovative

opportunities with various grants. Lastly, the Grow NJ Assistance Programs offer tax

credits to businesses that create and help retain jobs in New Jersey.

Kearny Point is located within an Urban Enterprise Zone, which benefits include

reduced sales tax, tax-free purchases and financial assistance. The EDA also aims to

foster innovation by nurturing the development of new technology through matching

loan programs, tax incentives, and networking opportunities with the investment

community.

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II. SustainabilityThe development will seek LEED Campus Certification for phases 3 and 4 of development by implementing various sustainability initiatives and

practices including:

• Green Roofs – Reduces “heat island effect”, rainwater overflow collected into cisterns for reuse in the building's cooling system

• Greywater storage and irrigation utilization

• Bio walls – Allows for a vertical orientation aesthetic while reducing the need for expensive mechanical air filtration systems

• Sustainably Sourced Insulation

• Semco Chilled Beams - Provide superior indoor air quality; quiet operation, and no draft

• Solar Panels – Reduces campus power consumption

• View Dynamic Windows - Eliminates the need for blinds/shades and allows in abundant light without excessive heat and glare.

• Solar-and Wind-powered street lamps

• Permeable Asphalt – Reduces stormwater runoff rate and incidences of flooding

• EV Charging Stations

• Bike Storage and Designated Bike Lanes – Encourages sustainable transportation and healthy living

• Eco-Friendly Cleaning Products

• Plastic Bottle Restriction – Employers provide refillable containers to be used at filling stations, reducing plastic usage and on-site litter

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II. Sustainability

Sustainability is one of Kearny Point’s core values and focuses.

Why is sustainability important?

• According to the USGBC, “The new Class A office space is green; lease-up rates for

green buildings typically range from average to 20% above average.”

• According to the USGBC, “The overall vacancy rate for green buildings was 4%

lower than for non-green properties – 11.7%, compared to 15.7%”

• Happier and healthier employees lead to increased productivity, top talent attraction

and retention, less frequent sick days, and decreased medical costs

Philadelphia Navy Yard

The Philadelphia Navy Yard is located in the Southern part

of the city and provides new life to the historic site. The

1,200 acre site consists of 7.5 million sf with a total of 13

million sf in the masterplan. The campus consists of office,

research & development, industrial, and recreational space.

There are currently more than 13,000 employees from

companies such as GSK, Urban Outfitters, and Tasty Baking

Company.

The Brooklyn Navy Yard is currently undergoing a $2.5 billion

redevelopment of the 330 acre property. There is a total

development amount of 2 million sf, which will add close to

10,000 jobs by 2020. The property provides space for office,

laboratory, manufacturing, technology, and food service

tenants. The immense Yard has over 400 tenants, while having

a 90% retention rate. Tenants at the property include, Wegmans

Food Store, which will have a 79,000 sf store located in

Admirals Row & 399 Sands. Additionally, Steiner Studios, a

successful television and film studio, adding 180,000 sf.

Brooklyn Navy YardIII. Comparable Projects 11

IV. Phase 3 –Building 82

Building 82 will foster a collaborative environment for its varied tenant

base. The 120,000 sf space will hold flexible office space for start-ups and

smaller companies, art studios for the creative minds in and around

Kearny, along with industrial kitchen space. Building 82 will mirror Building

78’s creative energy. In this space, we will seek a partnership with 1776, a

company offering an advanced co-working environment for its tenants.

The 7 story building will consist of 30,000 sf floorplates (300 x 100),

accommodating tenants of varying sizes. There will be a podium parking

structure for the building, offering three levels of parking and a total of 276

spaces. In addition, there will be a service elevator for tenants to move their

supplies and equipment to their floor, along with 16 foot exposed ceilings.

Parking for Building 82 will be free of charge, a perk that small tenants and

studio space users will enjoy.

Rendering of Exterior

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IV. Building 82

30,000 sf of clean, health department certified commercial kitchen

space will allow chefs, restaurants, bakers, food artisans,

consultants, and culinary teachers to flourish at any stage in their

business. The space will include prep & packaging areas along

with bakery & studio space which is great for cooking classes,

team building events, and even pop up dinners.

30,000 sf of art studio/gallery space will create the ideal

environment for the creative energy at Kearny Point to flourish.

Artwork produced in the studios can be utilized around the

Kearny Point development site, adding character and a defining

touch. Artists and art viewers alike will enjoy the small café,

which will provide craft beverages and a la carte lunch items.

13Potential Kitchen Space Uses

IV. Phase 4 - Parking Structure

The parking structure for phase 4 of the development will be

impressive in size and scope. The podium garage will

establish a foundation for which the life science, office,

restaurants, conference center, and hotel will stand upon. The

445,000 sf garage will feature 1,369 spaces, all on one level,

with elevator and stair access to each building. The roof of the

structure will act as a green roof and space for Kearny Point’s

occupants to enjoy the outdoors. Featuring landscaping and

hardscaping on the roof, the garage acts as true ground level.

The parking structure will feature 5 entry doors, allowing

ingress and egress for employees and hotel or restaurant

guests. The sides of the garage will feature walkable ramps

leading up from the center of Kearny Point, allowing all

other employees on campus to enjoy the space. In addition,

there will be multiple terraces facing the Hackensack River,

offering breathtaking views from the property.

Ingress/Egress

Green Roof View

IV. Phase 4 - Office

The Phase 4, 12-story office space will provide tenants high

quality and luxurious amenities within the building. The high end

finishes and design will help bring talent to Kearny Point. A

partnership with Convene to occupy two floors of the space will

be beneficial to provide tenants with a vertically integrated

community atmosphere within the building.

The office will total 360,000 sf, offering larger tenants the

potential to occupy large portions of the 30,000 sf floorplate.

Additionally, the building will feature a service elevator to help

move tenants in efficiently. Class-A Philadelphia Navy Yard space

lends support for rents in $40-$45 psf range.

Rendering of Exterior

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IV. Phase 4 - Amenity and Conference Space

Located between the Office and Life Science building will be a large amenity

space with conference rooms. The upper level will feature amenities

including a 10,000 sf fitness center for use by all tenants at Kearny Point, a

5,000 sf quick service café, and 5,000 sf of open floor plan with multiple

seating arrangements for collaborative working and relaxation.

The lower level will include 20,000 sf of conference rooms varying in size,

allowing companies to use this space at their convenience. In the future, the

conference center has potential to provide ancillary income for the owners.

Each room will feature flat screen televisions, telecommunication services,

and noise proofing to allow complete focus.

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IV. Phase 4- Life Sciences

NJIT Tower will be a hub of research and breakthrough in the life

sciences community, catering to tenants performing chemistry

research, biology research, and analytical chemistry research. Within

the scope of NJIT’s 2020 vision, Kearny Point will offer undergraduate

students the opportunity to use this innovative space to further their

education. With a blend of 60% office and 40% lab designation on

each floor plate, companies will be able to take full advantage of their

square footage.

The Building will total 150,000 sf and feature two service elevators for

tenants to efficiently move equipment and products in and out of their

space. The quality and design of the space will allow for higher rents,

starting near $35 Psf. Rendering of Exterior

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IV. Phase 4 - Restaurants

The development of Kearny Point into a fully integrated ecosystem

goes beyond workspace. The inclusion of dining options of higher

quality than a typical cafeteria will provide employees and guests

fun and enjoyable food options. The two restaurants will total

10,000 sf and be centrally located between the office tower, life

sciences building, and hotel. In choosing restaurants to occupy this

space, we decided to include options that coincide with the

sustainable and environmental standards of Kearny Point.

Bryn & Danes will provide healthy, accelerated-service options,

while providing a relaxing atmosphere. Iron Hill Brewery will

provide a sit-down option, where employees can network and

share an after work drink.

Rendering of Exterior

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IV. Phase 4- Hotel

The introduction of a large quantity of employees at Kearny Point will

spark a need for hospitality services for guests and employees of

different companies. A hotel will be of major convenience by mitigating

time wasted traveling to and from an offsite hotel. The hotel anticipates

significant demand from tenants using the studio and shooting space

planned for phase 2 of the development.

The hotel will provide services such as a small fitness center, café and

bar area, along with a small business center. There will be a total of

125 rooms, averaging 325 square feet. The interiors of the rooms will

feature industry-leading amenities, such as a glass shower with

ceramic tiling, in-room check out, and laundry services. Potential hotel

developers include Hilton Garden Inn and Study Hotels.

Rendering of Exterior

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Examples of Select Service Brands

V. Phase 3 – Timeline

The construction timeline of Building 82 will start this year as the building is being turned over in possession. The total

duration from permits and approvals to completion of construction will be 30 months. With the inclusion of 12 months of

contingency time, maximum time to complete construction is 42 months. The construction period includes the completion

of the podium parking garage, followed by the completion of the collaborative office, commercial kitchen, and art studio

space.

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V. Phase 4 – Timeline At year end 2021, permits and approvals begin immediately, and are anticipated to take . The next phase will include the

demolition of the previous three industrial buildings, allowing for the completion of the parking garage. Once the parking

garage is complete, the office, amenity and conference space, life sciences, restaurant and hotel will be completed in that

respective order. Over the final three years of the project, landscaping of the green roof will take place, corresponding with

building completions. The total completion time of phase 4 is 60 months.

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VI. Pro Forma 22

3% of Potential base rent

7.5% of Potential base rent

1.5% of NOI

VI. Base Case Return23

VI. Sensitivity Analysis24

A sensitivity analysis was created, all else held equal, by adjusting

cap rates on refinancing and ultimate sale from 7.75% in the worst

case, 6.75% for the base case, and 5.75% for the best case.

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Appendix

Appendix – Site Renderings26

Appendix - Development Costs27

Appendix - Inputs and Assumptions 28

Appendix - Worst Case Return29

Appendix - Best Case Return30

Appendix – Product Costs Life Sciences

Appendix - Product Costs32

An adjustment factor of 12.5% was applied to

the gross number of spaces needed to

account for shared parking and increased

future utilization of public transportation.

Appendix – Product Costs33

Appendix – Relevant Market Information34

Q4 2018 Cushman &

Wakefield Report

CBRE 1st ½ 2018 Study