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CALVERT STREET      PROJECT SUMMARY


OVERVIEW     PROJECT     LOCATION     PROPERTY

The Equitable Building, located at 10 North Calvert Street in Baltimore, Maryland, presents an immediate opportunity to redevelop the upper floors of an existing nine-story, 223,877 square foot mixed use office building into approximately 180 rental apartments, while leaving the existing 26,000 square feet of retail space intact. The Property is well situated in Baltimore’s City Center (CBD), within steps to public transit and in close proximity to major highways. City Center’s surrounding neighborhoods include Harbor East, Mt. Vernon, Camden, Little Italy and Federal Hill.

Historically, the property has primarily been used as an office building. It was acquired in 2004 with the intention of upgrading the property. The former owner was able to upgrade/re-tenant the property until 2009 when the financial crisis hit, resulting in the loss of a few major tenants and forcing a default on the mortgage. In September 2010, the loan was sold to the current Owner (now Seller). Since that time the Seller has been in possession of the property and operating the office building. The current owner has funded additional capital since taking title for tenant build outs, building repairs/upgrades and to support cash flow deficits. With the current loan coming due they decided to quietly market the property through an YPO (Young Presidents Organization) network, which is how this opportunity came to JK Equities.

Baltimore’s Downtown area is currently experiencing a revival as both public and private investments expand into the City. The local government is encouraging residential development in the CBD through tax subsidies and other incentives. This redevelopment is being supported by population growth and the need for an additional 5,800 housing units over the next five years in the Downtown area. There are currently a number of these properties being redeveloped yet they will only meet 20% of the potential demand, according to the Baltimore Downtown Partnership Outlook 2017.

To capitalize on the current market, we will acquire the property by late Summer 2013 and immediately begin preparing permit and construction plans for a new “Class A” apartment building. No zoning change will be required. Simultaneous to closing, all current office leases will expire and buyout/relocation agreements with remaining tenants whose lease terms expire after June 2014 will be negotiated. We have analyzed the current leases and have allocated towards tenant relocation/buyouts. After June 2014, the office building portion will be over 75% vacant with no remaining tenants expiring after June 2017. The Baltimore Office Market has a high vacancy with many landlords offering incentives to tenants to occupy their vacant space. All current retail leases will remain “As Is” during and after construction. Currently, the retail space provides approximately annual gross income. There will be minimal disruption to the retail portion of the property during renovation.

Karlik anticipates that construction plans and tenant relocation will be complete by Q1 2014 at which time construction will commence.


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