HOLD- A Winning Hand- Panama Expansion & Midwest Real Estate market

Debi Simon Part #1

The Midwest holds a royal flush in the logistics deck of cards. The stakes are already high, with the burgeoning freight movement footprint between states, Mexico and Canada. Add to this, the anticipated uptick in cargo volume from the Panama Canal. Dealt together, this is no time to fold. Smart actions now are positioning investors to ride on transportation, warehousing, import and export services, freight management and related operations.

Historically, Midwestern states have benefited from multi-modal transportation infrastructure such as rail, inland water ways and truck/warehouse distribution centers. With the growth in global containerized shipping coming from the Canal’s expansion, existing facilities will be bursting at the seams. Add to this, savvy shippers will make use of the import containers for the rising demand for Midwest exports to the Far East.

We can attest to this based on recent assignments where private money worked alongside municipalities for the expansion of enterprise zones; such as between a major petroleum company and a municipal economic development entity to develop a commercial truck fueling station and distribution site; expansion to a municipal airway in a rural community; upgrades to roadways by the Department of Transportation, expansion of commuter rail and workforce housing. Our market studies have been instrumental in determining an exit strategy and how to expand into additional phases with new funding partners.

Industrial now, is where multi-family was two years ago based upon our research and work volume. Infrastructure and transportation begets jobs, which stimulate development for housing and

services, in turn birthing communities and economies. We have numerous case studies supporting this statement. Please contact us for further discussion on this topic.

There are factors at play in the Midwest that aren’t as prevalent in other areas of the country.

For instance, a fairly new concept is the creation of Inland Ports.

These are considered intelligent logistics sites, providing national coordination and collaboration among ocean port users and multi modal transportation.

On the appraisal side

Landowners are building to suit along such corridors.

Landlords have signed leases in place months before the last tilt up building is in place. There is tremendous demand by large-scale users looking for specialized space . Right now we are finding that investor’s feel it is better to build at a 7% cap rate than buy an obsolete

property at a 5 % cap. Tenants are stepping up by paying more for energy efficiency in the rental rates, especially for

specialty uses. Absorption rates are decreasing as well positioned assets come on the market. One notable success story borne from Inland ports is the Heartland Corridor. A public, private

partnership developed to facilitate more efficient travel between the Norfolk, Virginia port region and Midwest cities—Chicago, Columbus, and Cincinnati and was accomplished through the process of eminent domain.

Inland ports will continue to play an important role. One of the common themes we hear in our conversation with investors and brokers is the need for efficiency in transporting goods from a major port such as the Panama.

Since these corridors usually contain numerous air, waterways, rail and truck facilities, we are finding higher absorption rates and increased demand for state of the art facilities.

Another drive is exports are rising from the Midwest and Inland Ports also enable the effective movement of goods outside the U.S

Export opportunities exist to reverse the flow of goods back to the Far East. Midwest States are on the move, with trade missions to the Far East, Canada and South America. This has spurred the foundation for new projects currently under way in our queue of upcoming assignments.

2012 Merchandise Exports

Illinois $68.1 billionIndiana $34.4 billionIowa $14.6 billionKansas $11.7 billionMichigan $ 57.0 billionMinnesota $ 20. 8 billionMissouri $13.9 billionNebraska $ 7.5 billionNorth Dakota $4.3 billionOhio $48.6 billionSouth Dakota $1.6 billion

The land of the "True North Strong and Free" is the largest importer of the Midwest regions goods.

With this in mind, consider the recent 2013 announcement made on the collaboration between Canada and the United States for the First-Ever “Binational Border Infrastructure Investment Plan”.

Iowa is currently part of the Super Highway Coalition called- NASCO which is promoting free trade between the US, Canada and Mexico. It also fosters partnerships between federal, state and private enterprise.

Transportation Corridor

According to Christopher Steele, Global COO and N.A. President, of Investment Consulting Associates the following lists are poised to capture significant new volume, or are otherwise likely to be centers of innovative logistics activity. (Lists are - to some degree – subjective).

Top - 10

U.S. Distribution Logistics Locations1. Northern Illinois/Indiana

2. Riverside/San Bernardino, CA

3. North Central Texas

4. Central Georgia

5. Greater Kansas City (KS, MO)

6. Memphis, TN

7. Eastern PA (Lehigh Valley, Scranton/Wilkes-Barre)

8. North Carolina Piedmont

9. Northwest Virginia

10. New Jersey

Emerging Logistics Locations1. Central Ohio (Rickenbacker/National Gateway)

2. Prince Rupert, BC

3. Guaymas, MX

4. Lazaro Cardenas, MX

5. Savannah, GA

6. Winter Haven, FL

7. Orangeburg, SC

8. Fayetteville, AR

9. Toledo, OH

10. Cleveland, OH

Waterway transportation is the silent workhorse of the U.S. freight economy.

Not all shippers in the US have access to navigable waterways, but those who do have a very attractive option of a low-cost and reliable means of transport.

The Mississippi River system and its tributaries are by far the most important waterway freight corridors in the US. Source http://ops.fhwa.dot.gov/freight/freight_analysis/

What is happening but you don’t hear about it is the shift in the kind of deals and who they are. Such as:

We are seeing is major players going after smaller deals, such as in the $20 Million to $50 million range.

According to Real Capital Analytics the last 12 months reflects over 250 major players have purchased industrial properties within the Chicago MSA alone. The major players consist of the “whos’s who” of Investment, Equity and Insurance companies within the USA and a fare dose of International notables.

Earlier this year we entertained a Japanese National from a major firm who was on a fact finding mission for a few Pension funds and REITS>