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2000-23774 RESO / I RESOLUTION NO. 2000-23774 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, AUTHORIZING THE CITY TO SELL ITS LEASE RIGHTS PURSUANT TO THE LEASE BETWEEN THE CITY AND 711 DECO, INC., DATED JUNE 20, 1997, FOR APPROXIMATELY 3,000 SQUARE FEET OF SPACE LOCATED AT 701-725 5TH STREET, FOR A BUY-OUT PRICE OF $320,000 SUBJECT TO THE CITY'S EXPENDITURE OF THE $20,000 ALLOWANCE FOR BATHROOM AND HV AC UPGRADES, GRANTED PURSUANT TO THE PORTOFINO SETTLEMENT AGREEMENT. WHEREAS, the City and the Miami Beach Redevelopment Agency (RDA) entered into an Agreement, dated November 7, 1995, (the Development Agreement), with West Side partners, Ltd., a Florida limited partnership (West Side); East Coastline Development Ltd., a Florida limited partnership; 404 Investments, Ltd., a Florida limited partnership; Azure Coast Development, Ltd., a Florida limited partnership; Beachwalk Development Corporation, a Florida corporation; Portofmo Real Estate Fund, Ltd., a Florida limited partnership; St. Tropez Real Estate Fund, Ltd., a Florida limited partnership; and Sun & Fun, Inc., a Florida corporation (collectively the "Portofino Entities"); and WHEREAS, the Development Agreement provided for approximately 3,000 square feet of space in the South Pointe Redevelopment Area, to be leased to the City, to be utilized "solely for public meeting space and/or municipal offices"; the Lease effective date was June 20, 1997, for a term of 40 years, at $1.00 per year, plus the proportionate share common area maintenance after the third Lease year; and WHEREAS, pursuant to Resolution No. 99-23105, the City has executed a Lease Agreement for approximately 3,000 square feet of space at 701-725 5th Street in the City of Miami Beach (the Premises), that conforms to the terms set forth in the Development Agreement; and WHEREAS, the Administration has determined, as set forth in the Lease Agreement, that the lease restricts use of the leased area "solely for public meeting space and/or municipal offices", and WHEREAS, not-for-profit or cultural institutions that the City has sought to relocate are not eligible under the use limitations imposed by the Lease Agreement; and WHEREAS, we have explored the potential to amend the eligible uses and the Lessor is not willing to alter this provision of the Lease Agreement; and WHEREAS, in March 1999, the Landlord proposed to buyout the City's lease rights for $180,000, and has increased its offer to buy the City's lease rights in exchange for $320,000, subject to the City's expenditure of the $20,000 allowance for bathroom and HV AC upgrades, granted pursuant to the Porto fino Settlement Agreement buyout price; and WHEREAS, the Administration subsequently procured an appraisal con?ucted by Investors Research Associates, Inc. and dated as of December 20,1999, to determine the value of the City's remaining Leasehold interest in the Premises, and said appraisal estimates the City's leasehold interest at $260,000 and values the leasehold interest absent use restrictions at $365,000; and WHEREAS, the buyout offer of $320,000, less the investment of $20,000 in upgrades, represents an 23% premium price to the City; and WHEREAS, in light of the City's inability to identify an ultimate user for the Premises, and its limited marketability, it is recommended that the Mayor and City Commission approve the Landlord's buyout offer and adopt the attached Resolution. NOW THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission of the City of Miami Beach, authorize the City to sell its lease rights pursuant to the Lease between the City and 711 Deco, Inc., dated June 20,1997, for approximately of3,000 square feet of space located at 701-725 5th Street, for a buy-out price of $320,000 subject to the City's expenditure of the $20,000 allowance for bathroom and HV AC upgrades, granted pursuant to the Porto fino Settlement Agreement. PASSED and ADOPTED this 26th day of January, 2000. ~M MAYOR ATTEST: J~r P(U~ CITY CLERK APPROVED AS TO FORM & LANGUAGE & FOR EXECUTION 1I{!Wlt~ 1/f;:/ (/J) City Attorney LAL/CMC/rar T:\AGENDA\2000IJAN1200\REGULAR\71IDECO_RES CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 http:\\ci.mlami-beach.fl.us ~. COMMISSION MEMORANDUM NO. 68-00 TO: Mayor Nelsen O. Kasdln and Members of the City Commission Lawrence A. Levy ~ City Manager DATE: January 26. 2000 FROM: SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, AUTHORIZING THE CITY TO SELL ITS LEASE RIGHTS PURSUANT TO THE LEASE BETWEEN THE CITY AND 711 DECO, INC., DATED JUNE 20, 1997, FOR APPROXIMATELY 3,000 SQUARE FEET OF SPACE LOCATED AT 701-725 Sm STREET, FOR A BUY-OUT PRICE OF $320,000 SUBJECT TO THE CITY'S EXPENDITURE OF THE $20,000 ALLOWANCE FOR BATHROOM AND HVAC UPGRADES, GRANTED PURSUANT TO THE PORTOFINO SETTLEMENT AGREEMENT RECOMMENDATION Adopt the Resolution. BACKGROUND & ANALYSIS The City and the Miami Beach Redevelopment Agency (RDA) entered into an Agreement, dated November 7, 1995, (the Development Agreement), with West Side partners, Ltd., a Florida limited partnership (West Side); East Coastline Development Ltd., a Florida limited partnership; 404 Investments, Ltd., a Florida limited partnership; Azure Coast Development, Ltd., a Florida limited partnership; Beachwalk Development Corporation, a Florida corporation; Portofino Real Estate Fund, Ltd., a Florida limited partnership; St. Tropez Real Estate Fund, Ltd., a Florida limited partnership; and Sun & Fun, Inc., a Florida corporation (collectively the "Portofino Entities"). The Development Agreement provided for approximately 3,000 square feet of space in the South Pointe Redevelopment Area, to be leased to the City, to be utilized "solely for public meeting space and/or municipal offices." The Lease effective date was June 20, 1997, and is for a tenn of 40 years, at $1.00 per year, plus the proportionate share common area maintenance after the third Lease year. Pursuant to Resolution No. 99-23105, the City has executed a Lease Agreement for approximately 3,000 square feet of space at 701-725 5th Street in the City of Miami Beach (the Premises), that conforms to the terms set forth in the Development Agreement. AGENDA ITEM R1A DATE -1-21..::....00 January 26, 2000 Commission Memorandum 711 Deco. Inc Page 2 The Administration has explored potential users for this facility and determined that there are restricted uses, as set forth in the Lease Agreement. The lease restricts the use of the leased area "solely for public meeting space and/or municipal offices." Therefore, not-for-profit or cultural institutions that the City has sought to relocate are not eligible under the use limitations imposed by the lease. We have explored the potential to amend the eligible uses and the Lessor is not willing to alter this provision of the Lease Agreement. Additionally, the site's use is restricted as a result of limited on-site parking; three spaces are provided. Furthermore, the estimated cost to build-out the space is estimated in excess of $78,000 and the lease requires the City to pay annual CAM after the third lease year, currently estimated at $8.04/sf, or $24,210. In March 1999, the Landlord proposed to buyout the City's lease rights for $180,000. Recently, the Landlord has increased his offer to buy the City's lease rights in exchange for $320,000, subject to the City's expenditure ofthe $20,000 allowance for bathroom and HV AC upgrades, granted pursuant to the Portofino Settlement Agreement. The Administration subsequently procured an appraisal to determine the value of the City's remaining leasehold interest in the Premises. The appraisal, conducted by Investors Research Associates, Inc. and dated as of December 20,1999, estimates the City's leasehold interest in the Premises is valued at $260,000, based upon a 15% discount rate as a result of the use restrictions imposed in the lease. The appraiser subsequently was asked to value the leasehold interest, absent any use restrictions and issued a valuation of $365,000 based upon a 12% discount rate. As a result, the landlord has agreed to increase his buy-out offer to $320,000 less the investment of $20,000 in upgrades. Therefore, the proposed buy-out offer of$320,000, represents a $60,000, or 23% premium price to the City. (Cost to value 1.23x). Therefore, in light of the City's inability to identifY an ultimate user for the site and the property's limited marketability, it is recommended that the Mayor and City Commission should approve the Landlord's buy-out offer and adopt the attached Resolution. LAL/C~rar T:\AGENDA\2OOO\JAN26OO\REGULAR\711DECQ.CM . . , APPRAISAL OF "'~ ~' , ~ THE CITY OF MIAMI BEACH'S LEASEHOLD INTEREST AT "7 731 FIFTH STREET MIAMI BEACH, FLORIDA ... , " , .... PREPARED FOR "! THE CITY OF MIAMI BEACH , ... '\ AS OF DECEMBER 20, 1999 " 1 j PREPARED BY ~ Edward N. Parker, MAl INVESTORS RESEARCH ASSOCIATES, INC. 5730 S.W. 74 STREET SOUTH MIAMI, FLORIDA 33143 .j ~ 1 1 , , .J ... 1 J investors research associates, inc. real estate consultants/appraisers . . investors research associates. inc. 5730 sow, 74 street. suite 100 south miami. florida 33143-5381 telephone 305-665-3407 fox 305-665-4921 real estate consultants and appraisers licensed real estate broker 23 December 1999 . Jose Damian Assistant Manager Office of Asset Management City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Re: 731 Fifth Street, Miami Beach , ,'? i . Dear Mr. Damian: ~ The attached appraisal of the City of Miami Beach's leasehold interest at the referenced property is being submitted according to your request. This is a limited appraisal prepared in a summary report format. It is considered to be a limited appraisal since the Departure Provision of USP AP is invoked for this appraisal because only a partial interest in the property is appraised, This appraisal is intended to comply with The Uniform Standards of Professional Appraisal Practice (USP AP), as adopted by the Appraisal Standards Board ofthe Appraisal Foundation and the Code of Professional Ethics and the Standards of professional Appraisal Practice of the Appraisal Institute. As detailed herein, it is the opinion of the undersigned that the City of Miami Beach's leasehold interest at the referenced property has a market value, as of December 20, 1999, of $260,000, Please call me if you have any questions. Sincerely, -R,,~.-- ~H. Edward N. Parker, MAl State Certified General Real Estate Appraiser #0000144 -' ., 2 '. ~ TABLE OF CONTENTS . ~t " TABLE OF CONTENTS ..............................................................................................................3 I. SCOPE OF THE ASSIGNMENT ........................................................................................4 A. IDENTIFICATION OF THE PROPERTY .................................................................................4 B. PURPOSE AND SCOPE OF THE ASSIGNMENT .....................................................................4 C. DEFINITIONS..................................................................................................................... 5 D. PROPERTY RIGHTS ApPRAISED ........................................................................................ 5 E. EFFECTIVE DATE OF APPRAISAL..........................................................................................5 F. ApPRAISER ...........................................................................................................................5 II. THE APPRAISAL PROBLEM ........................................................................................ 6 ., III. PROPERTY DESCRIPTION ........................................................................................... 8 A. LOCATION ............ ........................................................... ..................... ............... ...... .... ... 8 B. OWNERSHIP .......... ....... ..... .... .......................... ................................................ ..................8 C. SITE DESCRIPTION ....... ............... ........ ... ...........................................................................8 D. IMPROVEMENT DESCRIPTION ............................ ...............................................................9 IV. THE LEASE .....................................................................................................................10 V. LEASEHOLD V ALUATION .........................................................................................12 A. CONTRACT RENT ................................................... ......................................................... 12 B. MARKET RENT ...........................................:................................................................... 12 C. DISCOUNTED CASH FLOW ANALYSIS ............................................................................14 D. VALUE CONCLUSION...................................................................................................... 14 VI. ASSUMPTIONS AND LIMITING CONDITIONS...................................................... IS vn. CERTIFICATION ...........................................................................................................17 .~. VIII. QUALIFICAITONS ....................................................................................................18 i 3 .~ ~ I. SCOPE OF THE ASSIGNMENT ~ '. A. Identification of the Property The property being addressed in this appraisal is an approximate 3,000 square foot vacant office/storefront located at 731 Fifth Street, Miami Beach, Florida. It comprises the westernmost ground floor bay of an office/retail/residential property that extends along the north side of Fifth Street from Euclid Avenue to Meridian Avenue in the South Beach area of Miami Beach. The parent property is legally described as follows: .J Lots 7 and 10; and Lots 8 and 9, less the South 10 feet of Lots 8 and 9, Block 57 Ocean Beach Addition #3, according to the plat thereof recorded in Plat Book 2, Page 81 of the Public Records of Miami-Dade County, Florida. 1 B. Purpose and Scope of the Assignment The purpose of this appraisal is to estimate the market value of the City of Miami Beach's leasehold interest at the property described herein. The function of this appraisal is to provide the City of Miami Beach an estimate of value to assist the City in negotiations to sell this leasehold position to the fee owner of the property. The scope of the assignment encompassed the following steps performed within the framework of commonly accepted appraisal procedures: . Reviewed the 40-year lease between 711 Deco, Inc. (landlord) and the City of Miami Beach (lessee). . Discussed the assignment, the property, and the lease with various officials of the City of Miami Beach. . Met with the property owner to review the lease, obtain rental and expense information for the property, and inspect the subject space. . Inspected the subject neighborhood. . Searched for rental information for similar properties in the immediate subject neighborhood. . Analyzed these data in order to formulate a sound valuation judgment within the framework and application of the appropriate approach to value. .\ 4 ., ~ c. 1. 2. 3. 4. J 1 5. Definitions ~ Market Value The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: Buyer and seller are typically motivated; Both parties are well informed or well advised, and acting in what they consider their own best interest; A reasonable time is allowed for exposure in the open market; Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Fee Simple Interest An absolute fee without limitations to any particular class of heirs but subject to the limitations of eminent domain, escheat, police power, and taxation. An inheritable estate. Leasehold Interest The tenant's or lessee's interest. An estate in property created by a lease. D. Property Rights Appraised The is an appraisal of the City of Miami Beach's leasehold interest in the property described herein. E. Effective Date of Appraisal December 20,1999 F. Appraiser . Edward N. Parker, MAl 5 II. THE APPRAISAL PROBLEM The City of Miami Beach was previously a party to a lawsuit with the prior owner of the office/retail/residential building in which the subject space is located. As part of the settlement of that lawsuit the City was given a 40-year lease for the subject space at a rental rate of $1.00 per year plus a prorata share of common area expenses after the third lease year. The lease commencement date was June 20, 1997. As such, the City will begin incurring common area expenses on June 20, 2000. The subject space is vacant "shell" space that is in very rough condition and will require extensive restoration and tenant improvements construction prior to being suitable for occupancy by the City of Miami Beach. At the present time the space is being used to store various items apparently belonging to the building owner - primarily furniture and cabinets. Tenant improvement costs would be the responsibility of the tenant and would include at least the following: . . New electric . New plumbing . Bathrooms (there are no bathrooms presently) in compliance with ADA standards . Air conditioning . Partitioning . Dropped ceilings . Lighting . Floor coverings . New entrance . S ignage . Possible asbestos removal "" .~ The cost of these improvements is estimated to be at least $40 per square foot, or about $120,000. Parking at the property is very limited. The subject space is allocated only three spaces along the north side of the building and there is no parking along Fifth Street. There are a number of apartment buildings nearby so side street parking is generally quite full. ~ The City's lease limits use of the space to "public meeting space andlor municipal offices" and precludes subletting of the space. The landlord has indicated that he will not waive these conditions of the lease. Therefore, the City must use the space and cannot sublease or sell this leasehold interest, except to the property owner. . Beginning June 20, 2000, or six months from the date of this analysis, the City of Miami Beach will become responsible for a prorata share of all common area maintenance (CAM) expenses associated with the property. These "operating costs" are delineated in the lease to include the following: ~ 6 .. ~ . . . . . . . . . . . ...~ . . Real estate taxes Insurance Maintenance of the grounds, the building, parking lot, and all mechanical systems Common area utilities Trash and garbage removal Security (if provided) Reserves for replacement Depreciation on machinery and equipment Janitorial services Maintenance agreements Attorneys' fees Salaries Reasonable management fee The lease specifically states that this is intended to be a "triple net" lease with all expenses passed through to the tenants. The owner reported the present CAM charge to tenants is approximately $8.00 per square foot. The subject space is stated in the lease to comprise 3,000 square feet. Therefore, beginning June 20, 2000, the City will begin incurring CAM charges of $24,000 annually, or $2,000 per month. The City will be responsible for this expense even if the space remains vacant. Also, this expense would not include any electric or utility costs attributed to the subject space at such time that it is improved and occupied. These costs would probably be an additional $1.75-$2.00 per square foot, or about $5,000 - $6,000 annually. Summary . . .} . '.:1 . ~ > ., . The City has the 3,000-square foot subject space leased for 37.5 more years at a rental rate of$1.00 per year. . The City must use the space and cannot sublease. The cost to complete tenant improvements is estimated at about $120,000. In six months the City will begin incurring CAM costs of $2,000 per month, or $24,000 annually. If the space is improved and occupied the City will be subject to utility costs of about $5,000 to $6,000 annually. There are only three parking spaces allocated to this space and nearby parking is limited. 7 ~ III. PROPERTY DESCRIPTION A. Location The office/retail bay that is the subject of this analysis is located at 731 Fifth Street, Miami Beach. It is the westernmost ground floor bay of a three-story office/retail/residential property fronting the north side of Fifth Street and extending from Euclid A venue to Meridian A venue. The parent property address is 701-731 Fifth Street. The property is located in the South Beach area of Miami Beach. More specifically, it is located along Fifth Street, which is the main east-west thoroughfare in this area of South Beach, between Alton Road and Washington Avenue. Improvements along this strip of Fifth Street vary widely in type and condition. They include the following: drug stores (Eckerd, Walgreen, and South Point Pharmacy); gas stations (Amoco and Shell); adult entertainment (book store and a nude bar); restaurants (Burger King, Dunkin' Donut, and a Haitian restaurant); several auto repair shops; grocery store; and apartment buildings. While some of these commercial properties were built or restored during the last five years, others are older structures in need of maintenance. By contrast, commercial uses along and to the east of Washington Avenue are newer, more attractive, and more consistent with the revitalization of South Beach that has been occurring over about the last IS years. Rental rates and occupancy levels are much higher to the east of the subject property than in the immediate subject vicinity. B. Ownership The property is owned in the name of 7 I I Deco, Inc., an entity reportedly controlled by Michael Kadosh. According to the public records, Mr. Kadosh's group purchased the property from 7th & 5th Deco Corp. on January 27, 1997 for a price of $2,200,000 (Special Warranty Deed; O.R. Book 17695, Page 4000). According to Mr. Kadosh, he discounted the purchase price $300,000 to account for the income loss attributed to the lease to the City of Miami Beach. c. Site Description ., The site for the entire parent property measures 90 feet north to south by 280 feet east to west. According to the Miami-Dade County Property Appraiser's records, the site contains 25,200 square feet. . 8 .. ~ ~ D. Improvement Description The parent property consists of a three-story CBS structure that was built in 1930. The two upper floors contain 43 one-bedroom apartment units, each about 500 square feet in size. The ground floor is comprised of office and retail type space. According to the Miami-Dade County Property Appraiser's records, the entire building contains a total of 37,079 square feet of floor area. The ground floor commercial space is occupied by a variety of tenants including a Ducati motorcycle dealer (formerly Falls Leather Gallery's space), Futon Furniture, several real estate offices related to the building owner, and the vacant subject space. The subject space is the westernmost ground floor commercial space at the property. The bays at the building were designed to contain about 750 square feet each. The subject space comprises four bays, or a total of about 3,000 square feet. (Note: the lease states the subject space is 3,000 square feet). The space is unfinished, open floor area with no interior partItIons or tenant improvements. It appears that it has been many years since this space was occupied. It is presently being used to store furniture, cabinets, and other items belonging to the building owner. Prior to use as office space by the City of Miami Beach the space will require at least the following improvements: '., . New electric . New plumbing . Bathrooms (there are no bathrooms presently) In compliance with ADA standards . Air conditioning . Partitioning . Dropped ceilings . Lighting . Floor coverings . New entrance . S ignage . Possible asbestos removal , ~ The cost of this work is estimated to be about $40 per square foot, or about $120,000. The tenant would be responsible for the tenant improvement costs at the subject space. " The only on-site parking at the property is along the north side of the building. The subject space is allocated three parking spaces. There is no parking along Fifth Street. Parking along Euclid Avenue and Meridian Avenue to the north of the property is utilized by apartment residents in the area as well as commercial tenants and customers. As such, there is very limited parking for the property. 9 'j/. EXTERIOR VIEWS OF THE SUBJECT PROPERTY ,'.~ Looking east along Fifth Street. The subject space is the ground floor space at the left with paper on the window. Looking east at the alley and parking area to the north of the building (visible at the right). -' ., d INTERIOR VIEWS OF THE SUBJECT SPACE ... IV. THE LEASE ~ Term The City of Miami Beach has a 40-year lease for the subject space that commenced June 20,1997 and now has 37.5 years remaining. Base Rent Base rent for the space is $1.00 per year for the entire 40-year tenn. This rental rate does not include any tenant improvements. The City of Miami Beach would be responsible for all interior construction. Common Area Expenses Leases for the ground floor commercial space are stated to be "triple net" with all operating expenses passed on to the tenants. The subject lease calls for the tenant (the City) to begin paying a prorata share of common area maintenance (CAM) expenses beginning in the fourth year of the lease tenn, or beginning June 20, 2000. The lease states the subject space comprises 26 percent of the commercial space. The CAM expenses are delineated in the lease to include the following: . Real estate taxes . Insurance . Maintenance of the grounds, the building, parking lot, and all mechanical systems . Common area utilities . Trash and garbage removal . Security (if provided) . Reserves for replacement . Depreciation on machinery and equipment . Janitorial services . Maintenance agreements . Attorneys' fees . Salaries . Reasonable management fee i The owner reported the present CAM charge to tenants is approximately $8.00 per square foot. The subject space is stated in the lease to comprise 3,000 square feet. Therefore, beginning June 20, 2000, the City will begin incurring CAM charges of $24,000 annually, or $2,000 per month. The City will be responsible for this expense even ifthe space remains vacant. Also, this expense would not include any electric or utility costs attributed to the subject space at such time that it is improved and occupied. These costs would probably be an additional $1.75-$2.00 per square foot, or about $5,000 - $6,000 annually. 10 .. Permitted Uses Importantly, the lease stipulates that the City shall use the space "...solely for public meeting space and/or municipal offices." The landlord has stated that he will not waive this condition of the lease. Therefore, under the terms of the lease the subject space can only be used by the City of Miami Beach. The lease also stipulates that the City cannot sublet or assign the lease. The landlord has also stated that this condition of the lease will not be waived. These two conditions of the lease are extremely important because they preclude occupancy by any entity other than the City of Miami Beach and preclude assignment of the lease or subleasing of the space. ~ , . , 1 J .~ , , ., ;. , 11 ~ ~ V. LEASEHOLD V ALVA TION ~ The City of Miami Beach's leasehold interest is the present value of the City's rental advantage over the remaining tenn of the lease. In other words, it is the present value of the difference between market rent and contract rent over the remaining lease tenn. A. Contract Rent As previously addressed herein, contract base rent for the subject space is $1.00 per year annually through the 40-year lease term. There are presently 37.5 years remaining on the lease tenn. " In addition to the base rent, the tenant will be responsible for a pro rata share of CAM expenses beginning June 20, 2000. These expenses total about $8.00 per square foot, or $24,000 annually, or $2,000 per month. The owner reported that all tenants pay $8.00 per square foot. Therefore, the City has the advantage of not paying this expense for six more months. The total amount yet to be saved on CAM charges is $12,000. . B. Market Rent Mr. Kadosh provided rental infonnation for the subject building as summarized below. He reported that these are all triple net leases with tenants paying an additional $8.00:t per square foot for CAM charges. The Ducati Miami space was previously leased to Falls Leather Gallery at a rental rate reported to be $20 per square foot, triple net. When Falls leather Gallery filed bankruptcy the space was leased to Ducati Miami, a motorcycle dealer. Importantly, the landlord provided the tenant improvements for Falls Leather Gallery. Ducati Miami utilized the tenant improvements already in place. Therefore, both of these leases included tenant improvements. Similarly, the landlord provided tenant improvements for the Futon Furniture space. SUBJECT PROPERTY RENT ROLL 1 Futon Furniture Ducati Miami 1,270 3,700 $1,700 $5,000 $20,400 $60,000 $16.06 $16.22 Kabo Realty 860 $1,400 $16,800 $19.53 12 A _h fuo =,.1 iof"~"ioo"o oomp.mblo propoti~ w", I",.,y ",,",=ful. Fifth ~ Street is somewhat unique in that it offers commercial tenants good street exposure, but unless there is adequate on-site parking tenants have difficulty unless they are east of Washington Avenue. As previously stated, the area east of Washington Avenue or along Washington Avenue is considered far superior to the subject location. Rental rates and occupancy levels are much higher to the east. The most similar property located is a two-story retail/residential building fronting the south side of Sixth Street extending from Euclid A venue to a point about 100 feet west of Washington Avenue. This is the next street north of the subject and just to the east. A 1,500 square foot retail bay is presently listed for lease at an asking rent of $20.00 per square foot, gross. The listing agent reported pass through expenses to be about $4.00 per square foot. Therefore, the asking rent is equivalent to $16.00 per square foot, triple net. This space would require some tenant improvements but the infrastructure (electric, lighting, plumbing, bathrooms, ceilings, etc.) is in place. This space does not have any on-site parking but there is street parking along both sides of Sixth Street. " ., The Ducati Miami space is located at the east end of the subject building and it is only 700 square feet larger than the subject. Although a previous tenant paid a higher rent, they were not successful and filed bankruptcy. The current rent for this space is $16.22 per square foot, triple net, including tenant improvements. Although this space is in the same building as the subject, it is at the east end rather than the west end like the subject. As such, it is effectively one block closer to Washington Avenue and, thereby, better located. Assuming tenant improvements were in place, the market rent for the subject space would be lower. The comparable building fronting Sixth Street does not have as much traffic exposure as the subject, but it is only about 100 feet west of Washington A venue and has street side parking. The broker listing a 1,500 square foot store reported the asking rent of $16.00 per square foot, triple net, was negotiable. Also, the CAM charges at this property are $4.00 per square foot less than at the subject. Therefore, some downward adjustment to the subject's market rent is necessary. Considering the available data, it is concluded that if the subject space was built out, it would have a market rent of $15.00 per square foot. The present market rent is calculated to be $45,000. 3,000 square feet x $15/S.F. = $45,000 This rent assumes the tenant pays an additional $8.00 per square foot CAM expenses. Total gross rent, therefore, is $23.00 per square foot assuming tenant improvements are in place. , , 13 ~ .. C. Discounted Cash Flow Analysis The value of the City of Miami Beach's leasehold interest is calculated on the following page by discounted cash flow analysis. The following assumptions are made: . The cash flow projection assumes tenant improvements are in place. The cost to complete these improvements is then deducted to derive a value indication of the space in its present condition. . . , .. . Market rent is assumed to increase three percent annually. The first year rent advantage includes $12,000 for CAM charges that will not be incurred by the City. As such, "market rent" in the first year of the projection period is $57,000 ($45,000 market rent + $12,000 CAM charges not incurred). Thereafter, the City will be responsible for CAM charges at the same rate as other tenants at the building. Year 38 of the projection period is only six months in length. Therefore, only one half year's rent is considered. . If the City's lease did not restrict use of the space to City offices and did not provide subleasing, a discount rate of about 12 percent would be considered reasonable. However, given these very restrictive conditions, a discount rate of 15 percent is considered appropriate and has been utilized in this analysis. D. Value Conclusion As indicated by the discounted cash flow analysis presented herein, it is concluded that the value of the City of Miami Beach's leasehold interest at the subject property, as of December 20, 1999, is $ 260,000. " .. ~ " 14 ., . ,j ~ DISCOUNTED CASH FLOW ANALYSIS ~ 731 FIFTH STREET Market Rent Present Worth filII AssuminJJ T... In Place Factor fa) 15% Present Worth 1 $57,000' 0.8696 $46,958 2 $46,350 0.7561 $35,045 3 $47,74] 0.6575 $31,389 4 $49,173 0.5717 $28,112 5 $50,648 0.4972 $25,182 6 $52,167 0.4323 $22,552 7 $53,732 0.3759 $20,198 8 $55,344 0.3269 $18,092 .j, 9 $57,005 0.2843 $16,206 10 $58,715 0.2472 $14,514 " II $60,476 0.2149 $12,996 .. $62,291 $11,642 .J! 12 0.1869 13 $64,159 0.1625 $10,426 I 14 $66,084 0.1413 $9,338 15 $68,067 0.]229 $8,365 16 $70,109 0.]069 $7,495 '1 17 $72,212 0.0929 $6,708 i 18 $74,378 0.0808 $6,010 19 $76,609 0.0703 $5,386 20 $78,908 0.0611 $4,821 21 $81,275 0.0531 $4,316 22 $83,713 0.0462 $3,868 23 $86,225 0.0402 $3,466 24 $88,811 0.0349 $3,100 25 $91,476 0.0304 $2,781 26 $94,220 0.0264 $2,487 27 $97,047 0.0230 $2,232 28 $99,958 0.0120 $1,199 29 $102,957 0.0174 $1,791 30 $106,045 0.0151 $1,60] 31 $109,227 0.0131 $1,431 32 $112,504 0.0114 $1,283 33 $115,879 0.0099 $1,147 34 $119,355 0.0086 $1,026 35 $122,936 0.0075 $922 36 $126,624 0.0065 $823 ., 37 $130,423 0.0057 $743 38 $62,690 0.0049 llQ1 .. Total $375.961 Less T.I Cost $120000 Present Worth liAs Is" $255,961 Rounded $260,000 ., 'Year 1 market rent is $42,000 plus $12,000 CAM charge not incurred. The tenant is responsible for full CAM charges in Years 2-38. , " VI. ASSUMPTIONS AND LIMITING CONDITIONS This appraisal report has been made with the following general assumptions: 2. 3. .... 4. .{ - 1 5. 1 6. l ... 7. .. ". 8. .".> , 9. J 10. .t 11. I. No responsibility is assumed for the legal description or for matters including legal or title considerations. Tit]e to the property is assumed to be good and marketable unless otherwise stated. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. Responsible ownership and competent property management are assumed. The information furnished by others, in particular the property owner, is believed to be reliable and, whenever possible, it was cross checked with another source. However, no warranty is given for its accuracy. Should the rental data provided by the owner prove to be inaccurate, the value conclusion rendered herein may require revision. All engineering is assumed to be correct. The plot plans, plats, maps, and illustrative material in this report are included only to assist the reader in visualizing the property. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. It is assumed that all applicab]e zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in the appraisal report. It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. The existence of hazardous material, which mayor may not be present on the property, was not observed by the appraisers. The appraisers have no knowledge of the existence of such materials within or near the property. The appraisers, however, are not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material within or near the property that would cause a loss in value. No responsibility is assumed for any ]5 ~ ,~h ~,,;'"' " I" '"' ~"m~ " ",,;_ri'g Im,w'"," req';"" '" 'moo,,, ili=. ~ The client is urged to retain an expert in this field, if desired. 12. The appraisal is intended to comply with the appraisal requirements of the Code of Professional Ethics and Standards of Professional Conduct of the Appraisal Institute. This appraisal report has been made with the following general limiting conditions: 1. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. 1 2. 3. .-' Possession of this report, or a copy thereof, does not carry with it the right of publication. The appraiser, by reaSOn of this appraisal, is not required to give further consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made. ,>i 4. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser. ..., 5. Any value estimates provided in the report apply to the entire property, and any proration or division of the total into fractional interests will invalidate the value estimate, unless such proration or division of interests has been set forth in the report. i 1 4 ',. 16 ... VII. CERTIFICATION I certify that, to the best of my knowledge and belief: The statements offact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. ., My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. f , The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. ... This appraisal is intended to comply with the following: the Uniform Standards of Professional Appraisal Practice CUSP AP) as adopted by the Appraisal Standards Board of the Appraisal Foundation; the requirements of the Real Estate Appraisal Board of the State of Florida; and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. .. The use of this report is subject to the requirements and possible review of the Real Estate Appraisal Board of the Florida Department of Professional Regulation. The use of this report is subject to the requirements and possible review of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, Edward N. Parker, MAl, has completed the requirements of the continuing education program ofthe Appraisal Institute. ~ I have made a personal inspection of the property that is the subject of this report. 1 No one provided significant professional assistance to the person signing this report. ~ It is the opinion of the undersigned that the City of Miami Beach's leasehold interest at the property described herein has the following market value, as of December 20, 1999: -' l:L .,~ #. r~ Edward N. Parker, MAl State Certified General Appraiser-OOOO 144 $260,000 .. 17 '" ~ VIII. QUALIFICAITONS ~ EDWARD N. PARKER, MAl Investors Research Associates, Inc. 5730 S. W. 74 Street, Suite 100 South Miami, Florida 33143-5381 Phone No.: (305) 665-3407 Fax No.: (305) 665-4921 Academic University of Alabama - B.S., Marketing University of Miami - M.B.A. Experience Mr. Parker began his career as a real estate consultant in 1972 with the Reinhold P. Wolff Economic Research Company in Coral Gables, Florida. As a staff analyst, he was responsible for the preparation of market feasibility studies, retail studies, economic use analyses, and site location studies. . In 1974, Mr. Parker joined the Miami office of Real Estate Research Corporation (RERC), a wholly owned subsidiary of the First National Bank of Chicago. As a staff appraiser and analyst, Mr. Parker prepared appraisals of all types of income-producing properties located throughout the United States and the Caribbean. These valuations involved fee simple interest, leaseholds, partial interests, and going-concern valuations. He has also appraised a large number of special purpose properties including schools, marinas, resorts, and specialized manufacturing facilities. Mr. Parker's administrative responsibility at RERC included the coordination of the appraisal of the assets of two major Miami-based REITS during their orderly portfolio disposition. Mr. Parker also managed the annual ongoing portfolio appraisal of the properties comprising the First National Bank of Chicago commingled pension trust known as Fund F. , In June, 1981, Mr. Parker joined Investors Research Associates, Inc. as a principal. The fmn specializes in income property appraisals, highest and best use and market studies, as well as consultation services for major lending institutions, insurance companies, real estate syndicators, developers, pension funds and governmental agencies. Discounted cash flow and sensitivity analyses, as well as absorption studies are some of the services provided to clients. The fmn has successfully completed a number of very complex valuation assignments involving environmentally sensitive wetlands including offshore island properties for private and public clients. Agricultural properties including row crop land, groves, and tree nurseries are another specialty. Mr. Parker's experience includes condemnation appraisals for both public and private clients. The public client list includes the Florida Department of Transportation, South Florida Water Management District, National Park Service, U.S. Department of Justice, Dade County HOD, Dade County Department of Facilities Management, and Miami-Dade Water and Sewer Department. Property types appraised for condemnation purposes include office buildings, retail stores, restaurants, service stations, banks, churches, apartments, . vacant sites, agricultural (crop land and tropical fruit groves), and environmentally sensitive wetlands. Mr. Parker has qualified as an expert witness in Dade, Broward, Momoe and Duval County Circuit Courts, U.S. District Court, and U.s. Bankruptcy Court. He is also currently certified under the continuing education program conducted by the Appraisal Institute. .J ~i Affiliations . Member of the Appraisal Institute - MAl Licensed Real Estate Broker - State of Florida State Certified General Appraiser-OOOO 144 18 . . . ' 711 DECO Pt_.I~, INC. 717 5TH STREET Miami Beach, FL 33139 Tel. (305) 672-4600 Fa:1 (305) 672-0155 January 5, 2000 Attn: Christine Cuervo Ref: Purchase Miami Beach Lease @ 711 Deco, Inc. This is to confirm my final offer to purchase the le3:;o) rights currently held by the City of Miami Beach at 711 Deco building. The amount of the oBii- is $280,000. ($300,000- 20,000 fur bathroom allowance). Thank Yon, Michael Kadosh I 385 investors research associates. inc. 5730 sw. 74 street. suite 100 south miami, florida 33143-5381 teiephone 305-665-3407 fax 305-665-4921 real estate consultants and appraisers licensed real estate broker II January 2000 Jose Damian Assistant Manager Office of Asset Management City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Re: 731 Fifth Street, Miami Beach Dear Mr. Damian: 1 recently submitted a limited appraisal to you that estimated the value of the City of Miami Beach's leasehold interest in the referenced property. That appraisal valued the City's interest subject to the existing lease with the property owner. Significantly, my value estimate gave consideration to terms in the lease that stipulate that only the City of Miami Beach may occupy the property and the City cannot sublease or sell their leasehold position. My value estimate of the City's leasehold interest, subject to the existing terms and conditions of the lease, as of December 20, 1999, was $260,000. Subsequent to my submission of the above referenced appraisal you have requested that I provide the City with an estimate of the leasehold value that assumes the lease does not require the City of Miami Beach to be the only occupant of the space and does not preclude the City from subleasing the space or selling the leasehold interest. Please consider this letter report to be a supplement or Addenda to my previous appraisal. The reader should have a copy of my previous report in order to fully understand the content of this letter report supplement. As with my previous report, this is considered to be a limited appraisal. Except for the above assumptions regarding the lease provisions, all other contents of my previous appraisal are considered to be appropriate for this appraisal. The Lease As stated above, this analysis assumes that the City of Miami Beach can sublease the subject space or sell their leasehold position. As such, the City is not the only allowable occupant of the space. All other terms and conditions of the lease are assumed to remain the same. Market Rent The conclusion of market rent presented in my previous appraisal is considered to be appropriate in this instance also. ~ Discount Rate Because the City is assumed to have the right to sublease the space or sell their leasehold position to another tenant, the discount rate utilized in this analysis is 12 percent rather than the 15 percent rate utilized in the previous appraisal. Value Conclusion As indicated by the discounted cash flow analysis presented herein, it is concluded that the value ofthe City of Miami Beach's leasehold interest at the subject property, assuming that the City can sublease the space or sell their leasehold position to another tenant, as of December 20,1999, is $365,000. Please call me if you have any questions or would like to discuss any aspect of this appraisal. Sincerely, ~ AI. -P~ Edward N. Parker, MAl State Certified General Real Estate Appraiser #0000 I 44 . . . ~ " DISCOUNTED CASH FLOW ANALYSIS ~ 731 FIFTH STREET Market Rent Present Worth Yw: A~"lImin~ Tal. In Place Factor (Q) 120/. Present Worth I $57,000' 0.8928 $46,958 2 $46,350 0.7972 $36,950 3 $47,741 0.7118 $33,982 4 $49,173 0.6355 $31,249 5 $50,648 0.5674 $28,738 6 $52,167 0.5066 $26,428 7 $53,732 0.4523 $24,303 8 $55,344 0.4039 $22,354 9 $57,005 0.3606 $20,556 10 $58,715 0.3219 $18,900 11 $60,476 0.2875 $17,387 12 $62,291 0.2567 $15,990 13 $64,159 0.2292 $14,705 14 $66,084 0.2046 $13,521 15 $68,067 0.1827 $12,436 16 $70,109 0.1631 $11,435 17 $72,212 0.1456 $10,514 18 $74,378 0.1300 $9,669 19 $76,609 0.1161 $8,894 20 $78,908 0.1037 $8,183 21 $81,275 0.0925 $7,518 22 $83,713 0.0826 $6,915 23 $86,225 0.0738 $6,363 24 $88,811 0.0659 $5,853 25 $91,476 0.0588 $5,379 26 $94,220 0.0525 $4,947 27 $97,047 0.0469 $4,551 28 $99,958 0.0418 $4,178 29 $102,957 0.0373 $3,840 30 $106,045 0.0334 $3,542 31 $109,227 0.0298 $3,255 32 $112,504 0.0266 $2,993 33 $115,879 0.0237 $2,746 34 $119,355 0.0212 $2,530 35 $122,936 0.0189 $2,323 36 $126,624 0.0169 $2,140 37 $130,423 0.0151 $1,969 38 $62,690 0.0135 W2 Total $485,041 Less T.1 Cost $120000 Present Worth liAs Is" $365,041 Rounded $365,000 'Year 1 market rent is $42,000 plus $12,000 CAM charge not incurred. The tenant is responsible for full CAM charges in Years 2-38. CERTIFICATION I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. This appraisal is intended to comply with the following: the Uniform Standards of Professional Appraisal Practice (USP AP) as adopted by the Appraisal Standards Board of the Appraisal Foundation; the requirements of the Real Estate Appraisal Board of the State of Florida; and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. The use of this report is subject to the requirements and possible review of the Real Estate Appraisal Board of the Florida Department of Professional Regulation. The use of this report is subject to the requirements and possible review of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, Edward N. Parker, MAl, has completed the requirements of the continuing education program of the Appraisal Institute. I have made a personal inspection of the property that is the subject of this report. No one provided significant professional assistance to the person signing this report. It is the opinion of the undersigned that the City of Miami Beach's leasehold interest at the property described herein, assuming that the City can sublease the space or sell their leasehold position to another tenant, has the following market value, as of December 20, 1999: ~AJ.-P~ $365,000 Edward N. Parker, MAl State Certified General Appraiser-OOOO I 44 '. .' ~ . RELEASE Project Name: 711 Deco Plaza KNOW ALL MEN BY THESE PRESENTS: That the Undersigned, Neisen Kasdin as Mayor of the City of Miami Beach, on behalf of, CITY OF MIAMI BEACH, 1700 Convention Center Drive, Miami Beach, Florida 33139, for and in consideration of the payment of THREE HUNDRED THOUSAND DOLLARS AND 00/100 ($300,000.00), receipt of which is hereby acknowledged, releases, waives and forever discharges 711 DECO, INC., of 717- 5th Street, Miami Beach, Florida 33139 (Owner), and its elected and appointed officials, employees, representatives, agents, contractors, subcontractors, successors and assigns, from and against any and all (a) past, present and future damages, losses, liabilities, costs and expenses; (b) claims, suits, administrative proceedings, judgments, damages (including punitive damages), losses, fines, penalties, liabilities (including strict liability), encumbrances, liens, costs and expenses of investigation and defense of any claim, suit, or proceedings, settlements, and bond costs; (c) damages for wrongful death, bodily injury, property damage or natural resource damage and restoration, including lost profits, consequential damages, and the cost of demolition and rebuilding of any improvements; (d) diminution in the value of the real property legally described herein, and damages for the loss or restriction on the use of said property; and (e) fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other costs incurred in connection with, or related to that certain Lease Agreement, with an effective date of June 20, 1997, by and between the City of Miami Beach and 711 Deco, Inc., a copy of which is attached as Exhibit "A", as approved by the Mayor and City Commission of the City of Miami Beach pursuant to Resolution No. 2000-23774, adopted on January 26, 2000, and relating to the real property described as: Approximately 3,000 square feet of vacant office/storefront comprising the westernmost ground floor bay of the property at 731 - 5th Street, Miami Beach, Florida. The parent property is legally described as Lots 7 and 10; and Lots 8 and 9, less the south 10 feet of Lots 8 and 9, Block 57, Ocean Beach Addition No.3, according to the Plat thereofrecorded in Plat Book 2 at page 81 ofthe Public Records of Miami-Dade County, Florida. The Undersigned has the right and authority to execute this Release. The Undersigned acknowledges that, under Florida Statutes, the Owner, its successors and assigns, and others have a right to rely upon this Release and that making any false statement shall constitute peIjury and punishment can be made in accordance with provision of the laws of the State of Florida. IN WITNESS WHEREOF, the Undersigned has executed this Release as of the _ day of September, 2000. itnes f4: Print Nam~ /b2A If LueepvJ CITY OF MIAMI BEACH, a Florida B:~iCiPal Jff!ration Name: Neisen Kasdin Title: Mayor 1700 Convention Center Drive Miami Beach, Florida 33139 ~TH I w.dt~ TY LERK APPROVED AS TO FORM & LANGUAGE & FOREXECU:rtON STATE OF FLORIDA ) ) ) ~ "-~-<JlI SS COUNTY OF DADE RJAlkw F:IDDHP\$ALLIASSETl71lDECOIRELEASE.711 9/25/00 Commission No.: : LEASE AGREEMENT Florida Florida, following This Lease is made by and between 711 Deco, Inc., a corporation ("Landlord"), and the City of Miami Beach, a Florida municipal corporation ("Tenant"), on the terms and conditions: 1. Definitions. The terms provided herein shall be defined for purposes of this Lease as follows: 1.1. Building" means the building located at 701-725 5th Street, Miami Beach, Florida 33139, more particularly identified according to its legal description as: Lots 7 and 10; and Lots 8 and 9, less the South 10' of Lots 8 and 9, Block 57 Ocean Beach Addition #3, according to the plat thereof recorded in Plat Book 2, Page 81 of the Public Records of Dade County, Florida. The Building includes all land, interests appurtenant thereto. improvements, rights and 1.2. "Insurance" means the casual ty and commercial general liability insurance coverage maintained by Landlord to protect the Building as provided in Section 30 herein. 1.3. Effective Effective "Lease Date and Date. Term" means the period beginning with the terminating on a date forty years after the 1.4. "Lease Year" means the consecutive twelve calendar month period commencing on the Effective Date and each consecutive twelve calendar month periods thereafter during the Lease Term. 1.5. "Operating Costs" means the costs of maintaining the Building (excluding costs related to the residential portion of the Building), including but not limited to landscaping, repairs, line painting, paving and resurfacing, lighting, maintenance of heating and air conditioning systems serving the Building, electricity, sewer and water not separately metered and paid by individual tenants, insurance, sign maintenance, sanitary control, removal of trash, rubbish, garbage and other refuse, cost of security if any is provided, reasonable sums as operating reserves, depreciation on machinery and equipment used in maintenance, janitorial services, service and maintenance agreements for the Building, attorneys' fees, the cost of personnel, and a reasonable management fee. It is the intent of the parties that this Lease be a "triple net" lease (commencing with the fourth Lease Year) and, accordingly, the definition of EXHIBIT A "Operating Costs" interpretation. is to be given its broadest reasonable 1.6. "Sales Tax" means all Florida state, county, and/or municipal sales, use, or similar taxes, and all local option surtaxes assessed upon or in relation to Rent and all other considerations due and payable to Landlord by Tenant or any other person actually occupying, using, or entitled to use the Premises at the tax rates in effect from time to time during the Lease Term. 1.7. "Taxes" means the annual real property ad valorem taxes, special assessments, or similar governmental charges assessed upon the Building. 1.8. "Tenant I s Percentage Share" means Tenant I s percentage allocated share of Operating Costs, Taxes, and Insurance paid by Landlord for the Building which are chargeable to Tenant on a proportionate basis in accordance with this Lease. For all purposes of this Lease, T~~'~~ntage Share is 26%. 2. Lease of premise~. Landl~ db~s hereby lease to Tenant the Premises describe on Exhibit A (the "Premises"), known as 731 5th Street, Mi i Beach, Florida. The Prem~ses constitutes approximately, rentable square feet of floor space. Landlord has made no representations as to the actual square footage and Tenant hereby acknowledges that it has inspected the Premises and agrees that the Base Rent under this Lease is not based on the actual square footage of the Premises and will not be adjusted based on any measurements. 3. Term. This Lease shall be and remain in effect for the entire period of the Lease Term unless sooner terminated as provided herein. Notwithstanding anything to the contrary concrained herein, from and after the expiration of the third (3r) Lease Year, Tenant shall have the right, for any reason and/or for no reason, and in Tenant's sole and absolute discretion, to terminate this Lease, provided that Tenant delivers to Landlord at least ninety (90) days prior written notice of such termination. 4. Rent. 4.1. Base Rent. Beginning with Tenant shall pay to Landlord base rent amount of one dollar ($1.00) per year for Lease Term. the Effective Date, ( "Base Rent" ) in the each year during the 4.2. Ooeratinq Costs and Taxes. Commencing on the fourth (4th) Lease Year, Tenant shall, in addition to the Base Rent, pay to Landlord Tenant's Percentage Share of the Operating Costs and Taxes in monthly installments on the first (1st) day of each month during the Lease Term, in such amounts as are, from time to time, estimated by Landlord for each Lease Year beginning at the -2- commencement of the fourth Lease Year. Estimates shall be revised from time to time on the basis of the actual Operating Costs and Taxes for the preceding year. Should the Operating Costs and Taxes be underestimated, Tenant shall pay any deficiency promptly following written notice from Landlord and if Landlord shall overestimate the actual Operating Costs and Taxes for the preceding year, the overage shall be credited against the next due monthly payments of Tenant's Percentage Share pursuant to this Section 4.2. 4.3. Sales Tax. Tenant shall pay all applicable Sales Tax, if any, as may be due with respect to all payments of Base Rent, Tenant's Percentage Share of Operating Costs and Taxes and other charges due from Tenant under this Lease. To the extent that Tenant is exempt under applicable law from the obligation to pay Sales Tax, Tenant shall provide Landlord with Tenant's tax exempt identification number or similar evidence of such exemption, whereupon Tenant shall not be obligated to pay any applicable sales tax. 4.4. Rent. Base Rent, charges for Operating Costs and Taxes, for each Lease Year or portion thereof, and other charges as otherwise provided herein, plus all Sales Tax applicable thereto from time to time, are hereinafter referred to as "Rent." 5. Pavrnent. 5.1. Deliverv. Base Rent shall be payable in advance in annual installments with the first installment, including Sales Tax, being due upon Tenant's execution of this Lease, and thereafter each installment shall be due on the first day of each consecutive Lease Year during the Lease Term. Tenant's Percentage Share of Operating Costs and Taxes, including Sales Tax, shall be payable monthly as provided in Section 4.2 above. Rent payments shall be by check made payable to 7Lh Ii StR ];)9>;:Q CQrl?, and, unless instructed otherwise by Landlord, delivered to: t9 -=tit 'OW Inc. . nl. &. 3th DODO COJ'.1l. ~\1 Deco Inc. ORe c:,.mt'c PoiRL D....i.v,," 1..\\\ Wo.Sh\ng1Vr'\ 1Wtv\\J~ Miami Beach, Florida 33139 '~\\\ 5.2. Delinauencv. The Rent is delinquent if not received by Landlord on the date when due as specified above. If such Rent is not received by Landlord by the fifth day after the due date, in addition to all other rights and remedies that Landlord may exercise, Landlord may further assess Tenant a late charge of 5% of the Rent per month for each month or part thereof until such Rent is paid. 6. required provided Security Deposit. There is no Security Deposit under this Lease and any reference to same hereinafter shall be deemed deleted. -3- 7. AccePtance of Premises "As Is" . Tenant has inspected the Premises before executing this Lease and Tenant's execution of this Lease shall constitute unconditional agreement that the Premises are accepted in their "As Is" condition and that Landlord has made no representation or warranty to Tenant as to the condition of the Premises. 8. Use and Care. 8.1. Use. The Premises shall be occupied and used by Tenant solely for public meeting space and/or municipal offices. Tenant shall not use or permit the use of the Premises for any purpose, except as permitted herein, without the prior written consent of Landlord which consent may be withheld in Landlord's sole discretion. 8.2. Qperatinq Standards. Tenant shall operate its business in a dignified manner and in accordance with high standards of operation. Tenant will (i) replace promptly at its own expense with glass of like kind and quality any plate or window glass which is cracked or broken; (ii) replace doors or door hardware of the Premises which may for any reason become cracked or broken; (iii) maintain the Premises in a clean, orderly and sanitary condition and free of insects, rodents, vermin, and other pests; (iv) not permit undue accumulation of garbage, trash, rubbish or other refuse in the Premises; and (v) keep such refuse in proper containers at the Premises until normal pickup. 8.3. Applicable Law. At all times, Tenant shall fully and promptly comply with all laws, local ordinances, orders and regulations of any lawful authority having jurisdiction over the Premises, including without limitation, those relating to the environment, cleanliness, safety, occupation, and use of the Premises. 8.4. Environmental. Tenant shall not cause or permit any Hazardous Material to be brought upon, kept or used in or about the Premises or the Building by Tenant, its agents, employees, contractors or invi tees, wi thout the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion. If Tenant breaches the obligations stated in the preceding sentence, or if the presence of Hazardous Material on the Premises or at the Building caused or permitted by Tenant results in contamination of the Premises or the Building, or if contamination of the Premises or the Building by Hazardous Material otherwise occurs for which Tenant is legally liable to Landlord for damage resulting therefrom, then Tenant shall indenmify, defend and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation, diminution in value of the Premises or the Building, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises or the Building, damages arising from any adverse impact -4- on marketing of space, and sums paid in settlement of claims, at torneys' fees, consul tant fees and expert fees) which arise during or after the Lease Term as a result of such contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of Hazardous Material present in the soil or ground water on or under the Premises. Without limiting the foregoing, if the presence of any Hazardous Material on the Premises or at the Building caused or permitted by Tenant results in any contamination of the Premises or the Building, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises and the Building to the condition existing prior to the introduction of any such Hazardous Material to the Premises or the Building; provided that Landlord's approval of such actions shall first be obtained, which approval shall not be unreasonably withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises or the Building. Landlord shall have the right at all reasonable times to inspect the Premises and to conduct tests and investigations to determine whether Tenant is in compliance with this Section of the Lease, the costs of all such inspections, tests and investigations to be borne by Tenant. Tenant's obligations pursuant to the indemnity contained in this Section shall survive the termination of the Lease. As used herein, the term hazardous or toxic substance, becomes regulated by any local of Florida or the United States "Hazardous Material" means any material or waste which is or governmental authority, the State Government. 9. Abandonment. rn the event that at any time during the Lease Term, Tenant abandons the Premises, Tenant shall be in default hereunder, and Landlord may exercise any and all of its rights and remedies hereunder on account of a Tenant default. 10. Hold Over. If Tenant remains in possession of the Premises after the termination of this Lease and without the execution of a new lease, Tenant shall be deemed to be occupying the Premises as a tenant at sufferance at a rent equal to double the then "fair market rentable value" of the Premises as such fair market rentable value is reasonably determined by Landlord based upon comparable rentals in the Building at such time for other ground floor space. 11. Parkinq. Tenant acknowledges that there is limited on-site parking facilities located at the Building which are allocated among the tenants. Tenant shall have three (3) spaces marked for its use at the Building. Notwithstanding this allocation, Landlord assumes no responsibility for enforcing the use of the allocated or unallocated parking spaces. Tenant shall be responsible to pay Landlord for the use of said spaces, in -5- addition to Base Rent, at the standard building parking rates in effect from time to time. 12. Sians. Tenant will not place or permit to be placed or maintained on any exterior door, wall or window of the Premises any sign, awning or canopy, or advertising matter or other thing of any kind, and will not place or maintain any decoration, letter or advertising matter on the glass of any window or door, nor will any illuminated sign be placed in the window display area of the Premises without first obtaining Landlord's consent, which consent may be withheld in Landlord's sole discretion. Tenant shall at all times keep all signs in good condition and proper operating order in accordance with all applicable government regulations. No signs or other equipment shall be erected on the roof of the Building. 13. Repair and Maintenance. Landlord agrees to repair and maintain in good order and condition, ordinary wear and tear excepted, the roof, roof drains, outside walls, foundations and structural portions (both interior and exterior) and the air conditioning and heating systems of the Building. Notwithstanding the preceding covenant, however, Tenant shall be responsible for; (i) repair of damage caused by Tenant, its employees, agents, contractors, customers, licensees or invitees; (ii) interior repainting and redecoration; and (iii) compliance with the operating standards set forth in Section 8.2. Landlord shall not be liable for any damages caused by or growing out of any breakage, leakage, or defective condition of the electric wiring, air conditioning or heating pipes and equipment, water, closets, plumbing, appliances, other equipment, or facilities serving the Premises. Neither Landlord nor Landlord's agents or servants shall be liable for any damage caused by or growing out of any defect, latent or patent, in the Premises. In no event shall Landlord be liable for damages or injuries arising from failure to make repairs, nor shall Landlord be liable for damages or injuries arising from defective workmanship or materials in making any such repairs. Landlord shall have no obligation to repair until a reasonable time after the receipt by Landlord of written notice from Tenant of the need for repairs. Tenant waives the provision of any law, or any right Tenant may have under common law, permitting Tenant to make repairs at Landlord's expense. The costs of such repair or maintenance obligations of Landlord shall be included in and constitute "Operating Costs". 14. Tenant Alterations. 14.1. Conformina Al terations. Tenant shall not make any alterations to the Premises which require the issuance of a building permit ("Alterations") without the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion. Tenant shall obtain, and provide copies to Landlord of, all appropriate governmental permits and approvals at Tenant's expense prior to the beginning of the work on the Alterations. Tenant shall prepare and submit to Landlord for -6- approval three complete sets of plans, drawings and specifications, in sufficient detail required to obtain a building pennit, covering the Alterations ("Plans"). If Landlord or Landlord's architect notifies Tenant of any objections to the Plans, Tenant shall make the necessary revisions to Landlord's reasonable satisfaction and promptly resubmit the Plans after such notice. Tenant shall give Landlord notice of any items to be removed from the Premises as a result of the ~~terations. If Landlord does not wish to take possession of such items, 'Tenant shall remove the items at its sole cost and expense. 14.2. Removal. Upon tennination of this Lease for any reason, all fixtures and built-in eauioment used in the Premises, supplied and installed at the sole- cast and expense of Tenant, shall be the property of Landlord. During the Lease Term, such property shall be subject to Landlord's lien rights and remedies provided by law. 15. Loss of Property. Landlord shall not be liable for any loss of any property of Tenant from the Premises or for any damages to any property of Tenant brought onto the Premises. Landlord, without liability to Tenant, shall have the right and may at any time close the Premises whenever the same may become necessary in compliance with any law, order, regulation or direction of any lawful authority or the agents, officers or representatives thereof, or in the event of any public disturbance or like circumstance which, in the judgment of Landlord, may appear proper or advisable. 16. Access to Premises. During normal business hours, Landlord, its agents and representatives, may enter the Premises for the purposes of inspection, making emergency repairs, replacements, alterations or additions to the Premises, or to exhibit the Premises to prospective tenants, purchasers or other persons. 17. Utilities. Tenant shall procure for its own account and shall pay the cost of all charges for electricity, water, sewer, telephone, gas (if applicable) and any other items of utilities consumed on or at the Premises. In the event it becomes necessary for Landlord to pay any of the costs of such utilities, then any such amount is hereby agreed and declared to be Rent and shall be due and payable on the first day of the following month. Landlord shall not be liable in the event of any interruption in the supply of any utilities. Tenant agrees that it will not install any equipment which will exceed or overload the capacity of any utility facilities serving the Premises and that if any equipment installed by Tenant shall require additional utility facilities, the same shall be installed at Tenant's expense in accordance with plans and specifications approved in advance in writing by Landlord. 18, Building Destruction. are partially or In the event the Premises or the totally destroyed by fire, flood or -7- other casualty through no fault of Tenant, provisions shall apply: the following 18.1. Destruction of Premises. In the event that the Premises are destroyed fully or partially by such casualty, Landlord shall cause the Premises to be restored to the prior existing condition provided that the same can be reasonably accomplished as determined by Landlord within 180 days. Due allowance shall be made for a reasonable time necessary for Landlord to adjust the loss with the insurance companies insuring the Premises at the time of the casualty, and due allowance is to be made for delay occasioned by strikes, lock-outs, permitting and other conditions beyond the control of Landlord. In the event the Premises cannot be reasonably repaired and restored within 180 days, then Landlord shall have the option, at Landlord's sole discretion, to either rebuild the Premises (provided that the same shall be completed in any event within one (1) year following the casualty, subject to acts of God or other causes beyond Landlord's reasonable control) or Landlord, at its sole option, may relocate the Tenant to different space within the Redevelopment Area (being the area south of 6th Street in the City of Miami Beach) in accordance with the terms of Section 38.11 of this Lease upon notice to Tenant. . Tenant shall have no right to possession of the Premises during the period Landlord is making the repairs nor shall Tenant have any right to any proceeds of Landlord's casualty insurance. 18.2. Destruction of the Buildinq. In the event that 50% or more of the rentable square feet of the Building is destroyed by such casualty, Landlord may, at its option, elect to relocate Tenant within the "Redevelopment Area" (being the area south of 6th Street in the City of Miami Beach) in accordance with the terms of Section 38.11 of this Lease within 180 days after such event. 18.3. Rent Abatement. Should the Premises, or portion thereof, be rendered untenantable by reason of damage or destruction thereof by fire, wind, flood, or other casualty not caused by or the responsibility of Tenant, the Rent shall abate in proportion to the areas of the Premises rendered untenantable from the date of such event up to the date of the restoration of the Premises, or termination of this Lease at Landlord's option. Landlord, its agents, servants and employees and contractors shall have the right to enter upon the Premises and remain thereon for the purpose of restoring the Premises. 19. Condemnation. If the Premises, or any part thereof, shall be appropriated and taken for any public use by virtue of eminent domain or condemnation proceedings, or if by reason of any law or ordinance the use of the premises for the purposes provided for in this Lease shall be unlawful, Landlord shall have the right to terminate this Lease upon 30 days written notice to Tenant, and the Rent shall be paid only through the date that Tenant surrenders possession of the Premises. Any Rent paid in -8- advance beyond such date shall be returned by Landlord to Tenant. Landlord shall have the right to all proceeds received as a result of such eminent domain or condemnation proceedings; provided that Tenant shall be entitled to seek such separate award as may be designated for Tenant's loss of this leasehold provided further that Tenant's award does not reduce the damages payable to Landlord. A sale by Landlord to any authority having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed a taking under the power of eminent domain for all purposes under this Section. 20. Assiqnment and Sublet. Tenant shall not, directly or indirectly, (i) sublet the Premises or permit the use of the same or any part thereof by anyone other than Tenant or (ii) assign or in any other manner transfer this Lease or any estate, interest or benefit therein, without the prior written consent of Landlord which consent may be withheld in Landlord's sole discretion. 21. Default. following events shall the part of Tenant: The happening of anyone or more of the constitute a default under this Lease on 21.1. Tenant fails to pay the Base Rent by the fifth day of the Lease Year in question or any other Rent as required under this Lease when due, or any cost, expense, or tax due in addition thereto. 21. 2. Tenant fails to fully and promptly perform any act required of it hereunder or. to otherwise comply with any term or provision hereof. 21.3. The filing by or on behalf of Tenant of any voluntary petition or pleading to declare Tenant a bankrupt, the filing of any involuntary petition to declare Tenant bankrupt if not discharged within 60 days thereof, or the adjudication in bankruptcy of Tenant under any bankruptcy law or act. 21.4. The appointment by any court or under any law of a receiver, trustee, or other custodian of the property, assets or business of Tenant. The assignment by Tenant of all or any part of its property or assets for the benefit of its creditors. The levy of execution, attachment or other taking of property, assets or the leasehold interest of Tenant by process of law or otherwise in satisfaction of any judgement, debt or claim. 22. Remedies of Landlord. In the event of a default by Tenant, Landlord, at Landlord's option, may elect to do one or more of the following: 22.1. remove all Terminate this Lease and re-enter the Premises and persons and property from the Premises, either by -9- summary proceedings or by any other suitable action or proceeding at law, or otherwise; or 22.2. Seek any other remedy available at law or equity. 22.3. If Landlord elects to terminate this Lease: (1) Landlord shall give notice of such termination, which shall take effect three days after such notice is given, or such greater number of days as is set forth in such notice, fully and completely as if the effective date of such termination were the date originally set forth in this Lease for the expiration of the Lease Term; (2) Tenant the Premises to Landlord, doing so, on or before the shall quit and peacefully surrender without any payment by Landlord for effective date of termination; and (3) All Rent, including accelerated Rent, shall become due and shall be paid up to the effective date of termination, together with such expenses, including attorneys' fees. as Landlord shall incur in connection with such termination. 22.4. No receipts of monies by Landlord from Tenant after termination of this Lease shall reinstate, continue, or extend the Lease Term, affect any notice previously given by Landlord to Tenant, or operate as a waiver of the right of Landlord to enforce the payment of Rent. 22.5. If Landlord shall terminate this Lease, shall be entitled to apply any sums then held by pursuant to any of the provisions of this Lease. Landlord Landlord 22.6. In the event of any re-entry and/or dispossession by summary proceedings or otherwise without termination of this Lease: (1) All Rent shall become due and shall be paid up to the time of such re-entry and/or dispossession, together with such expenses, including attorneys' fees, as Landlord shall incur in connection with such re-entry and/or dispossession by summary proceedings or otherwise; (2) All Rent for the remainder of the Lease Term may be accelerated and due in full; and (3) Landlord may relet all or any part of the Premises, either in the name of Landlord or otherwise, for a term or terms which may, at Landlord's option, be equal to, less than, or greater than the period which would otherwise have constituted the balance of the Lease Term. In connection with such reletting: -10- - (4) Tenant or Tenant's representative shall pay, as additional Rent, to Landlord, as they are incurred by Landlord, such reasonable expenses as Landlord may incur in connection with reletting, including, without limitation, legal expenses, attorneys' fees, brokerage commissions, and expenses incurred in altering, repairing, and putting the Premises in good order and condition and in preparing the Premises for reletting; (5) Tenant or Tenant's representative shall pay to Landlord, in monthly installments on the due dates for Rent payments for each month of the balance of the Lease Term, the amount by which any Rent payment exceeds the net amount, if any, of the rents for such period collected on account of the reletting of the Premises; any suit brought to collect such amount for any month or months shall not prejudice in any way the rights of Landlord to collect the deficiency for any subsequent month or months by a similar action or proceeding; (6) At Landlord's option exercised at any time, Landlord shall be entitled to recover immediately from Tenant, in addition to any other proper claims, but in lieu of and not in addition to any amount which would thereafter become payable under the preceding subsection, a sum equal to the amount by which (a) the sum of the Rent for the balance of the Lease Term, discounted at a reasonable rate selected by Landlord to its then- present worth, exceeds (b) the net rental value of the Premises, discounted at the same rate to its then-present worth, for the balance of the Lease Term. In determining such net rental value of the Premises, the rent realized by any reletting of the Premises, if such reletting is upon terms (other than rental amounts) generally comparable to the terms of this Lease, shall be deemed to be such net rental value; and (7) At Landlord's option, Landlord may make such alterations and decorations in or upon the Premises as Landlord, in Landlord's sole judgment, considers advisable and necessary for the purpose of reletting the premises; the making of such alterations and decorations shall not operate or be construed to release Tenant from liability under this Section; the cost of all such alterations and decorations shall be paid by Tenant to Landlord as additional Rent. (8) Landlord shall have, receive, and enjoy as Landlord's sole and absolute property, any and all sums collected by Landlord as rent or otherwise upon reletting the Premises after Landlord shall resume possession of the Premises as provided by this Lease, including, without limitation, any amounts by which the sum or sums so collected shall exceed the continuing liability of Tenant under this Lease. If Landlord shall have accelerated Rent payments and collected same from Tenant, and subsequently shall have relet the Premises, then Landlord, after deducting all costs related to reletting, including, but not limited to, those described or anticipated in this Section, shall pay to Tenant the amount remaining which is -11- collected as Rent for each n have previously received the '.~h, to the extent Landlord shall ~t for such month from Tenant. -.~~.:~,"":. (9) Landlord ~d Tenant agree that after the commencement of suit for po, =ssion of the Premises or after final order or judgment for the possession of the Premises, Landlord may demand, receive and collect any monies due or coming due without in any mar: .=r' affecting such suit, order, or judgment. All such monies :ollected shall be deemed to be payments on account of the UE" and occupation of the Premises, or, at the election of Landlor:, on account of Tenant's liability under this Lease. (10) The words 're-enter" and "re-entry", as used in this Section, are not and shall not be restricted to their technical legal meaning, but a~2 used in the broadest sense. (11) Tenant waives all rights of redemption which may otherwise be provided by any legal requirement in the event that Landlord shall, because of the occurrence of a default by Tenant, obtain possession of the Premises under legal proceedings, or pursuant to present or future law or to the terms and conditions of this Lease. (12) Landlord, in addition to other rights and remedies it may have, shall have the right to (a) keep in place and use all of the furniture, fixtures, and equipment in the Premises, including that which is owned by or leased to Tenant, and (b) to remove all or any part of Tenant's property from the Premises and any property removed may be stored in any public warehouse or elsewhere at the cost of and for the account of Tenant. Landlord shall not be responsible for the care or safekeeping of such property, whether in transport, storage or otherwise. Tenant waives any and all claim against Landlord for loss, destruction. damage or injury which may be occasioned by any of the aforesaid acts. Tenant shall be liable to Landlord for costs incurred by Landlord in connection with any storage, transport or other acts anticipated in this Section and shall hold harmless and indemnify Landlord from all loss, damage, cost, expense and liability in connection therewith. Landlord shall also have the right to relinquish possession of all or any portion of such furniture, fixtures, equipment and other property to any person ("Claimant") claiming to be entitled to possession thereof who presents to Landlord a copy of any instrument represented to Landlord by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting Claimant the right under various circumstances to take possession of such furniture, fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity of instrument's copy of Tenant's or Tenant's predecessor's signature thereon and without the necessity of Landlord making any nature of investigation or inquiry as to the validity of the factual or legal basis upon which Claimant purports to act; and Tenant agrees to indemnify and hold Landlord harmless fom all cost, -12- expense, loss, damage and liability incident to Landlord's relinquishment of possession of all or any portion of such furniture, fixtures, equipment or other property to Claimant. No re-entry or taking possession of the Premises by Landlord shall be construed as an election. on Landlord's part to terminate this Lease unless a written notice of such intention is given to Tenant. Notwithstanding any such re-letting without termination, Landlord may at all times thereafter elect to terminate this Lease for such previous default. Any such re-entry shall be allowed by Tenant without hindrance, and Landlord shall not be liable in damages for any such re-entry, or guilty of trespass or forcible entry. (13) Landlord shall be entitled, without notice or bond, to the issuance of pre-judgment writs of replevin, pre- judgment distress writs, attachment '....rits, break open orders, orders authorizing the locking of the Premises to protect Landlord's lien on personal property, fixtures and equipment, and such other orders as may be issued by a court of law or equity. Landlord shall have the right to take possession as allowed under Florida law. The remedies described herein are cumulative and in addition to and without waiver of all remedies allowed Landlord by this Lease or by case law, common law and statute now or hereinafter in effect. Tenant agrees that the rights and remedies granted Landlord are commercially reasonable. 23. Cure of Tenant's Breach. If Tenant breaches any covenant or condition of this Lease, Landlord may, on reasonable notice to Tenant (except that no notice need be given in case of emergency), cure such breach at the expense of Tenant and the reasonable amount of all expenses, including attorneys' fees, incurred by Landlord in doing so (whether paid by Landlord or not) shall be deemed Rent payable on demand. 24. Mechanics' Liens. In accordance with the applicable provisions of the Florida Construction Lien Law, Florida Statutes s713 .10, no interest of Landlord whether personally or in the Premises shall be subject to liens for the Alterations or other improvements made by Tenant or caused to be made by Tenant under this Lease. Further, Tenant acknowledges that Tenant, with respect to the Alterations or other improvements made or caused to be made by Tenant under this Lease, shall promptly notify the contractor making such improvements to the Premises of this provision exculpating Landlord's liability for such liens. In the event that a claim of lien is filed against the Premises in connection with any work performed by or on behalf of Tenant, Tenant shall satisfy such claim within ten days from the date of filing. In the event that Tenant fails to satisfy such claim within such ten day period, Landlord may thereafter charge Tenant, as additional Rent, all costs incurred by Landlord in connection with the satisfaction of such claim, including attorneys' fees. Further, Tenant agrees to indemnify, defend and save Landlord harmless from and against any damage or loss incurred by Landlord as a result of any such claim of lien. -13- 25. Tenant Estoppel. Tenant shall from time to time, upon not less than five business days prior written notice given by Landlord, execute, acknowledge and deliver to Landlord a written statement certifying to such matters as Landlord may reasonably request, including that this Lease is unmodified and in full force and effect (or that the same is in full force and effect as modified, listing the instruments of modification), the dates to which the Rent and other charges have been paid, and whether or not, to the best of Tenant's knowledge, Landlord is in default, it being intended that any such statement delivered pursuant to this Section may be relied upon by a prospective purchaser of Landlord's interest, mortgagees of Landlord's interest, or assignee of any mortgage upon Landlord's interest in the Premises. 26. Relation of the Parties. The execution of this Lease or the performance of any act pursuant to the provisions thereof shall not be deemed or construed to have the effect of creating between Landlord and Tenant, the relationship of principal or agent or of partnership or of joint venture, and the relationship between them shall be that only of Landlord and Tenant. 27. Acts of God. Notwithstanding any other provision herein to the contrary, provided such cause is not due to the willful act or neglect of Landlord, Landlord shall not be deemed in default with respect to the performance of any of the terms, covenants and conditions of this Lease if the same should be due to any strike, lock-out, civil commotion, war-like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain any materials, service or financing, through act of God or other cause beyond the control of Landlord. 28. Improvements. Notwithstanding any other provision herein to the contrary, Landlord shall not be responsible nor liable for any loss or damage to Tenants improvements and betterments to Premises. Further, Tenant shall not be entitled to any credit or diminution of the Rent herein reserved for any improvements made by Tenant. 29. Tenant Indemnity. Tenant shall to the fullest extent permitted by law indemnify and hold Landlord harmless from and against all claims, demands, and judgments for loss, damage or injury to property or person resulting or accruing by reason of the use and occupancy of the Premises. 30. Landlord Insurance. Landlord shall keep the Building insured against casualty damage caused by fire, flood, or wind, to the extent of 100% of replacement cost, excluding foundations. Tenant shall be liable for and pay, as Rent, Tenant's Percentage Share of the cost of the Insurance carried by Landlord related to the commercial space at the Building as -14- provided above. monthly payment time, estimated Term. Tenant shall pay for such Insurance along with of Rent in such amounts as are, from time to by Landlord for each Lease Year during the Lease 31. Waiver of Subroqation. All insurance carried by Landlord or Tenant covering losses arising out of destruction of or damage to the Building, the Premises, or their contents shall, to the extent reasonably obtainable without additional premium, provide for waiver of subrogation against Landlord, Tenant, and other tenants in the Building on the part of the insurance carrier. Should an additional premium be charged, the party benefiting from such waiver shall reimburse the party obtaining such waiver for the cost of such additional premium failing which there shall be no obligation to obtain the waiver of subrogation otherwise required hereunder. Evidence of the existence of such waiver will be furnished by either party to the other party on request. 32. Insurance Rate Adlustment. If, as the result of any act or neglect of Tenant, its invitees, agents, employees, or representatives, or the nature of the business conducted in or at the Premises by Tenant, any insurance premium paid for by Landlord upon the Building shall be increased over the premium existing as of the date hereof, Tenant shall pay Landlord, as Rent, the increase in the premium of such insurance. 33. Ad Valorem Taxes. 33.1. Personal Property Tax. Tenant shall be liable for and shall pay all applicable taxes levied against its intangible and tangible personal property, including equipment, furniture, and fixtures. If such taxes for which Tenant is liable hereunder are levied against Landlord or the Building, and if Landlord elects to pay the same or if the assessed value of the Building is increased by inClusion of any such items and Landlord elects to pay such taxes based on such increase, Tenant shall pay Landlord, as Rent, upon demand that part of such taxes for which Tenant is liable hereunder. 33.2. Real Estate Tax. Tenant shall be liable for and shall pay, as Rent, Tenant's Percentage Share of the Taxes levied against the commercial space at the Building for each Lease Year during the Lease Term as provided above. In the event the last Lease Year is not a calendar year, Tenant's proportionate share of such Taxes shall be prorated. 33.3. Payment Procedures. Landlord shall estimate the Taxes provided in Section 33.2 for each year, and Tenant shall pay the same as Rent. After the actual amount of the Taxes or other charges is confirmed, a final computation will be made and delivered to Tenant. Tenant shall have 30 days to pay the balance, if any, of the actual amount. Landlord is not obligated to challenge any actual or proposed Taxes or other charges. -15- However, in - the event that Landlord chooses to do so, Tenant shall pay Tenant's Percentage Share of such actual amount once a final determination is made together with the reasonable fees and costs (including the fees and costs of attorneys, accountants, appraisers and other professionals) incurred by Landlord in connection with the challenge thereof. 34. Subordination. This Lease is subject and subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation for security which may now or hereafter encumber or affect the real property on which the Building located, and to any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof. In confirmation of such subordination, Tenant shall promptly execute any certificate that Landlord may request. Tenant hereby constitutes and appoints Landlord as Tenant's attorney-in-fact to execute any such certificate or certificates for and on behalf of Tenant. At the option of Landlord, or any successor Landlord or the holder of any mortgage affecting the Building, Tenant agrees that neither the foreclosure of a mortgage affecting the Building nor the institution of any suit, action, surmnary or other proceeding against Landlord herein, or any successor Landlord, or any foreclosure proceeding brought by the holder of any such mortgage to recover possession of such property shall, by operation of law or otherwise, result in the cancellation or termination of this Lease or the applications of Tenant hereunder, and upon the request of any such Landlord, successor Landlord or the holder of such mortgage, Tenant covenants and agrees to execute an instrument in writing satisfactory to such Landlord, successor Landlord, or to the holder of such mortgage, or to the purchaser of the mortgaged premises in foreclosure, whereby Tenant attorns to such successor in interest. 35. Memorandum of Lease. If so requested by Landlord, Tenant shall execute a short form or memorandum of this Lease which may, in Landlord I s sole discretion, be recorded in the Public Records of Dade County, Florida, for the purpose of protecting Landlord I s estate from claims, including claims of lien, as provided in the Florida Statutes. Except as specifically provided above, this Lease shall not be recorded in such public records. 36. regard to by Tenant hereunder. Time of Essence. Time shall be of the essence with the payment of all Rent by Tenant, and the performance and Landlord of all of their respective obligations 37. Notices. Any notice, demand, request or other communication required or permitted to be given under this Lease shall be in writing, signed by the party giving it and conclusively deemed to have been properly given to and received and to be effective (a) if sent by tested telex or cable, or -16- hand-delivered against receipt therefor, or by telecopy or other facsimile transmission, or by express mail service, on the day on which delivered, as the case may be, at the respective addresses set forth below, or if such day of delivery is not a business day, on the first business day thereafter, or (b) if sent by registered or certified mail, return receipt requested, postage prepaid, on the third day after the day on which deposited in any post office station or letter box, addressed at the respective addresses set forth below: As to Landlord: 711 Deco, Inc. 411 Washington Avenue Miami Beach, Florida 33139 Attn: Michael Kadosh Tel: 305-538-0398 Fax: 305-53o-Qz..9Lf L} Tenant: cY As to City of Miami Beach, Florida 1700 Convention Center Drive Miami Beach, Florida 33139 Attn: City Manager Tel: (305) 673-7010 Fax: (305) 673-7782 Any party hereto may, by the other party hereto, designate substitution of the foregoing address given. giving written notice any other address to which notice shall to in be 38. General Provisions. 38.1. Severability. If any provision of this Lease or the application thereof to any person or circumstances is held invalid, prohibited, or unenforceable for any reason, this Lease shall be ineffective only to such extent and the remaining provisions shall continue to be given full force and effect so far as possible. 38.2. No Waiver. The failure of a party to insist upon strict performance of any tenn, to claim any interest, or to exercise any power, right or option contained in this Lease, in anyone or more instances, shall not be construed to be or constitute in fact a waiver or relinquishment of that party's right to assert and enforce its rights regarding any such tenn, interest, right, power, or option in any future instance. 38.3. Entire Agreement. This Lease, including all Exhibits referenced herein, represents the entire agreement of the parties and is intended as a complete and exclusive statement of the tenns thereof. Any oral or written inducements, -17- representations, warranties, made prior to the execution ineffective for all purposes. agreements or other communications of this Lease shall be void and 38.4. Modification and Rescission. modified or rescinded only by a writing making specific reference hereto. This Lease may be signed by the parties 38.5. Governinq Law. This Lease shall be construed and enforced in accordance with the laws of the State of Florida without regard to its conflicts or choice of laws. 38.6. Jurisdiction arid Venue. In the event any disputes hereunder cannot be resolved amicably and litigation shall be commenced, Landlord and Tenant agree that venue and jurisdiction shall lie exclusively in the Circuit court in and for Dade . County, Florida. Each party hereby agrees to waive, to the fullest extent pennitted by law, any defenses or challenges to such venue or personal or subject matter jurisdiction. 38.7. WAIVER OF TRIAL BY JURY. IT IS MUTUALLY AGREED BY AND BETWEEN LANDLORD AND TENANT THAT THE RESPECTIVE PARTIES HERETO SHALL AND THEY HEREBY DO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BOUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT'S USE OR OCCUPANCY OF THE PREMISES. IN THE EVENT LANDLORD COMMENCES ANY PROCEEDING FOR POSSESSION OF THE PREMISES, TENANT WILL NOT FILE ANY COUNTERCLAIM OF WHATEVER NATURE OR DESCRIPTION IN ANY SUCH PROCEEDING. 38.8. Interoretation. Unless the context of this Lease indicates a contrary intent, words in the singular shall include the plural and vice-versa, and words in the masculine gender shall include the feminine or neuter genders as appropriate. Article headings are for convenience only and shall not in any way affect the interpretation of any provision of this Lease. 38.9. Radon Disclosure. The following disclosure is required to be furnished to Tenant under Florida law: "Radon is a natural~y occurring radioactive gas that, when it has accumulated ~n a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health center." 38.10. DUDlicate Oriqinals. This Lease is fully executed by the parties in two original instruments, either of which may be introduced into evidence in any proceeding as conclusive proof of the text thereof. -18- 38 .11.-Relocation Riqhts. The Premises may be relocated within the Redevelopment Area (as defined above) from time to time during the Lease Tenn at the discretion of-tne--Landlurd' Up01J. at least sixty (60) days advance notice to the Tenant, provided that the cost of relocation and the replacement of any tenant improvements necessitated thereby (including any that need to be made to comply with applicable handicap requirements) shall be borne by the Landlord. The Premises shall always be located within a building equal to or better in quality than the Building as currently existing. IN WITNESS WHEREOF, this Lease has been executed and caused to be delivered in Dade County, Florida, to be effective in all respects as of June 20, 1997 (the "Effective Date") . WITNESSES: LANDLORD: ~f~ ?rd,...~~__ ?~'---d:> f}{JJJr 1~1~/UU ~ ~ ~u;N/vf$6 711 Deco, Inc., A Florida ::~o~~~ Nam~t1I~ Title: f1: WITNESSES: TENANT: City of Miami Beach, Florida, A Florida . ipal Corporation q..~ \--I.,.J4l.....;\-Q... C4.olo /2.oJ,..;9VC~ By: Name: Title: loJe: Q:N K"osd:,,, """''::j",a.. MIAMI/GORSONM/874939/Sr3v031.DOC/9/17/97 APPROVED AS TO FORM & LANGUAGE & FOREXECUnON 1jj...~ 'Z / t-!~t ' 0ciIli -19-