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All on -sites and off -site costs, including site landscaping, the creek plaza and creekwalk, traffic signal and site preparation contingency allowance. Total on -site and off -site costs are estimated at $1.9 million ($6 per sq.ft. of net usable land area). The Developer is obligated to construct high quality site amenities, including a prominent landscape feature at the corner of San Leandro Boulevard and Davis Street, extensive parking lot landscaping, a creekside plaza and a creekwalk. Indirect costs (exclusive of financing costs) are estimated at approximately $1.4 million, or $18 per square foot of rentable area, and include architecture and engineering, insurance, bonds, estimated fees and permits, DFSI/undergrounding fees, general administrative expenses (not to exceed $225,000), leasing commissions and contingency fees. ■ The financing cost estimates are based on $9.75 million in construction financing at 7.5% for 12 months, and financing fees of 2.5 points. The financing cost, including fees, is projected to be approximately $600,000. As can be seen in Table 1, direct costs are estimated at approximately $7.3 million, indirect costs at $1.4 million, and financing costs at $600,000, for a total cost, excluding land costs and developer profit, of $9.3 million. R Net Income Table 2 presents the projected net operating income for the retail space. The income assumptions used are based upon discussions upon general lease terms provided by the Developer and our own experience in evaluating grocery store -anchored retail projects. In addition, it is assumed that the layout and size of the tenancies must be in accordance with the proposed Conceptual Site Plan. The major assumptions behind the net income estimates are as follows: Estimated average rental income of $13.36/sq.ft. per year ($1. 1 1/sq.ft. per month) for the three credit tenants (the food market, Walgreens and Hollywood Video); and ■ Estimated rental income of $15 to $26/sq.ft. per year for 24,095 sq.ft. of shops, restaurants and food related tenants, with an average rent of $21.60 ($1.80 per sq.ft. per month). Overall, the average annual rent for the 80,500 sq.ft. of rentable space is estimated to be $15.85/sq.ft. ($1.32/sq.ft. per month). KEYSER MARSTON ASSOCIATES I N C. 19100/0001-002.dx Page I