PHL FOOD & SHOPS 2017 LEASING OUTREACH. May 9, 2017

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1 PHL FOOD & SHOPS 2017 LEASING OUTREACH May 9, 2017

2 Clarence LeJeune Operating Partner, MarketPlace PHL, LLC and President & CEO, LeJeune and Associates, LLC

AGENDA Opening Remarks Chellie Cameron, CEO, PHL Paul McGinn, President, MarketPlace Development Meet the Team 2016 Leasing Outreach Highlights Why Bring Your Business to PHL?

3 AGENDA Opening Remarks Chellie Cameron, CEO, PHL Paul McGinn, President, MarketPlace Development Meet the Team 2016 Leasing Outreach Highlights Why Bring Your Business to PHL? Sublease Requirements Chermaina Roundtree, Compliance Manager, MarketPlace PHL, LLC ACDBE Program Kathleen Padilla, Director, Office of Business Diversity, PHL Lorraine E. Aldridge, DBE Coordinator, Office of Business Diversity, PHL 2017 Leasing Opportunities and Process Michael DiCosola, Executive Vice President, MarketPlace Development Q&A

4 Chellie Cameron Chief Executive Officer, Philadelphia International Airport PHLPROUD

5 Paul McGinn Managing Partner, MarketPlace PHL, LLC & President, MarketPlace Development

6 MEET THE TEAM

7 THE MARKETPLACE PHL MANAGEMENT TEAM Mel Hannah, VP and General Manager Sissy Williams, Assistant General Manager Chermaina Roundtree, Compliance Manager Dynise Espeleta, Manager of Marketing & Customer Service Craig Sherby, Leasing Manager Steve Rosen, Controller Michelle Robinson, Owner, Michelle Robinson Design

8 2016 LEASING OUTREACH HIGHLIGHTS

9 B/C CONNECTOR Opened September 2016

10 B/C CONNECTOR Opened October 2016

11 A-WEST CONCOURSE Opened March 2017

12 A-WEST CONCOURSE Opened March 2017

13 D/E CONNECTOR Opened April 2017

14 C CONCOURSE Opened April 2017

15 B CONCOURSE Opening May 2017

16 B CONCOURSE Opening May 2017

17 B CONCOURSE Opening May 2017

18 B CONCOURSE Opening May 2017

19 B CONCOURSE Opening Fall 2018

20 B CONCOURSE Opening Fall 2018

21 B CONCOURSE Opening Fall 2018

22 A-EAST CONCOURSE Opening May 2017

23 C CONCOURSE Opening Summer 2017

24 A-WEST, A-EAST & D CONCOURSES Opening June 2017

25 A-WEST CONCOURSE Opening August 2017

26 A-West CONCOURSE Opening August 2017

27 D/E CONNECTOR Opening August 2017

28 D/E CONNECTOR Opening August 2017

29 D CONCOURSE Opening July 2017

30 B/C CONNECTOR Opening Fall 2017

31 C CONCOURSE Opening Fall 2017

32 B/C CONNECTOR Opening Fall 2017

33 A-WEST CONCOURSE Opening Fall 2017

34 A-EAST CONCOURSE Opening Fall 2017

35 A-WEST CONCOURSE Opening September 2017

36 WHY BRING YOUR BUSINESS TO PHL?

37 PHL EQUALS GREAT OPPORTUNITY Strong passenger traffic Mix of originating & connecting traffic International flights Diversified airline mix Great passenger demographics High sales per passenger

38 PHL TRAFFIC Over 500 departures daily to 120 cities, including 33 international cities More than 30+ million passengers travel through PHL each year PHL ranks 19th in the country in passenger traffic Over 20,000 airline and airport employees 24 hours a day, 7 days a week

39 PASSENGER DEMOGRAPHICS Traffic is approximately 32% connecting and 68% origin destination 57% of connecting passengers have layovers of 1+ hours 78% of originating passengers arrive 2+ hours prior to departure 41% of passengers have annual household income of $100,000 or more Passenger median age is and 61% are married 46% of passengers are professionals or executive Approximately 33% of passengers are traveling for business (67% personal) Current program average is $198 M in sales and 15 million enplanements

40 SALES PER SQUARE FOOT BY CATEGORY 2016 Over 178 in-line stores $1,500 $1,303 $1,415 PHL 2016 Sales $198 M $1,202 $1,163 PHL sales per square foot of $1,163 Millions $1,000 $635 $500

41 SPECIAL AIRPORT CONDITIONS Space Size Storage Street Pricing / Street Pricing Plus 10% Security/Badging ACDBE Requirements Aggressive Economics Distribution and Delivery Design and Construction Inclement Weather/ Emergency Operations

42 Chermaina Roundtree Compliance Manager, MarketPlace PHL, LLC

43 LABOR HARMONY Subtenants are required to have a signed Labor Harmony Agreement ( LHA ) with a labor organization seeking to represent the employees of the Subtenant. Requirement for LHA is not applicable for: o Subtenants which employ fifteen (15) or fewer employees o Locally Owned Small Business Must be headquartered within the Philadelphia Metropolitan Statistical Area Employ thirty (30) or fewer employees at the airport o Small Minority/Disadvantaged Business Enterprise ( ACDBE ) Employs thirty-five (35) or fewer employees

21st CENTURY MINIMUM WAGE & BENEFITS ORDINANCE Chapter 17-1300 of the Philadelphia Code: o New hourly minimum wage Full-time, part-time, temporary, or seasonal basis (including

44 21st CENTURY MINIMUM WAGE & BENEFITS ORDINANCE Chapter of the Philadelphia Code: o New hourly minimum wage Full-time, part-time, temporary, or seasonal basis (including temporary, contracted, contingent workers and persons working through a temporary service, staffing or employment agency) Chapter of the Philadelphia Code: o Minimum benefits requirement

45 CAMPAIGN CONTRIBUTION DISCLOSURE Subtenants are required to disclose: Campaign contributions to political candidates and incumbents who are running for, or currently serving office, anywhere in the Commonwealth of PA Any consultants/lobbyists used to assist in obtaining the sublease and their contributions All subcontractors that you intend to use Requests for money or anything of value from the City or Marketplace More general information can be viewed at:

DISPLACED WORKER PROGRAM Online portal Information for concession employees who lose employment due to cessation of some or all operations of a location Subtenants o Access portal to fill

46 DISPLACED WORKER PROGRAM Online portal Information for concession employees who lose employment due to cessation of some or all operations of a location Subtenants o Access portal to fill vacancies during start-up of operations o Required to interview all displaced workers of same category in job portal until at least 50% of initial complement of employees are hired from the portal

47 HOURS OF OPERATION Compliance is required as per the sublease Retail operating hours o 7 AM - 10 PM (or as determined by flight schedules) Food & Beverage operating hours o 45 minutes before the first flight o 30 minutes after the last flight o By concourse o Reviewed monthly

48 Kathleen Padilla Director, Office of Business Diversity, Philadelphia International Airport

49 PHL S ACDBE REQUIREMENTS Governing US DOT Regulations 49 CFR Part 23 Participation by Disadvantaged Business Enterprises (DBEs) in Airport Concessions 49 CFR Part 26 Participation by DBEs in Department of Transportation (DOT) Financial Assistance Programs PHL Responsibilities Establish Overall Goals (set triennially) Certification Performed by the Pennsylvania UCP ( Monitoring and Enforcement Reporting

50 FY 2018 PHL 2020 FY ACDBE ACDBE GOALS GOALS

51 ESTABLISHING OVERALL GOALS PHL is required to set two overall 3-year ACDBE goals: Car rental concessions Concessions other than car rentals Overall goal must be based on demonstrable evidence of the availability of ready, willing, and able ACDBEs relative to all businesses ready, willing and able to participate in the concessions opportunities PHL s Current Non-Car Rental Concessions ACDBE Goal is 16.45%

52 ACDBE GOAL SETTING PHL is currently developing its Federal Fiscal Years ACDBE goals Goal-setting is a two-step process 1) Establish a base figure based on the relative availability of ACDBEs to participate in PHL s concessions programs. 2) Make any necessary adjustments to the base figure based on local market conditions.

Advertising 2.10% Rooftop Antenna 0.21% Cable Television 0.

53 PHL S BASE FIGURE NON-CAR RENTAL Project non-car rental concessions opportunities for Federal fiscal years Advertising 2.10% Rooftop Antenna 0.21% Cable Television 0.06% Hotel 13.42% Passenger services 9.69% Food & Beverage 47.12% Retail & RMUs 27.40%

Services 812990 Personal and Laundry Services 466120 Health and Personal Care Stores 443142 Electronics Stores 523130 Commodity Contracts NAICS Codes Description 446130 Optical Goods Stores 448120

54 PHL S BASE FIGURE NON-CAR RENTAL Identify NAICS codes currently performing on PHL s concessions opportunities. NAICS Codes Description Advertising Cable Television Food Services Mobile Food Services Hotels Nonstore Retailers Telecommunications Spa Services Personal and Laundry Services Health and Personal Care Stores Electronics Stores Commodity Contracts NAICS Codes Description Optical Goods Stores Clothing and Accessories Family Clothing Stores Shoe Stores Jewelry Stores Luggage and Leather Good Stores Miscellaneous Store Retailers Telecommunications Resellers Nonresidential Property Managers Admin. Mgmt. and General Management Book Stores Magazines / News Stands

55 PHL S BASE FIGURE NON-CAR RENTAL Based on weighted projected opportunities and types of firms, calculate the % of ACDBEs compared to all firms that can participate in PHL s concessions programs. ACDBEs In 7-county area Listed in PA UCP, NJ UCP Directory, OEO directory, FAA DBE Connect In relevant NAICS codes In 7-county area From US Census County Business Patterns data In relevant NAICS codes All Firms

56 PHL S BASE FIGURE NON-CAR RENTAL Step 1 Results: Activity ACDBE All Firms Relative Availabi lity Weight Weighted Relative Availability Advertising % 2.10% 0.89% Cable Television % 0.06% 0.00% Food & Beverage 486 2, % 47.12% 8.01% Hotel % 13.42% 0.00% Passenger services % 9.69% 0.46% Retail & RMUs 510 5, % 27.40% 2.55% Rooftop Antenna % 0.21% 0.00% 11.91%

57 ADJUSTING PHL S BASE FIGURE NON-CAR RENTAL After Step 1, determine what adjustment, if any, is needed to the base figure. Consider: Past ACDBE participation Evidence from disparity studies Any available evidence from related fields that affect the opportunities for ACDBEs to form, grow and compete

58 ADJUSTING PHL S BASE FIGURE NON-CAR RENTAL Past participation of ACDBEs was determined to be the only relevant adjustment to consider. For past three years, participation at PHL was: Fiscal Year FY % FY % ACDBE Achievement Regulations require using the median (or middle) past participation percentage FY %

59 PHL S BASE FIGURE NON-CAR RENTAL PHL s preliminary overall 3-year goal, prior to stakeholder input, is calculated by averaging the results of Step 1 (11.91%) with Step 2 (25.30%) % 25.30% 18.60% 2

60 PUBLIC PARTICIPATION PHL is required to communicate with the public in two ways for ACDBE goal-setting Consultative process with stakeholders Today Meeting with business organizations (i.e. Chambers, Industry Organizations) in June Publishing of goals on its website Please meet with us after this session or send your comments/questions on the goal setting to

61 Lorraine E. Aldridge DBE Coordinator, Office of Business Diversity, Philadelphia International Airport

62 ACDBE CERTIFICATION ACDBE owner must: Own 51% or more of the firm Have training/experience in the field of business Control the day to day operations Contribute the capital needed to start the company with their own funds and credit Meet the personal net worth cap of $1.32 million Meet the business size cap of $56.42 million in gross receipts Have an existing or pending contract at the airport

63 ACDBE OVERVIEW Airport Concession Disadvantaged Business Enterprise Operates under Federal Regulations (49 CFR parts 23 & 26) Certification of ACDBE s & DBE s in PA administered by Pennsylvania Unified Certification Program (PA UCP) Download applications for certification from the PA UCP website: Division of Aviation: Lorraine E. Aldridge DBE Coordinator Office of Business Diversity Phone: MarketPlace PHL, LLC: Chermaina Roundtree Compliance Manager Phone:

64 Michael DiCosola Executive Vice President, MarketPlace Development

74 GOALS Provide best possible passenger experience Cutting edge brands and designs Innovative concepts Be inclusive o Opportunity for local, regional and national concepts o Opportunity for large, medium, and small operators o Opportunity for ACDBE operators o Transparency and open access Drive revenue and improve financial return to PHL Stimulate competition

CHOOSING A TENANT Get multiple offers on each space to create demand Establish market value for the space Ascertain highest and best use for the location Evaluate offers based on: 1.

75 CHOOSING A TENANT Get multiple offers on each space to create demand Establish market value for the space Ascertain highest and best use for the location Evaluate offers based on: 1. Use & Concept (innovative and new) 2. Economics (rent and capital investment) 3. Operator Experience and Successes 4. Financial Strength of Operator 5. ACDBE Participation 6. Store Design a. Power is required in all customer seating areas.

on recommendations for each space October 20 th Tenants design package issued October 27 th Leases to

76 NEXT STEPS LEASING SCHEDULE OUTREACH MEETING (May 9 th ) May 27 th Responses back from Outreach Participants June 16 th Proposals out to Tenants July 28 th Proposals due from tenants September 15 th Review and decide on recommendations for each space October 20 th Tenants design package issued October 27 th Leases to selected tenants April 2018 through August 2018 Tenants under construction July 2018 through December 2018 Openings

77 Q & A

PHL Food and Shops Leasing Outreach May 5, 2016

PHL Food and Shops Leasing Outreach May 5, 2016 Operating Partner, MarketPlace PHL, LLC and President, LeJeune and Associates, LLC CLARENCE LEJEUNE Agenda Opening Remarks, Chellie Cameron, CEO, PHL Opening