The Power of EUL: Air Force Enhanced Use Lease Program Overview

1. The Power of EUL:Air Force Enhanced Use Lease Program Overview Mr. Dennis Guadarrama AFRPA/SAU Division Chief 15February 2011

2. Overview • Purpose/Future Vision • Key Program Progress • Approach • Client Advocacy • Targeted Marketing • Action Plan Overview • Timeline to Goal • Key Takeaways: What this Means to You

3. The Power of EUL • Vision: • Use the Power of EUL to deliver $5B in return to the Air Force • Developed a Plan • A comprehensive business-focused approach to portfolio development • AF Leadership support • Leadership ‘champions’ support opportunity development and advocate program’s value • Project Execution • Builds on current successes by identifying high-value opportunities and diversifying portfolio • Long-term strategy • Focused on building partnerships fostering best returns and mutual benefit

4. Approach Identify and Prioritize Opportunities      1 2 3 4 5 Identify Hot Markets Map Hot Markets to States Map to Bases and MAJCOMs Evaluate Client Advocacy Prioritize Opportunities  Incentives? Resources? Potential opportunities? Land available? High revenue potential? Existing project champions? Concurrence on priorities? • Identified hot markets using four criteria: • Renewable portfolio standards • Superior physical resources • Good price of electricity • Job growth • Identified hot market states • Commercial Real Estate still on road to recovery • Primary focus on Renewable Energy • Identified the number of bases by state • Examined supply and demand at each base • Estimated value of potential projects • Prioritized opportunities at each of the bases by revenue • Assessed AF client advocacy across MAJCOMs and bases • Identified existing advocates at bases and MAJCOM • Assessed where current projects could lead to future interest • Coordinate strategies with FOAs and A7Cs • Prioritized opportunities across MAJCOMs and bases • Prioritized list will be used to develop phased approach • Need concurrence on prioritization criteria: market,state-driven, or client Opportunity Identification/Valuation Opportunity Prioritization  = Complete 3 = In-Progress

5. Client Advocacy Strategy We must communicate the $5B Plan to all stakeholders – Internal and External Overarching Campaign (Program) Project Specific Advocacy Long-term 1. Establish branding, messaging 2. Deploy campaign 3. Project marketing 4. Lifecycle PA support 5. Build on success • Internal: • Goal: Increase awareness and build advocacy for EUL • Demonstrate SAF/IE support • Problem statements: What problem does EUL solve? • Include Developer engagement • Partnership w/FOAs • MAJCOM/ base outreach • Media engagement • Events (ADC, REWNA) • Work closely with external stakeholders • Developer Engagement: • Industry Forums • Social media/web • Trade media • Direct email • PA collaboration w/ installation, MAJCOM, developer • Media engagement to promote opportunities • Developer Industry Days • Ensure external market understands the project • Hill/Edwards: Regional or ‘super’ Industry Days to promote full slate of projects • PA guidance developed in collaboration w/ stakeholders • Key messaging • Media opportunities • Celebrate success • Lease signing • Ground breaking • Economic Impact • Relationships • Stakeholder testimonials as evidence of EUL success • Marketing team visits to MAJCOMS/ installations • Continued event participation • Education and training • Goal: Introduce EUL to the next generation of real property officers and asset managers

6. Key Program Initiatives Program Initiative Industry Feedback Action Taken Streamline existing process and educate stakeholders 1 • Process is too long • Unclear roles and responsibilities • Adaptability to project needs is critical • Demonstrated streamlined process through execution of Edwards AFB EUL • Held focus groups to define roles and responsibilities; educated over 100 developers and AF personnel over the last 18 months (EUL 101 training, Industry Forum) Build partnership with other FOAs to expand success 2 • EUL/PPA governance is needed • Partnering with FOAs is critical for success • Established Renewable Energy Project Development Subpanel • Charter with AFCESA and AFCEE, developed process to evaluate renewable energy projects for execution • Working with AFCEE to leverage Natural Infrastructure Infuse Industry best practices in to program using Think Tanks and Industry forums 3 • Need to be more in-line with commercial business practices • Continuous dialogue and trust • Held highly successful EUL Industry Day in Boston Aug 09 • Hosted three Think Tank sessions focused on portfolio driven analysis of real estate and energy markets • Collaborated with industry to build the Business Development and solidified the approach for $5B plan Mount a rigorous business development effort to ensure deal success 4 • There has been a lack of proper due diligence • Need for upfront analysis • Reduce risk of deal failure • Early, up-front due diligence efforts applied to MAJCOM studies to identify opportunities • Developed screening tools to identify/analyze hot markets • Implemented project management principles (performance metrics, charters, risk management)

7. Action PlanPortfolio Evolution Current Project Pipeline Values Targeted Project Strategy Values Portfolio Expansion Strategy Values A:Current Pipeline ~$.78B B:Mid-term ~$3.6B C: Long-term ~$3.7B Real Estate $301.3M 38% Energy 30% Energy $482.0M 62% Innovation 60% Traditional Real Estate 10%

8. ApproachTarget Strike Zones (Hot Market States) • 88% of the AF EUL program future energy deals are located in Hot Market States Markets aligned to States w/ AF Installations Hot markets Other opportunity locations Hot Energy Market Characteristics: Superior physical resources, renewable portfolio standards, and good electricity prices, jobs, and rates.

9. Glide Path to $5B • Targeting the $5B goal by focusing on 3 primary areas: • A: Current PipelineB: Mid-termC: Long-term Program Glide Path NPV Potential C $8.0 Comments $3.7B Stretch Goal $8.08B $7.0 • A: Current program at projected NPV of $783M • B: Estimated $3.6B focused on target strike zones (Hill & Edwards AFB) • C: Estimated $3.7B attainable from diversifying the portfolio (cost avoidance, reinvestment, fence to fence analysis) $6.0 $5B Goal Line $5.0 B $4.0 NPV ($ in Billions) $3.0 $5.0B $3.6B $2.0 A $1.0 $0.82 $0.78B $0.0 Portfolio Expansion Strategy Targeted Project Strategy Current Pipeline (Executed & In Pipeline) Grand Total

10. Targeted Marketing • Developed Marketing and Communications Team focused on: • Building sustainable partnerships with developers and financiers • Continue conveying a predictable, understandable, process for transactions • Partnering with state and local community stakeholders to: • Identify synergies with potential EUL projects and stakeholder expectations • Consistently communicate with Economic Development Offices, Local Universities, and City Council meetings • Educate and inform regulatory agencies on EUL benefits and processes • Sharing initial due diligence with development community • Ensure synergies and identify potential local investors and/or grant funding for specific initiatives • Exploring new approaches to industry days • Regional, AF-wide Renewable Energy Forums

11. Takeaways AFRPA is focused on reaching $5B Goal • Developed three focus areas • Resources/Manpower through AFRPA, MAJCOM, and installations play critical role in execution of the plan 1 Developed a plan 2 • Establish firm support and direction from HQ Air Force through MAJCOMs to bases that EUL projects are a top priority • SAF/IE endorsement will increase advocacy and momentum of the program Leadership Support • Ensuring projects remain financeable through a flexible, streamlined process • Strategizing on how best to spread the wealth across the Air Force • Focusing on investment strategies that will help the Air Force supportthe $5B goal 4 Long-Term Strategy • Initiated long-term strategy planning with Hill and Edwards AFBs • Identified next wave of opportunities (Hill, Edwards, AMC) • Developed timeline to reach $5B • Set the stage for solicitations and HRO selections over the next 3 years 3 Project Execution • Targeted stakeholder engagement and marketing to build synergies • Sharing of due diligence to maximize probability of deal success 5 Communications & Marketing

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