CCI - LAP II

Capital Commercial Investments Inc. (CCI) is selling Honeywell Aerospace’s Military Repair & Overhaul Facility located adjacent to Phoenix’s Sky Harbor Airport. This is one of many facilities Honeywell has in the Phoenix area. The 94,503 square foot industrial building with surface parking resides on 4.65 acres bordering the Northern edge of Sky Harbor Airport. Honeywell Aerospace utilizes the facility to service and refurbish military aircraft engines and components.

LAP-II Investment Highlights

Honeywell, with $23 Billion in annual revenues, has an investment grade “A” credit rating.
Honeywell Aerospace, as tenant, is heavily imbedded in this facility. They enjoy close proximity to Sky Harbor Airport and other multiple Honeywell Facilities. The Honeywell Aerospace Group has leases with the City of Phoenix in excess of 40 years.
Lease Renewal is highly probable due to Honeywell Aerospace’s large non-recoverable investments.
NNN lease provides a minimum 3% annual CPI adjustment with minimal maintenance requirements by the landlord.
Purchase price is significantly below replacement cost.
Asset exit strategy in place. Sky Harbor Airport has a long term interest in acquiring the property for airport expansion and construction of a fourth runway.

Honeywell’s lease is up for renewal August 1, 2009. CCI rates Honeywell’s renewal probability as extremely high under existing terms due to its favorable location to other Honeywell properties and the Airport, their non-recoverable investment in the space, high cost to relocate, low operating costs, reconstruction costs of it's assembly and repair lines, and a lack of pre-built alternate facilities in the area. Honeywell has renewed their lease four times since relocating to this location. Honeywell has spent several million in improvements in the last few years. It is our opinion that Honeywell, one of the top local employers, will only move their operation from Sky Harbor when the fourth runway becomes a reality.

Sky Harbor Airport ’s expansion plan for a North Runway provides a motivated buyer for the property seven to twelve years out. The Airport has already acquired approximately 75% of the Northern bordering land tracts through voluntary buyout programs. Their business buyout program in the past has included fair market value plus the cost of relocation of existing tenants. For political reasons, the Airport operates as a good neighbor and implements a win-win attitude regarding their acquisition and expansion plans.

SUPPLEMENTAL INFORMATION

Tenant: Honeywell’s Phoenix Repair and Overhaul Group is part of Honeywell Aerospace aftermarket services, a wholly owned subsidiary of Honeywell International. The tenant uses this property, one of several Honeywell facilities in and around the Sky Harbor Airport, to assemble, recondition, and test military aircraft engines and components, with the majority of the facility devoted to engine services. Honeywell International Inc. (NYSE: HON) is a diversified technology and manufacturing company, serving customers worldwide with aerospace products and services, control technologies for buildings, homes and industry, automotive products, specialty chemicals, fibers, plastics and electronic and advanced materials. Honeywell has 108,000 employees, a market capitalization of $28.6 billion, and an investment grade “A” credit rating. Honeywell’s 2003 revenues were up 3.9% to $23.1 Billion. Honeywell globally manages its business operations through four strategic business units: Aerospace, Automation and Control Solutions, Specialty Materials and Transportation and Power Systems. Honeywell has manufacturing, sales and research and development operations in the United States, Europe, Canada, Asia and Latin America. See Honeywell's website for more detailed information and current news articles (http://www.honeywell.com). Additional information on the Phoenix Repair and Overhaul facility can be found at http://www.phoenixro.com/

Property: Located at 202 South 27 th Street, Phoenix, Arizona, the masonry and metal clad building of approximately 94,503 rentable square feet situated on 4.65 acres was extensively renovated in 1996 and includes an excellent mix of office and warehouse space. The property has 143 surface parking spaces. The property is zoned A-1 light industrial and A-2 heavy industrial by the City of Phoenix. A rail spur is on site. The property is situated immediately North of Phoenix’s Sky Harbor Airport.

Lease: Honeywell, formerly Allied Signal, has occupied this facility since the early 1970's. The current lease commenced August 1, 2006 with a three year term expiring July 31, 2009. The lease is triple-net with a current monthly lease rate of $0.51 PSF adjusted up annually for inflation. The inflation adjustment is based on a U.S. City Average CPI adjustment, and provides a minimum 3% and maximum 5% adjustment range.

Submarket: The Sky Harbor industrial submarket contains approximately 38 million square feet. Vacancy is currently 13%. The first quarter of 2004 saw positive absorption of 318,000 square feet. Average monthly market rate is $0.54.

Sky Harbor Airport Development: The new third runway open on October 5, 2000 at a cost of $175 million. The runway expansion program included rerouting drainage to the Salt River and relocating the Arizona Air National Guard 161st Aerial refueling wing facilities. For additional information read the Phoenix aviation director statement to congress. Planning has commenced for a new fourth runway. Read the full article on the Maricopa County Aviaition Plan. Approximately 192,000 passengers and guests pass through Sky Harbor each day. As population growth in the valley has increased, so has the demand for airport services. Sky Harbor has experienced a 32 percent increase in passengers since 1990 and has approximately 33.5 million passengers a year using its facilities. During 1999 the airport ranked as the 12th busiest in the country and 17th busiest in the world for passenger volume. The number of aircraft landing and departing the airport has also increased. With over 560,000 operations per year, Sky Harbor currently ranks as the 4th busiest airport in the country for takeoffs and landings. Cargo volume has increased 69 percent since 1990 with 365,543 tons of cargo shipped from Sky Harbor in 1999. The dramatic increases in demand have caused the Airport to outgrow its facilities and have impacted the ability to provide quality customer service. In an effort to improve customer service, the City of Phoenix Aviation Department has undertaken an aggressive expansion program at Phoenix Sky Harbor International Airport and currently has 78 construction projects underway at a projected cost of $619 million.

Light Rail Development Program: (http://www.valleymetro.org/rail/) Current plans call for the METRO light rail system to open in late 2008. Station design plans were completed in spring 2004, with final design of some remaining system elements, such as the track, scheduled for completion in summer and fall 2004. Construction on the Maintenance and Storage Facility is scheduled to begin in summer 2004, with line construction scheduled to begin in late 2004/early 2005 along some portions of the route. The detailed planning phase of the METRO light rail system will encompass a light rail corridor to serve the high-capacity travel corridor connecting Phoenix, Tempe and Mesa. Light rail project planners worked with the community to develop and recommend an initial 20.3-mile route to city councils in the three cities.

Phoenix Facts: The following information is from the City of Phoenix website:

A 30-minute drive encompasses more than 1.3 million people and a total labor force of at least 650,000 workers, The Wadley-Donovan Group, Ltd.
There is enough water to support the region well into the 22nd century, CB Richard Ellis.
2025 population estimated at 9.6 million, CB Richard Ellis.
Arizona has been the second fastest growing state in the nation throughout the 1990's, CB Richard Ellis.
Greater Phoenix is projected to be the second largest "job engine" in the U.S. through 2025, Newsweek Magazine.
Sky Harbor International Airport is 4th in the country for take-offs and landings, distributes 1,000 tons of cargo daily, supports 1,300 flights daily, serviced by 24 passenger airlines and serves 109 cities via nonstop flights, CB Richard Ellis
Median age in 2000: 33; median new home price $165,543 and median resale home price $130,000; cost of living index 100.8%, CB Richard Ellis
Major employers: Honeywell, Banner Health Systems, Motorola, Intel, Wal-Mart.