PORT OF SEATTLE 2018 FINANCIAL & PERFORMANCE REPORT

Transcription

1 PORT OF SEATTLE 2018 FINANCIAL & PERFORMANCE REPORT AS OF SEPTEMBER 30, 2018

2 TABLE OF CONTENTS I. Portwide Performance Report 3-5 Page II. Aviation Division Report 6-18 III. Maritime Division Report IV. Economic Development Division Report V. Central Services Division Report

3 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/18 EXECUTIVE SUMMARY Financial Summary The Port s operating results for the first three quarters of 2018 were very strong. Total operating revenues were $532.4M, which is $21.8M above budget and $47.8M higher than the same period in Excluding Aeronautical revenues, which are based on cost recovery, other operating revenues were $299.6M, $17.0M above budget and $17.1M higher than the 2017 actuals primarily due to higher revenues from Public Parking, Rental Cars, ADR & Terminal Leased Space, Ground Transportation, Employee Parking, Cruise, Recreational Boating, Grain, and Conference & Event Centers. Total operating expenses were $293.2M, $24.2M below budget mainly due to vacancies, hiring delays, and outside services. Operating income before depreciation was $239.2M, $46.0M above budget and $20.7M higher than the 2017 actuals. The Port-wide capital spending is projected to be $620.6M for Operating Summary At the Airport, the total enplanement growth for the third quarter of 2018 was 6.5% compared to the same period in This number is comprised of enplanement growth rate of 6.5% for domestic passengers and 7.0% for international passengers. The total landed weight for the third quarter of 2018 was 7.6% higher than the same period last year. Total air cargo metric tons were 1.9% above third quarter of For the Maritime division, the number of cruise passengers was 1,103K for the third quarter of 2018, slightly higher compared to 1,062K for the same period in The occupancy rate at Shilshole Bay Marina increased to 95.9% compared to 94.9% in For the Economic Development division, building occupancy for Central Harbor and T-91 Uplands were lower than the same period in 2017 while the building occupancy for T-91 Industrial remained the same as the third quarter of 2017 and Marina Office and Retail was slightly higher than Key Business Events In September, the Port, along with Japan Airlines, announced that new daily non-stop service from Seattle to Narita/Tokyo will commence in the spring of Japan Airlines will be joining ANA and Delta Airlines as the third airline to offer this route which is expected to address the increasing demand for the Seattle-Tokyo market. In August, the Port sponsored the 34th Annual Airport Minority Advisory Council (AMAC) Airport Business Diversity Conference bringing together hundreds of aviation professionals, government officials and individuals from around the country. In July, the Port worked with Sound Transit to distribute 500 free light rail tickets to disembarking cruise passengers to encourage them to spend time in Seattle before heading to the airport. A similar project was conducted at the airport. These programs are intended to bolster tourist spending while reducing pollution and traffic congestion. The Port also hosted an airport operations career panel and tour for nearly 40 teachers participating in Washington Alliance for Better Schools Teacher Externship program. Major Capital Projects The Port Commission authorized the new International Arrivals Facility (IAF) program Guaranteed Maximum Price (GMP) of $773M in construction costs; with the addition of $76M sales tax and additional costs, the expected final project cost is $968M. The IAF is expected to be operational in August 2020 after the completion of security and systems testing. Moreover, the Port Commission authorized the initiation of a design and research phase to provide sound insulation to condominium complexes near the airport as part of the Port s long-term commitment to the surrounding airport communities. More than $400M has been invested on Port projects since 1985 to mitigate the impact of the airport to the surrounding communities. Construction Project Closeouts were issued for several projects: T-5 Pile Removal and Disposal, T-102 Roof and HVAC Replacement; Pier 90 Roof Overlay; Wi-Fi Enhancement for Concourse C and Central Terminal; and Pier 66 Elevators 4 Modernization. 3

4 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/18 PORTWIDE FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 188, , , ,941 4, % 30, % Airport Non-Aero Revenues 165, , , ,905 10, % 16, % Other Port Operating Revenues 99, , ,326 96,708 6, % % Total Operating Revenues 453, , , ,554 21, % 47, % Total Operating Expenses 236, , , ,404 24, % 27, % NOI before Depreciation 217, , , ,150 46, % 20, % Depreciation 123, , , ,548 (209) -0.2% % NOI after Depreciation 94,578 95, ,438 70,602 45, % 20, % NON-AIRPORT FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % NWSA Distributable Revenue 43,426 43,412 34,007 34,985 (978) -2.8% (9,405) -21.7% Maritime Revenues 40,323 43,838 47,446 44,843 2, % 3, % EDD Revenues 12,357 12,222 14,590 13, % 2, % SWU & Other 3,098 3,164 3,395 3, % % Total Operating Revenues 99, ,635 99,439 96,708 2, % (3,196) -3.1% Total Operating Expenses 44,765 52,503 57,028 66,511 9, % 4, % NOI before Depreciation 54,439 50,132 42,411 30,197 12, % (7,721) -15.4% Depreciation 31,517 30,119 30,011 30, % (107) -0.4% NOI after Depreciation 22,922 20,013 12,399 (155) 12, % (7,614) -38.0% MAJOR OPERATING REVENUES SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 188, , , ,941 4, % 30, % Public Parking 51,505 55,297 59,245 58, % 3, % Rental Cars - Operations 28,401 28,339 30,025 27,021 3, % 1, % Rental Cars - Operating CFC 10,529 9,132 13,407 13, % 4, % ADR & Terminal Leased Space 42,865 44,002 48,196 44,795 3, % 4, % Ground Transportation 9,155 11,756 13,910 12,703 1, % 2, % Employee Parking 6,926 7,112 7,744 7, % % Airport Commercial Properties 7,412 13,825 11,804 11, % (2,021) -14.6% Airport Utilities 5,448 5,236 5,464 5,667 (203) -3.6% % Clubs and Lounges 2,235 3,715 4,801 4, % 1, % Cruise 15,072 17,515 19,025 18, % 1, % Recreational Boating 7,676 8,289 9,368 9, % 1, % Fishing & Operations 6,383 6,303 6,443 5, % % Grain 3,561 3,782 4,043 3, % % Maritime Portfolio Management 7,616 7,929 8,551 8, % % Central Harbor Management 5,222 6,487 6,924 6, % % Conference & Event Centers 6,463 5,706 7,636 6, % 1, % NWSA Distributable Revenue 43,426 43,412 37,894 34,985 2, % (5,518) -12.7% Other 5,306 4,791 5,184 4, % % Total Operating Revenues (w/o Aero) 265, , , ,613 17, % 17, % TOTAL 453, , , ,554 21, % 47, % 4

5 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/18 MAJOR OPERATING EXPENSES SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Salaries & Benefits 79,073 86,837 95, ,726 5, % 9, % Wages & Benefits 74,036 82,321 91,657 91,284 (372) -0.4% 9, % Payroll to Capital Projects 15,681 18,668 20,049 21,678 1, % 1, % Equipment Expense 4,358 6,020 5,883 6, % (137) -2.3% Supplies & Stock 5,971 6,837 7,178 6,654 (524) -7.9% % Outside Services 45,073 53,473 62,260 83,195 20, % 8, % Utilities 15,521 17,403 19,805 19,307 (498) -2.6% 2, % Travel & Other Employee Expenses 2,689 3,283 3,381 4,987 1, % % Promotional Expenses ,160 1, % % Other Expenses 18,348 22,336 22,860 20,806 (2,054) -9.9% % Charges to Capital Projects (25,410) (31,858) (36,992) (40,272) (3,280) 8.1% (5,135) 16.1% TOTAL 236, , , ,404 24, % 27, % KEY PERFORMANCE METRICS CAPITAL SPENDING RESULTS PORTWIDE INVESTMENT PORTFOLIO Fav (UnFav) Incr (Decr) 2017 YTD 2018 YTD Budget VarianceChange from 2017 Actual Actual Actual Forecast Budget Chg. % Chg. % Enplanements (in 000's) 17,788 18,952 23,416 24,654 24, % 1, % Landed Weight (lbs. in 000's) 21,422 23,053 28,431 29,203 29, % % Passenger CPE (in $) n/a n/a % % Grain Volume (metric tons in 000's) 2,939 3,422 4,363 4,183 4, % (180) -4.1% Cruise Passenger (in 000's) 1,062 1,103 1,072 1,115 1, % % Shilshole Bay Marina Occupancy 95.0% 96.6% 94.9% 95.9% 95.9% 0.0% 0.0% 1.0% 1.1% 2018 YTD Budget Variance $ in 000's Actual Forecast Budget $ % Aviation 366, , , , % Maritime 23,676 28,638 46,449 17, % Economic Development 1,693 3,777 6,099 2, % Corporate & Other (note 1) 4,324 13,761 26,779 13, % TOTAL 396, , , , % Note: (1) "Other" includes T5 Street Vacation project and Storm Water Utility Small Capital projects. During the third quarter of 2018, the investment portfolio earned 1.95% versus the benchmark s (the Bank of America Merrill Lynch 1-3 Year US Treasury & Agency Index) 2.81%. Over the last twelve months the portfolio and the benchmark have earned 1.69% and 2.38%, respectively. Since the Port became its own Treasurer in 2002, the life-to-date earnings of the Port s portfolio and the benchmark are 2.46% and 1.82%, respectively. 5

6 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues 247, , , ,082 2, % 36, % SLOA III Incentive Straight Line Adj (1) (3,576) (3,576) % 3, % Aeronautical Revenues 244, , , ,082 2, % 39, % Non-Aeronautical Revenues 221, , , ,786 6, % 14, % Total Operating Revenues 465, , , ,867 9, % 54, % Total Operating Expense 261, , , ,856 (1,275) -0.4% 37, % Net Operating Income 204, , , ,011 7, % 17, % Capital Expenditures 153, , , , , % 280, % (1) Annual non-cash amortization of $17.9M lease incentive related to the 5 year SLOA III agreement which ended in Division Summary 2018 Forecast vs Budget Net Operating Income for 2018 is forecasted to be $7.9M higher than budget (3.8% favorable) o Operating Revenue is expected to be $9.2M higher than budget (1.7% favorable) from higher Aeronautical revenue primarily due to the decrease in revenue sharing percentage (from 50% down to 40%) negotiated in the new airline lease agreement which was not known when the 2018 Budget was approved. Non-Aero revenue is currently forecasted at $6.5M higher than 2018 Budget (2.7% favorable). o Operating Expenses are expected to be $1.3M higher than budget (0.4% unfavorable) primarily due to Environmental Remediation Liability cost increase in soils contamination ($3.1M), Aviation Direct Charges ($5.4M). These increases are offset by lower charges from other divisions $7.6M (6.9% favorable) which includes some planned spending deferred to future years rather than actual cost savings, as well as payroll costs expected to be lower than budget due to vacancies and hiring delays. Division Summary 2018 Forecast vs Actuals Net Operating Income for 2018 is forecasted to be $17.1M higher than prior year (8.5% favorable) o Operating Revenue is expected to be $54.2M higher than prior year (10.8% favorable) primarily due to higher Aeronautical revenue from higher rate based costs and lower revenue sharing. In addition, revenues will be higher this year due to the SLOA III incentive amortization which ended in Non-Aero revenue is also expected to be $14.5M higher in 2018 from Landside business activities, which more than offset the ($5.4M) one-time lump sum frontage fee reimbursement received in Commercial Properties in o Operating Expenses are expected to be $37.0M higher than prior year (12.4% variance) due to higher payroll related to increased staffing ($15.4M), higher outside services expense ($14.2M) primarily due to non-recurring expenses focused on addressing strategic initiatives throughout the airport, and higher charges from other divisions ($14.2M). These planned 2018 increases in expenses are partially offset by the one-time amortization for prepaid frontage fees in 2017 ($3.6M) and lower expected costs in Environmental Liability Expense ($1.7M), and Capital to Expense costs ($2.5M). 6

7 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 A. BUSINESS EVENTS Customer Service: Below target through Q3. Airport Service Quality scores below 2017 in all six categories. Introduced SEA app in August. Launched WE ARE customer service curriculum in September. Sustainable Airport Master Plan Environmental Review: Completed 60-day agency and public scoping comment period. Diversity: Successful Airport Minority Advisory Council conference held in Seattle in August with record attendance. Airport Dining and Retail: Completed evaluation process for ADR lease group 4A. Central terminal rood kiosks were very successful during summer. Noise Insulation: sound audits completed on 41 homes. Design plans completed on 29 homes that remain in program. Sustainable Aviation Fuels: SAF strategic plan presented to commission in July. New International Service: JAL announced new service to Tokyo-Narita effective March B. KEY PERFORMANCE METRICS YTD 2016 YTD 2017 YTD 2018 % Change from 2017 Total Passengers (000's) Domestic 31,229 31,784 33, % International 3,701 3,938 4, % Total 34,931 35,722 38, % Landed Weight (In Millions of lbs.) Cargo 1,352 1,677 1, % All other 19,296 19,745 21, % Total 20,649 21,422 23, % Cargo - Metric Tons Domestic freight 139, , , % International freight 88,203 97, , % Mail 41,015 43,117 42, % Total 268, , , % 7

8 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Key Performance Measures Key Performance Metrics 2018 Forecast compared to 2018 Budget: Cost per Enplanement (CPE) Forecast: o CPE $0.12 unfavorable to original budget of $ Budget assumed 50% Revenue Sharing. The 2018 Forecast reflects 40% Revenue Sharing as negotiated in the SLOA IV agreement, which was not known when the 2018 Budget was approved. Note: Adjusted CPE Budget is based on 40% Revenue Sharing per SLOA IV agreement bringing the adjusted CPE to $0.16 favorable to budget. o CPE increase of $0.94 compared to prior year due to increase in rate base costs and decrease in revenue sharing percentage under SLOA IV. Non-Aero NOI: o Non-Aero NOI 2018 Forecast expected to be $7.4M favorable to 2018 budget due to both higher revenues and deferred expenses. o Non-Aero NOI 2018 Forecast expected to be $1.1M higher than prior year due primarily to increased Ground Transportation activity, increased transactions in Public Parking, and stronger performance in Airport Dining and Retail. 8

9 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 C. OPERATING RESULTS Division Summary YTD Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues (1) 191, , , ,941 4, % 28, % SLOA III Incentive Straight Line Adj (2) (2,682) (2,682) N/A 2, % Aeronautical Revenues 188, , , ,941 4, % 30, % Non-Aeronautical Revenues 165, , , ,905 10, % 16, % Total Operating Revenues 354, , , ,846 15, % 47, % Operating Expenses: Payroll 76,077 86,857 96,767 98,193 1, % 9, % Outside Services 25,651 27,587 34,645 39,187 4, % 7, % Utilities 10,905 12,264 14,280 13,918 (362) -2.6% 2, % Other Airport Expenses 14,572 18,992 16,682 15,058 (1,623) -10.8% (2,310) -12.2% Total Airport Direct Charges 127, , , ,357 3, % 16, % Environmental Remediation Liability 5,492 2,714 4,484 2,980 (1,504) -50.5% 1, % Capital to Expense (8) N/A (63) -88.8% Total Exceptions 5,521 2,786 4,492 2,980 (1,512) -50.7% 1, % Total Airport Expenses 132, , , ,337 2, % 18, % Police Costs 13,529 14,052 16,161 16, % 2, % Capital Development 5,680 10,679 9,200 17,034 7, % (1,479) -13.8% Other Central Services 36,560 37,748 40,858 43,504 2, % 3, % Maritime/Economic Development 2,742 2,653 3,046 4,295 1, % % Total Charges from Other Divisions 58,512 65,131 69,265 81,557 12, % 4, % Total Operating Expense 191, , , ,893 14, % 22, % Net Operating Income 163, , , ,953 29, % 24, % Operating Expenses 2018 YTD Actuals compared to 2018 YTD Budget: Total Operating Expenses are lower than the YTD 2018 Budget by $14.8 million due to the net of the following: (1) Aero revenues are net of revenue sharing. (2) Annual non-cash amortization of $17.9M lease incentive related to the SLOA III agreement for the 5 year period from YTD Aviation Direct Operating Expenses are lower than budget by $4.0 million due to the following: Positive Variance of $6.0M Negative Variance of $2.0M Payroll - vacancies & hiring delays $1.4M Utilities $0.4M Outside Services (savings & work deferred to future year) $4.6M Increased Electric activity 0.4M NERA 3 grant (FAA pilot program) 0.3M Lower Surface Water activity (0.2M) AV Maintenance temporary timing issues 0.2M All Other Utilities 0.2M Capital Program Mgmt delay in key planning projects 0.2M SAMP - Environmental assessment delayed 1.2M Other Airport Expenses $1.6M CBP reimbursable program not yet spent 0.3M Safety Management Programs still in early stages 0.4M Customer Service programs not yet spent 0.2M All other Outside Services 1.8M 9

10 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Operating Expenses 2018 YTD Actuals compared to 2018 YTD Budget - continued: YTD Operating Expenses Exceptions are higher than budget by $1.5 million due to the following: Positive Variance - no material variance Negative Variance of $1.5M Environmental Remediation Liability Soils: IAF (soils) estimate increase 1.5M Taxiway Improvement Project 0.2M Asbestos: Obligating events not expected until 2019 (2.2M) NSAT (asbestos) estimate increase 1.0M IAF- SSAT Interior Corridor 0.5M Terminal Security 0.2M Other projects 0.3M $1.5M YTD Operating Expense charges from Central Services and other divisions are lower than budget by $12.3M million due to the following: Positive Variance of $12.3M Other Central Services savings Police savings Maritime/Economic savings CDD savings Aviation PMG (projects delayed/deferred) 4.7M PCS 2.2M Engineering 0.9M $2.6M $0.6M $1.3M $7.8M Negative Variance - none Operating Expenses 2018 YTD Actuals compared to 2017 YTD Actuals: Total Operating Expenses are higher than YTD 2017 Actuals by $22.5 million due to the net of the following: YTD Aviation Direct Operating Expenses are higher than YTD 2017 Actuals by $16.7 million due to the following: Increase of $19M Decrease of $2.3M Payroll - increased staffing $9.9M Other Aviation Expenses $2.3M Outside Services $7.1M One-time amortization frontage fees $3.7M Utilities $2.0M All other Aviation Expenses ($1.4M) YTD Operating Expenses Exceptions are higher than 2017 YTD Actuals by $1.7 million due to the following: Increase of $1.7M Environmental Remediation Liability Asbestos: IAF- SSAT Interior Corridor 0.5M SSAT Structural Improvements 0.8M Other projects 0.4M $1.7M Decrease - no material amount YTD Operating Expense charges from Central Services and other divisions are higher than YTD 2017 Actuals by $4.1 million due to the following: Increase of $5.6M Decrease of $1.5M Other Central Services $3.1M CDD savings $1.5M Police Costs $2.1M Maritime/Economic Development $0.4M 10

11 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Division Summary YE Forecast Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues (1) 247, , , ,082 2, % 36, % SLOA III Incentive Straight Line Adj (2) (3,576) (3,576) % 3, % Aeronautical Revenues 244, , , ,082 2,687 39, % Non-Aeronautical Revenues 221, , , ,786 6, % 14, % Total Operating Revenues 465, , , ,867 9, % 54, % Operating Expenses: Payroll 101, , , ,156 2, % 15, % Outside Services 37,863 41,055 55,260 52,532 (2,728) -5.2% 14, % Utilities 14,690 16,374 18,073 17,320 (753) -4.3% 1, % Other Airport Expenses 20,655 28,292 23,968 19,776 (4,193) -21.2% (4,324) -15.3% Total Airport Direct Charges 175, , , ,784 (5,385) -2.4% 26, % Environmental Remediation Liability 4,463 8,812 7,116 4,030 (3,086) -76.6% (1,696) -19.2% Capital to Expense 129 2, (367) 0.0% (2,489) -87.1% Total Exceptions 4,592 11,668 7,483 4,030 (3,453) -85.7% (4,185) -35.9% Total Airport Expenses 179, , , ,814 (8,838) -3.9% 22, % Police Costs 18,183 17,652 22,174 22, % 4, % Capital Development 9,319 14,701 17,039 23,092 6, % 2, % Other Central Services 50,099 51,004 56,930 58,265 1, % 5, % Maritime/Economic Development 3,946 3,904 5,336 5, % 1, % Total Charges from Other Divisions 81,547 87, , ,042 7, % 14, % Total Operating Expense 261, , , ,856 (1,275) -0.4% 37, % Net Operating Income 204, , , ,011 7, % 17, % CFC Surplus (4,899) (2,750) (6,157) (7,142) % (3,407) % Net Non-Operating Items in / out from ADF (3) 2,160 3,481 4,406 4, % % SLOA III Incentive Straight Line Adj 3,576 3, % (3,576) % Debt Service (4) (133,982) (131,060) (136,343) (136,075) (267) 0.2% (5,283) -4.0% Adjusted Net Cash Flow 70,885 75,050 80,853 72,200 8, % 5, % (1) Aero revenues are net of revenue sharing. (2) Annual non-cash amortization of $17.9M lease incentive related to the SLOA III agreement for the 5 year period from (3) Per SLOA III definition of Net Revenues. (4) 2018 Budget debt service amount inadvertently understated by the $2.1M debt service exclusion adjustment which impacts Aero Rate Based Revenues only. Total 2018 Aeronautical debt service obligation is reflected in the 2018 Forecast column. 11

12 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Operating Expenses 2018 YE Forecast compared to 2018 YE Budget: Total Operating Expenses are forecasted to be higher than the 2018 Budget by $1.3 million due to the net of the following: Aviation Direct Operating Expenses are forecasted to be higher than the 2018 Budget by $5.4 million due to the following: Positive Variance of $2.3M Negative Variance of $7.7M Payroll - vacancies & hiring delays $2.3M Outside Services $2.7M Aviation Planning 0.7M Taxi Operations (SP & curbside mgmt) 0.5M Customer Service (new dept. expenses) 0.4M UPM Pest Management 0.5M All other Outside Services 0.6M Utilities $0.8M IWTP overflow event 0.7M All other Utilities 0.1M Other Aviation Expenses $4.2M Construction Access Support 1.1M Equipment Rental & General Expenses 0.5M Maintenance Equipment & Supplies 0.9M All other Aviation Expense 1.7M Aviation Operating Expense Exceptions are higher than budget by $3.5 million due to the following: Positive Variance - no material variance Negative Variance of $3.5M Environmental Remediation Liability Soils: IAF (soils) estimate increase 3.8M Asbestos: Obligating events not expected until 2019 (2.2M) NSAT (asbestos) estimate increase 1.0M IAF- SSAT Interior Corridor 0.5M Capital to Expense - write-off Main Terminal/NSTAR Operating Expense charges from Central Services and other divisions are forecasted to be lower than budget by $7.6 million due to the following: Positive Variance of $7.6M Other Central Services savings Maritime/Economic savings CDD savings Aviation PMG (projects delayed/deferred) 4.8M PCS 1.3M Engineering 0.8M Other CDD (0.8M) $1.3M $0.2M $6.1M Negative Variance - none $3.1M $0.4M 12

13 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Operating Expenses 2018 YE Forecast compared to 2017 YE Actuals: Total Operating Expenses are forecasted to be higher than 2017 Actuals by $37.0 million due to the net of the following: Aviation Direct Operating Expenses are forecasted to be higher than 2017 Actuals by $27.0 million due to the following: Increase of $31.3M Decrease of $4.3M Payroll - increased staffing $15.4M Other Aviation Expenses $4.3M Outside Services $14.2M One-time amortization frontage fees 3.6M Onsite Consultants - Airport Dining and Retail 4.0M Litigated & Non-litigated damages 1.8M Personal Services - Non-Aero Commercial Properties 2.7M All other Aviation Expenses (1.1M) Personal Services - AV Facilities and Capital Program 4.0M Small Works Construction Services - Airfield Operations 1.2M Other Contracted Services - Baggage Systems 1.3M All other Outside Services increases 1.0M Utilities $1.7M Operating Expense Exceptions are forecasted to be lower than 2017 Actuals by $4.2M due to the following: Increase - none Decrease of $4.2M Environmental Remediation Liability IAF soils 1.4M All other ERL expense 0.3M Capital to Expense Obsolete exit lane equipment 1.9M SSAT - HVAC equipment 0.7M Projected Main Terminal/Nstar write off (0.4M) All other Capital to Expense items 0.3M $1.7M $2.5M Operating Expense charges from Central Services and other divisions are forecasted to be higher than 2017 Actuals by $14.2 million due to the following: Increase of $14.2M Police CDD Other Central Services Maritime/Economic Development divisions $4.5M $2.3M $6.0M $1.4M Decrease - no material amount 13

14 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Aeronautical Business Unit Summary - YTD Aeronautical Q Actuals vs. Q Budget Net Operating Income for Q is $13.0M higher than budget (18.9% favorable) o Operating Revenue is $4.7M higher than budget (2.1% favorable) primarily due to the decrease in revenue sharing percentage (from 50% down to 40%) negotiated in the new airline lease agreement which was not known when the 2018 Budget was approved. o Operating Expenses are $7.8M lower than budget (4.9% favorable) primarily due to timing delays in Outside Services spending and lower charges from other divisions. Aeronautical Q Actual vs. Q Actual Fav (UnFav) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Incr (Decr) Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Revenues: Movement Area 72,374 82,520 95,501 95, % 12, % Apron Area 11,477 11,808 13,055 12, % 1, % Terminal Rents 118, , , ,653 (405) -0.3% 8, % Federal Inspection Services (FIS) 8,480 10,509 11,143 10, % % Total Rate Base Revenues 210, , , ,207 1, % 23, % Commercial Area 6,873 7,710 7,549 7,583 (35) -0.5% (162) -2.1% Subtotal before Revenue Sharing 217, , , ,790 1, % 23, % Revenue Sharing (26,401) (28,773) (23,806) (26,849) 3, % 4, % Total Aeronautical Revenues 191, , , ,941 4, % 28, % Total Aeronautical Expenses 125, , , ,485 7, % 14, % Net Operating Income 66,283 65,632 79,049 66,456 12, % 13, % Net Operating Income for Q is $13.4M higher than Q (20.4% favorable) o Operating Revenue is $28.1 M higher than Q (13.7% favorable) due to higher rate based costs to support increased airline activity and lower revenue sharing due to reduction in revenue sharing percentage under new airline agreement. o Operating Expenses are $14.6M higher than Q (10.5% variance) due to higher airport direct operating expenses to support increased airline activity and higher charges from other divisions. 14

15 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Aeronautical Business Unit Summary - YE Forecast Airline Rate Base Cost Drivers Fav (UnFav) Budget Variance Incr (Decr) Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Revenues: Movement Area 94, , , ,422 (1,017) -0.8% 15, % Apron Area 14,028 16,771 15,753 15,979 (226) -1.4% (1,018) -6.1% Terminal Rents 155, , , ,854 (889) -0.5% 15, % Federal Inspection Services (FIS) 11,227 18,612 13,596 13, % (5,016) -26.9% Total Rate Base Revenues 275, , , ,668 (1,949) -0.6% 25, % Commercial Area 9,379 10,574 10,212 10, % (362) -3.4% Subtotal before Revenue Sharing 285, , , ,880 (1,949) -0.6% 24, % Revenue Sharing (37,395) (42,311) (31,162) (35,799) 4, % 11, % Other Prior Year Revenues (5) (26) % % Total Aeronautical Revenues 247, , , ,082 2, % 36, % Total Aeronautical Expenses 168, , , ,931 (2,119) -1.0% 23, % Net Operating Income 78,879 72,276 84,719 84, % 12, % Debt Service (1) (89,130) (86,564) (91,238) (90,323) (915) -1.0% (4,674) -5.4% Net Cash Flow (10,251) (14,288) (6,519) (6,173) (346) -5.6% 7, % (1) 2018 Budget debt service amount inadvertently understated by the $2.1M debt service exclusion adjustment which impacts Aero Rate Based Revenues only. Total 2018 Aeronautical debt service obligation is reflected in the 2018 Forecast column. Aeronautical 2018 YE Forecast vs YE Budget Fav (UnFav) Budget Variance Incr (Decr) Change from $ in 000's Actual Actual Forecast Budget $ % $ % O&M 165, , , ,433 2, % 20, % Debt Service Gross 118, , , ,555 (4,321) -3.6% 2, % Debt Service PFC Offset (32,831) (33,057) (32,987) (33,015) % % Amortization 28,215 29,654 32,373 32, % 2, % Space Vacancy (2,638) (2,264) (2,653) (2,650) (3) 0.1% (389) 17.2% TSA Operating Grant and Other (982) (901) (1,228) (1,028) (200) 19.4% (327) 36.4% Rate Base Revenues 275, , , ,668 (1,949) -0.6% 25, % Commercial area 9,379 10,574 10,212 10, % (362) -3.4% Total Aero Revenues 285, , , ,880 (1,949) -0.6% 24, % Aeronautical net operating income is forecasted to be $0.6M higher than budget (0.7% favorable). o Aeronautical revenues are forecasted to be $1.9M lower than budget (0.6% unfavorable) primarily due to decreases in Debt Service flowing through Rates in the Movement and Terminal Rents areas. o Aeronautical operating expenses are forecasted to be $2.1M higher than budget (1.0% unfavorable) driven primarily by increased costs in Outside Services. 15

16 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Aeronautical 2018 YE Forecast vs YE Actuals Net Operating Income for 2018 is expected to be $12.4M higher than prior year (17.2% favorable) o Operating Revenue is expected to be $36.1M higher than prior year (13.5% favorable) due to higher rate based costs to support increased airline activity and lower revenue sharing due to reduction in revenue sharing percentage (from 50% down to 40%) under new airline agreement. o Operating Expenses are expected to be $23.6M higher than prior year (12.1% variance) due to higher airport direct operating expenses to support increased airline activity and higher charges from other divisions. Non-Aero Business Unit Summary - YTD Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Non-Aero Revenues Rental Cars - Operations 28,401 28,339 30,025 27,021 3, % 1, % Rental Cars - Operating CFC 10,529 9,132 13,407 13, % 4, % Public Parking 51,505 55,297 59,245 58, % 3, % Ground Transportation 9,155 11,756 13,910 12,703 1, % 2, % Airport Dining & Retail & Leased Space 43,754 44,002 48,196 44,795 3, % 4, % Commercial Properties 7,412 13,825 11,804 11, % (2,021) -14.6% Utilities 5,448 5,236 5,464 5,667 (203) -3.6% % Employee Parking 6,926 7,112 7,744 7, % % Clubs and Lounges 2,235 3,715 4,801 4, % 1, % Other 631 1,579 1,742 1, % % Total Non-Aero Revenues 165, , , ,905 10, % 16, % Total Non-Aero Expenses 66,232 74,612 82,489 89,408 6, % 7, % Net Operating Income 99, , ,848 96,497 17, % 8, % Non-Aeronautical Q Actuals vs. Q Budget Net Operating Income for Q is $17.4M higher than budget (18.0% favorable) o Operating Revenue is $10.4M higher than budget (5.6% favorable) primarily due to Airport Dining & Retail revenue stronger than expected in Q2/Q3 due to schedule delays in quick-serve restaurant units remaining open into Feb 2018 which were expected to close in late In addition, Employee Parking continues to experience strong demand driven growth. o Operating Expenses are $6.9M lower than budget (7.7% favorable) primarily due to slower than anticipated grant spending on NERA 3 FAA pilot program and schedule delays on ADR tenant buildout projects. Non-Aeronautical Q Actual vs. Q Actual Net Operating Income for Q is $8.5M higher than Q (8.0% favorable) o Operating Revenue is $16.3M higher than Q (9.1% favorable) primarily due to the one-time lump sum frontage fee reimbursement ($5.4M) received in Commercial Properties in 2017, which is partially offset by higher Rental Car operating CFC revenue due to lower debt service costs, and higher Public Parking revenue due to higher rates in effect in Q1 compared to the prior year. o Operating Expenses is $7.9M higher than Q (10.6% increase) primarily due to payroll staffing vacancies being filled and the Commissary Kitchen build payout to Ivar s within the Airport Dining and Retail areas. Also, there has been increased activity in both staffing and non-payroll costs due to the growth in revenue in Clubs and Lounges. 16

17 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Non-Aero Business Unit Summary - YE Forecast Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Non-Aero Revenues Rental Cars - Operations 37,082 35,051 35,084 35,294 (210) -0.6% % Rental Cars - Operating CFC 12,122 10,641 14,653 15,563 (910) -5.8% 4, % Public Parking 69,540 75,106 80,371 78,572 1, % 5, % Ground Transportation 12,803 15,684 18,210 16,884 1, % 2, % Airport Dining & Retail & Leased Space 58,405 58,980 62,380 59,087 3, % 3, % Commercial Properties 9,992 18,042 15,089 14, % (2,953) -16.4% Utilities 7,233 7,018 7,396 7,556 (160) -2.1% % Employee Parking 9,329 9,617 10,214 9, % % Clubs and Lounges 3,028 5,041 5,830 5, % % Other 1,487 1,624 2,081 2, % % Total Non-Aero Revenues 221, , , ,786 6, % 14, % Total Non-Aero Expenses 92, , , , % 13, % Net Operating Income 128, , , ,861 7, % 1, % Less: CFC (Surplus) / Deficit (1) (4,899) (2,750) (6,157) (7,142) % (3,407) % Adjusted Non-Aero NOI 123, , , ,719 8, % (2,279) -1.7% Debt Service (1) (43,984) (44,495) (45,105) (45,752) % (609) -1.4% Net Cash Flow 79,844 85,856 82,967 73,967 8, % (2,889) -3.4% Non-Aeronautical 2018 Forecast vs Budget Non-Aeronautical net operating income is forecasted to be $7.4M higher than budget (5.8% favorable). o Non-Aeronautical revenues are forecasted to be $6.5M higher than budget (2.7% favorable): Airport Dining & Retail - favorable ($3.3M) forecast reflects strong performance in both Food and Beverage, Retail Sales despite transitions to new leases, and increased revenue from Advertising. Commercial Properties - favorable $0.4M due to earlier than anticipated occupancy of DMCBP Phase II building. Utilities unfavorable ($0.2M) due to reduced tenant billings while garbage program undergoes process improvement planning. o Non-Aeronautical operating expenses are forecasted to be $0.8M lower than budget (0.7% favorable) primarily due to lower than anticipated charges from other divisions due to AVPMG terminal project delays. Non-Aeronautical 2018 Forecast vs Actuals (1) CFC excess and Debit service are forecasted/budgeted on an annual basis only. Thus, quarterly data is not available. Fav (UnFav) Incr (Decr) Net Operating Income for 2018 is expected to be $1.1M higher than prior year (0.8% favorable) o Operating Revenue is expected to be $14.5M higher than prior year (6.1% favorable) primarily due to increased Landside business activity, which more than offsets the ($5.4M) one-time lump sum frontage fee reimbursement received in Commercial Properties in o Operating Expenses are expected to be $13.4M higher than prior year (12.9% variance) due to higher payroll costs related to increase in staffing, higher outside services expense primarily due to non-recurring expenses focused on addressing strategic initiatives throughout the airport, and higher charges from other divisions. 17

18 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 D. CAPITAL RESULTS $ in 000's Budget Variance Description YTD Actual Forecast Budget $ % International Arrivals Facility (1) 126, , , , % ASL Conversion at Checkpoints (2) 901 1,251 16,800 15, % NS NSAT Renov NSTS Lobbies (3) 111, , ,738 (16,436) -11.7% N. Terminals Utilities Upgrade (4) ,200 7, % Add'l Baggage Makeup Space IAF (5) 1,493 6,118 15,998 9, % Terminal Security Enhancements (6) 910 2,260 5,925 3, % SSAT Infrastructure HVAC (7) 348 1,168 4,910 3, % 2018 Taxiway Improvement Proj (8) 11,596 31,281 36,250 4, % Concourse D Hardstand Holdroom (9) 22,704 26,181 27,986 1, % Alternate Utility Facility (10) 17,193 17,385 18, % Checked Bag Recap/Optimization (11) 24,943 35,443 38,000 2, % Service Tunnel Renewal/Replace (12) 10,224 14,224 16,000 1, % Additional STS Cars (13) - - 6,525 6, % All Other 48,489 83, ,822 74, % Total Spending 366, , , , % (1) Contractor performance continues to be below the planned 2018 levels with a lag in the September pay application (paid 10/2). The mitigated plan accelerates performance in 2019/20 to recover lagging 2018 performance. (2) $8.7M of capital budget deemed to be public expense as the equipment will be transferred to TSA. 1 of 3 lanes has been installed; remaining lanes pushed out to Q Q (3) Construction had not ramped up as quickly as anticipated compared to the baseline established for early Construction level of effort is now matching and exceeding initial expectations as schedule end dates have not slipped. (4) Early works construction cancelled and combined with main construction phase due to better coordination with adjacent projects. (5) Delays in construction due to changes in sequencing of work by contractor. A revised schedule has significant work still being done in late 2018 while significant portions are shifted to (6) Favorable bids for Phase I (shatter proof windows) will result in less spending in (7) Bid bust has resulted in one year delay of project. Expected design completion Q4 2018, construction beginning Q (8) Project delayed 3 weeks due to Operating Engineers Strike. (9) Project substantial complete in Q Project's budget has potential savings. (10) Project is complete. Engineered System contract methodology resulted in significant cost savings. (11) Contractor is behind schedule by 77 days and installation (and respective payment) is slower than anticipated (12) Construction within the Tunnel has been delayed due to IAF's delayed reopening of Air Cargo Road and major contractor's slowing down toward that delayed area. (13) Project delayed to begin in

19 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Revenues: Operating Revenue 50,810 54,183 56,420 55,053 1,367 2% 2,236 4% Total Revenues 50,810 54,183 56,420 55,053 1,367 2% 2,236 4% Total Operating Expenses 40,283 42,164 47,420 49,578 2,158 4% 5,256 12% Net Operating Income 10,526 12,020 9,000 5,475 3,525 64% (3,020) -25% Capital Expenditures 5,746 20,489 28,638 46,449 17,811 38% 8,149 40% Division Summary 2018 Forecast vs Budget Operating Revenues are forecasted to be $1,367K above budget due to favorable moorage revenue, and more cruise passengers. Operating Expenses are forecasted to be $2,158K below budget primarily due to movement of tenant improvements at the Maritime Industrial Center to capital, underspend in Cruise consulting, and Central Services payroll. Net Operating Income forecasted to be $3,525K above budget. At the end of the third quarter, capital spending for full year 2018 is forecasted to be $28.6 million or 62% of the approved budget of $46.4 million. Division Summary 2018 Forecast vs Actuals Operating Revenues are expected to be $2,236K above 2017 primarily due to higher tariff rates. Operating Expenses are expected to be $5,256K greater than 2017 primarily increased wage rates, Cruise Port Valet, and acquisition of Salmon Bay Marina. Net Operating Income is forecasted to be $3,020K less than Net Operating Income before Depreciation by Business Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Fishing & Operations (2,709) (1,658) (2,145) (2,892) % (487) -29% Recreational Boating 863 1,100 1, , % % Cruise 11,042 11,165 11,498 8,790 2,708 31% 333 3% Bulk 2,711 2,752 2,693 1, % (59) -2% Maritime Portfolio (101) % % All Other (102) (526) (80) (478) % % Total Maritime 12,421 13,178 14,391 7,321 7,070 97% 1,213 9% 19

20 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 A. BUSINESS EVENTS Cruise Finished a record year for passengers driven by P66 and the Norwegian Bliss. Recreational Boating Floating wetlands were installed for a University of Washington pilot program at Harbor Island Marina. Shilshole Bay Marina restroom bids 30% over Engineer s estimate. Considering alternatives with scope reduction and will present top 4 to commissioners. Fishing and Commercial Operations Christened the Global Provider, a new 126 foot tanker vessel at Fishermen s Terminal. Maritime Portfolio Management Completed replacement of 2,500 square foot of roadway at the Maritime Industrial Center, along with 80 linear feed of curb/retaining wall. Stormwater Utility YTD: Rehabilitated 5 miles of stormwater infrastructure and assessed 27.3 miles. Tracking to exceed the 75% assessment target. B. KEY PERFORMANCE METRICS Grain Volume Metric Tons in 000 s Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 Actuals 2018 Budget 2018 Actuals Cruise Passengers in 000 s Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 Actuals 2018 Budget 2018 Actuals 20

21 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 C. OPERATING RESULTS Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Fishing & Operations 6,383 6,303 6,443 5, % 140 2% Recreational Boating 7,676 8,289 9,368 9, % 1,078 13% Cruise 15,072 17,515 19,025 18, % 1,510 9% Bulk 3,561 3,782 4,043 3, % 261 7% Maritime Portfolio Management 7,616 7,929 8,551 8, % 622 8% Other % (2) -11% Total Revenue 40,323 43,838 47,446 44,843 2,603 6% 3,609 8% Expenses Fishing & Operations 3,280 3,377 3,624 3,515 (109) -3% 246 7% Rec Boating 2,435 2,930 2,912 3, % (19) -1% Cruise 771 1,829 2,184 3,651 1,467 40% % Other Maritime , % (237) -34% Maintenance Expenses 7,049 7,089 8,362 8, % 1,273 18% Portfolio Management 2,427 2,560 2,894 2, % % Other ED Expenses % (27) -6% Total Maritime & EDD expenses 16,798 18,978 20,904 23,784 2,880 12% 1,926 10% Enviromental & Sustainability , % % CDD Expenses % 37 6% Police Expenses 2,912 2,913 3,252 3,175 (76) -2% % Other Central Services 6,822 7,243 7,242 7, % (1) 0% Aviation Division (12) -14% 5 5% Total Central Services & Aviation 11,056 11,312 12,250 13,738 1,488 11% 938 8% Envir Remed Liability (99) 0 99 NA (469) -127% Total Expense 27,902 30,660 33,055 37,522 4,467 12% 2,395 8% NOI Before Depreciation 12,421 13,178 14,391 7,321 7,070 97% 1,213 9% Depreciation 13,008 12,589 13,313 13, % 724 6% NOI After Depreciation (588) 589 1,078 (6,062) 7, % % 2018 YTD Actuals vs. Budget Operating Revenues were $2,603K higher than budget from favorable occupancy rates in Cruise, Recreational Boating, and Fishing & Operations along with higher than expected grain volumes. Operating Expenses were $4,467K lower than budget: o Cruise $1,467K lower than budget due to timing and savings of Port Valet and consulting invoices. o Rec Boating $580K lower than budget due to open positions and invoice timing. o Other Maritime $551K lower than budget from Marketing open FTEs and Habitat expenses applied to non-operations and capital. o Environment & Sustainability $606K lower than budget due to vacant positions and capital/expense mix. o Capital Development (CDD) $258K below budget due to fewer contractors than expected. o Other Central Services $712K lower than budget primarily due to lower charges from Public Affairs $191K, Human Resources $166K, Accounting $102K, and Exec $77K. o All other expenses net to $293K lower than budget. Net Operating Income was $7,070 above budget YTD Actuals vs YTD Actuals Operating Revenues were $3,609 higher than 2017 actual due to increased moorage rates, improved occupancy at Shilshole Bay Marina, increased cruise passenger fees, and longer than anticipated occupancy by fishing vessels at Terminal

22 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/18 Operating Expenses were $2,395K higher than 2017 actual: o Cruise $355K greater than 2017 due to property rental at P66 and Consulting. o Marine Maintenance $1,273K greater than 2017 due to increased wages and mix of Maritime projects. o Portfolio Management $334K greater than 2017 due to higher utility expense. o Central Services $938K increase from 2017 related to Police allocation and Environmental expense projects. o Environmental Remediation $469K below o All other Expenses net to $36K above Net Operating Income was $1,213K above 2017 actual. Financial Summary (Year-End Forecast) Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Fishing & Operations 9,108 9,297 8,614 8, % (683) -7% Recreational Boating 10,255 11,086 12,401 12, % 1,315 12% Cruise 15,422 17,596 18,575 18, % 980 6% Bulk 5,382 5,427 5,417 5, % (10) 0% Maritime Portfolio Management 10,255 10,787 11,395 11, % 609 6% Other 388 (9) % % Total Revenue 50,810 54,183 56,420 55,053 1,367 2% 2,236 4% Expenses Fishing & Operations 4,308 4,599 4,601 4, % 3 0% Rec Boating 3,164 3,813 4,199 4, % % Cruise 2,600 2,674 3,677 4,748 1,071 23% 1,003 38% Other Maritime ,399 1, % % Maintenance Expenses 9,900 10,420 11,261 11, % 840 8% Portfolio Management 3,367 3,507 3,688 3, % 181 5% Other ED Expenses % % Total Maritime & EDD expenses 24,425 26,140 29,658 31,226 1,568 5% 3,518 13% Enviromental & Sustainability 1,358 1,125 1,823 2, % % CDD Expenses 1, ,212 1, % % Police Expenses 3,921 3,756 4,209 4, % % Other Central Services 9,315 9,869 10,396 10, % 527 5% Aviation Division % (15) -11% Total Central Services & Aviation 15,743 15,635 17,763 18, % 2,127 14% Envir Remed Liability NA (389) -100% Total Expense 40,283 42,164 47,420 49,578 2,158 4% 5,256 12% NOI Before Depreciation 10,526 12,020 9,000 5,475 3,525 64% (3,020) -25% Depreciation 17,351 17,410 17,868 17, % 459 3% NOI After Depreciation (6,824) (5,390) (8,868) (12,394) 3,525 28% (3,478) -65% 2018 Forecast vs Budget Operating Revenues are forecasted to be $1,367K higher than budget: o Cruise more passengers at higher rate. o Recreational Boating and Fishing & Operations moorage occupancy favorable to budget. Operating Expenses are forecasted to be $2,158K lower than budget: o Tenant improvements at the Maritime Industrial Center capitalized rather than expensed. o Fishing and Recreational Boating payroll and outside services savings. o Lower Port Valet and consulting cost than budgeted in Cruise. o Favorable payroll savings from Central Services. Net Operating Income is forecasted to be $3.5M above budget. 22