CAPITOL TOWERS CHARLOTTE, NORTH CAROLINA

Transcription

1 CAPITOL TOWERS CHARLOTTE, NORTH CAROLINA

2 E X E C U T I V E S U M M A R Y CAPITOL TOWERS Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp. a North Carolina licensed real estate broker ( HFF ) has been retained as the exclusive sales representative for Capitol Towers (the Property, Asset, or Building ), two newly constructed office assets, one standalone retail building, one standalone medical office building, and a seven-level structured parking deck totaling 477,704 SF and located in the flourishing Charlotte market. Ideally positioned in Charlotte s most prestigious office submarket, SouthPark, the Property is 88.5% leased with substantial on-going leasing momentum and offers a stable cash flow supported by an investment grade tenant roster featuring exceptional remaining lease term. This core investment opportunity is poised for a tremendous long-term outlook as the Asset offers an unmatched ability to attract and retain tenants due to best-in-class tenant buildouts, a market-leading amenity package, and the market s premier office location. Capitol Towers is a generational investment presenting investors with the unique opportunity to acquire Charlotte s premier newly constructed office assets and obtain a secure, cash flowing investment in one of the country s fastest growing markets.

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4 INVESTMENT SUMMARY ADDRESSES Tower I (South Tower) 4350 Congress Street Charlotte, NC Tower II (North Tower) 4250 Congress Street Charlotte, NC RENTABLE BUILDING AREA INVESTMENT SUMMARY INSTITUTIONAL-QUALITY OFFICE ASSET Capitol Towers is a state-of-the-art office property in Charlotte s most competitive submarket. Investors have the opportunity to acquire the market s premier office assets in SouthPark with unmatched competitive advantages driving tenant demand, consistently achieving premium rental rates, and resulting in above-market occupancy. A GENERATIONAL CORE INVESTMENT OPPORTUNITY ICONIC TROPHY OFFICE BUILDINGS RETAIL DESTINATIONS TRANSFORMING CAPITOL TOWERS DIVERSE, INVESTMENT GRADE TENANT ROSTER SOUTHPARK: URBAN-INFILL LOCATION WITH HIGH BARRIERS TO ENTRY CHARLOTTE S PREMIER UPSCALE URBAN HUB CHARLOTTE S MOST PRESTIGIOUS OFFICE SUBMARKET DEMONSTRATING EXCEPTIONAL HISTORICAL PERFORMANCE UPSIDE POTENTIAL: PARKING REVENUE, RETAIL OPPORTUNITY, REDUCE BASIS Tower I (South Tower) 228,461 SF Tower II (North Tower) 227,454 SF Buildings C & G (SouthPark Grill & Legion 14,289 SF Brewing Company) Building F (Novant Medical Group) 7,500 SF TOTAL 477,704 SF PERCENT OCCUPIED* Tower I (South Tower) 77.3% Tower II (North Tower) 98.5% Buildings C & G (SouthPark Grill & Legion 100% Brewing Company) Building F (Novant Medical Group) 100% TOTAL 88.5% YEAR BUILT Tower I (South Tower) 2015 Tower II (North Tower) 2017 STORIES Tower I (South Tower) 10 Tower II (North Tower) 10 ACRES** WALT 11.4 Years PARKING GARAGE ~1,633 parking spaces, including 154 gated executive spaces (3.42 per 1,000 SF) *Occupancy is as of the financial analysis start date, 1/1/2019. **All buildings are on the same tax parcel.

5 A GENERATIONAL CORE INVESTMENT OPPORTUNITY Capitol Towers is one of Charlotte s premier office assets featuring high-quality new construction, best-in-class tenant buildouts, a state-of-the-art amenity package, unmatched accessibility, and the market s most prestigious location. Recognized as one of Charlotte s most storied neighborhoods, SouthPark has experienced unprecedented commercial revitalization to become the premier upscale urban hub in the market. As the signature office destination in SouthPark, Capitol Towers provides the quintessential environment for corporate enterprise generating exceptional tenant demand from a diverse range of users. As a result, the asset is 88.5% leased to an investment grade tenant roster boasting more than eleven years of weighted average lease term. With extremely high barriers to entry in SouthPark, as scarcity of unimproved sites limit supply, investors are presented with a rare opportunity to acquire the premier office assets in Charlotte s most desired office submarket. The only offering of its kind in one of the nation s fastest growing markets, Capitol Towers presents investors with a truly generational investment opportunity.

6 ICONIC TROPHY OFFICE BUILDINGS NEW CONSTRUCTION BEST-IN-CLASS BUILDOUTS MARKET-LEADING AMENITY PACKAGE Capitol Towers features two newly constructed ten-story office assets, one standalone retail building, and one standalone medical office building totaling 477,704 SF. Featuring an iconic design, best-in-class buildouts, picturesque views of SouthPark and Uptown Charlotte, an attached seven-level structured parking deck, and a market-leading amenity package, the assets are the premier office buildings in Charlotte. NEW CONSTRUCTION The Property features attractive concrete and glass facades and a one-of-a-kind architectural design distinguishing it as one of Charlotte s iconic office destinations. Due to the development s design and focus on efficiency, Capitol Towers was awarded the distinguished LEED Gold Certification. Impressive lobbies, Class A interior finishes, and scenic outdoor patios, leave a lasting impression on tenants and visitors alike and will greatly benefit investors long-term leasing efforts. Moreover, as a newly constructed property, there will be no deferred maintenance for investors.

7 BEST-IN-CLASS BUILDOUTS Sterling Capital Management LLC Featuring floor-to-ceiling window lines, impressive reception areas, creative meeting spaces, modern breakrooms, private conference rooms, private patios, and attractive executive offices, Capitol Towers boasts some of the best tenant spaces in the market. Significant tenant investment in the spaces above the landlord offered tenant improvement packages, allows for these extremely attractive buildouts and demonstrates the current tenants long-term commitment to the asset. MARKET-LEADING AMENITY PACKAGE Dixon Hughes Goodman LLP Capitol Towers offers the top amenity package in the Charlotte market featuring a state-of-the-art on-site fitness center, upscale men s and women s locker rooms with showers, a shared executive conference room with a retractable door allowing for up to 170 person meeting, a highly-coveted co-working suite with WIFI, and a shared kitchen and snack area. In addition, the assets feature an attached seven-level parking deck offering lower level executive parking, the upscale SouthPark Grill restaurant, and the extremely popular Legion Brewery. These competitive advantages allowed ownership to rapidly lease-up the asset and will provide investors with the ability to fully stabilize the Property, retain existing tenants, and attract new tenants for the long-term. Amenity Center Amenity Center Amenity Center

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9 RETAIL DESTINATIONS TRANSFORMING CAPITOL TOWERS SouthPark Grill: Founded by the successful local restaurateur Greg McIntosh, who previously owned McIntosh s Steaks & Seafood, SouthPark Grill offers a seasonal menu of classic American fare. SouthPark Grill offers full-service lunch and dinner options with brunch available on weekends. The restaurant features an inviting contemporary environment with brass accents and a scenic outdoor patio area and can accommodate up to 270 guests. SouthPark Grill provides tenants with a convenient fine dining option and a lively bar for drinks after work. Legion Brewing Company: Opening in the Fall of 2018, Legion Brewing Company is one of Charlotte s top-ranked breweries and will serve as the first brewery in SouthPark. The location will boast a fullservice restaurant, outdoor beer garden, and nearly 4,000 SF of event space. Legion Brewery will be a major influence at Capitol Towers and in the SouthPark neighborhood as the wildly popular brewery will attract millennials and add a trendy concept to the Property that will be a true value enhancement for investors. Moreover, tenants will greatly benefit from Legion Brewing as it provides an ideal client entertainment destination or company happy hour option with casual drinks and dining. SILVER MEDAL IRISH DRY STOUT - WORLD BEER CUP (2018)

10 DIVERSE, INVESTMENT GRADE TENANT ROSTER FEATURING EXCEPTIONAL REMAINING TERM Capitol Towers features an impressive tenant roster anchored by investment grade tenants with attractive remaining term. Representing a broad range of industries, serving as the Headquarters for a number of creditworthy tenants, and boasting more than eleven years of weighted average lease term, Capitol Towers is well positioned to mitigate downturn economic risk presenting investors with highly-coveted long-term stability. As a result, Capitol Towers offers the most core tenant roster in the Charlotte market. (3%) (4%) (2%) (2%) HEADQUARTER TENANTS (53% OF TOTAL RSF) Albemarle Corporation (NYSE: ALB; Moody s: Baa2; HQ) Dixon Hughes Goodman LLP (HQ) Sterling Capital Management LLC (HQ) Lincoln Derr (HQ) Eagle Marsh Holdings (HQ) OTHER NOTABLE TENANTS Citizens Bank, N.A. (Moody s A1) JPMorgan Chase Bank, N.A. (NYSE: JPM; Moody s: A3) Novant Medical Group (Moody s: A1) MassMutual Life Insurance, N.A. (Moody s: Aa2) (11%) (14%) (25%) (39%) CHEMICALS & MANUFACTURING ACCOUNTING & FINANCIAL SERVICES BANKING INSURANCE FOOD & RETAIL OTHER LAW MEDICAL 67% LEASED TO CREDITWORTHY TENANTS DIVERSE TENANT ROSTER MITIGATING DOWNTURN RISK 11.4 YEARS WEIGHTED AVERAGE LEASE TERM

11 Albemarle Corporation CAPITOL TOWERS MAJOR TENANTS BREAKDOWN Albemarle Corporation SF 162,368 % of Property 34.0% Dixon Hughes Goodman LLP SF 48,692 % of Property 10.2% Sterling Capital Management LLC SF 32,211 % of Property 6.7% Dixon Hughes Goodman LLP Industry Chemicals & Manufacturing Industry Accounting Industry Financial Services Notable Information NYSE: ALB, Moody s: Baa2 Notable Information SE s largest accounting firm Notable Information $65 Billion of AUM, HQ Remaining Term 15 Years Remaining Term 12 Years Remaining Term 11 Years JPMorgan Chase Bank, N.A. MassMutual Life Insurance, N.A. Citizens Bank, N.A. SF 31,076 SF 25,123 SF 24,709 % of Property 6.5% % of Property 5.3% % of Property 5.2% Industry Banking Industry Insurance Industry Banking Notable Information NYSE: JPM, Moody's: A3 Notable Information Moody s: Aa2 Notable Information Moody's: A1 Remaining Term 10 Years Remaining Term 6 Years Remaining Term 8 Years Mass Mutual Life Insurance

12 CHARLOTTE S PREMIER UPSCALE URBAN HUB Capitol Towers is ideally positioned within Charlotte s renowned SouthPark submarket. Known for its upscale retail offerings, affluent neighborhoods, and host of recreational areas, SouthPark has established itself as a premier location for businesses and residents alike. Capitol Towers provides its users with an abundance of amenities within a one-mile radius including 65+ restaurants, 1,200+ hotel rooms, and 3,000+ multi-family apartment units. Notable shopping destinations within a short drive of the Property include the SouthPark Mall, the largest mall in the Carolinas owned and operated by Simon Property Group, Specialty Shops SouthPark, Morrison Shopping Center, Phillips Place, and Sharon Corners. Additionally, the Property is just minutes away from Myers Park Country Club, Symphony Park, and the Harris and Harris Express YMCAs. Over $800 million of commercial development has created this upscale urban hub and investors will greatly benefit from continued investment in the area as Capitol Towers is the new center-piece of SouthPark. In addition, Capitol Towers SouthPark location offers convenient access to the region s major thoroughfares including I-77, I-85, and I-485. As a result, Capitol Towers benefits from excellent local and regional connectivity placing users just 10 minutes from Charlotte s CBD and 15 minutes from the Charlotte Douglas International Airport. EXECUTIVE COMMUNITIES WITHIN 3 MILES OF CAPITOL TOWERS MYERS PARK EASTOVER FOXCROFT WENDOVER-SEDGEWOOD COTSWOLD BARCLAY DOWNS QUAIL HOLLOW MOUNTAINBROOK PROVIDENCE CROSSING 77 PARK ROAD PARK QUAIL HOLLOW QUAIL HOLLOW COUNTRY CLUB RESIDENCE INN MARION DIEHL PARK PIEDMONT TOWN CENTER YMCA M&S CLEANERS TERRACE CAFE TACO MAC FRESHII SALON VIVACE HILTON GARDEN INN CHARLOTTE DOUGLAS INTERNATIONAL AIRPORT (15 Minute Drive) PARK ROAD SHOPPING CENTER AMC THEATRES SHAKE SHACK HARRIS TEETER GNC MICHAEL S CANTINA 1511 BARCLAY DOWNS RENAISSANCE SOUTHPARK HOTEL SHARON CORNERS HOMEGOODS HARPER S RESTAURANT THE ORIGINAL PANCAKE HOUSE CAPITOL TOWERS WHOLE FOODS 544.7% MORE HOUSEHOLDS WITHIN 1 MILE OF CAPITOL TOWERS SINCE 2010 SHARON ROAD SOLIS SOUTHPARK

13 77 EASTOVER CHARLOTTE CBD (10 Minute Drive) FREEDOM PARK MYERS PARK WENDOVER-SEDGEWOOD MYERS PARK COUNTRY CLUB COTSWOLD MARRIOTT SOUTHPARK SPECIALTY SHOPS SOUTHPARK PURE BARRE WILLIAMS-SONOMA TALBOTS TOSCANA RISTORANTE FOXCROFT INSPIRE SOUTHPARK DOUBLETREE HILTON THE RESIDENCE AT SOUTHPARK SOUTHPARK MORRISON SOUTHPARK MALL BELK NORDSTROM DILLARD S DICK S SPORTING GOODS NEIMAN MARCUS FAIRVIEW ROAD APPLE CRATE & BARREL BURBERRY KATE SPADE MICHAEL KORS MOUNTAINBROOK APEX SOUTHPARK UNDER DEVELOPMENT PROVIDENCE CROSSING MORRISON SHOPPING CTR FIREBIRDS BARNES & NOBLE EARTH FARE GROCERY YAFO KITCHEN AMENITY HOUSING HOTEL DINING & RETAIL EXECUTIVE NEIGHBORHOODS SOUTHPARK RADIUS OF CAPITOL TOWERS DEMOGRAPHICS 1 MILE 3 MILE CHARLOTTE MSA Average Household Net Worth $1,091,781 $946,092 $788,165 $571,221 Average Family Income $242,382 $204,521 $161,316 $101,749 Median Home Value $435,223 $469,127 $375,044 $189,127 College Educated Population 72.3% 61.6% 60.9% 34.2% Unemployment Rate 1.2% 1.7% 2.5% 1.7%

14 CHARLOTTE S MOST PRESTIGIOUS OFFICE SUBMARKET DEMONSTRATING EXCEPTIONAL HISTORICAL PERFORMANCE Capitol Towers presents investors with the rare opportunity to acquire the premier office product in one of Charlotte s top performing submarkets. Over the past ten years, SouthPark has consistently outperformed the broader Charlotte market in the Class A office space as occupancy and average rental rates demonstrate the above-market fundamentals achieved in SouthPark. The average 10-year historical occupancy in SouthPark is an impressive 91%, in comparison to 86% for the overall Charlotte market. This includes the period immediately following the recession during which SouthPark fundamentals remained strong, well above the Charlotte market, which is a testament to the submarket s diverse tenant base and consistent demand mitigating the impact of an economic downturn. Moreover, SouthPark clearly demonstrates premium rental rates when compared with the overall market as Class A space has demanded an average rental rate premium of 14.3% above Charlotte market rates since During this same time period, SouthPark has experienced a remarkable 37% increase in rental rates leading all Charlotte submarkets in terms of rent growth. Market fundamentals continue to tighten in SouthPark as a current occupancy of 92% and average rental rate of $32.57/SF rank at the top of the Charlotte market providing investors with an ideal acquisition environment backed by strong fundamentals. Moreover, the delivery of Capitol Towers has supported additional rent growth in SouthPark as the Property is demanding some of the highest rental rates in the Charlotte market at $37.50/SF. SOUTHPARK - ACHIEVING TOP CLASS A RENTAL RATES IN CHARLOTTE SUBMARKET INVENTORY VACANCY RATE AVG. CLASS A RATES 5-YEAR RENT GROWTH SF UNDER CONSTRUCTION CBD 21.8M SF 9.80% $ % 1.6M SF SouthPark 5.1M SF 8.50% $ % 0 SF Midtown/SouthEnd 6.2M SF 3.70% $ % 800K SF Market 124M SF 7.10% $ % 3.3M SF SOUTHPARK CONSISTENTLY OUTPERFORMING THE MARKET CAPITOL TOWERS SOUTHPARK OCCUPANCY - CLASS A SOUTHPARK RENT - CLASS A MARKET OCCUPANCY (EXCLUDING SOUTHPARK) - CLASS A MARKET RENT (EXCLUDING SOUTHPARK) - CLASS A

15 CLASS A SOUTHPARK OFFICE COMPETITIVE SET # Property/Owner SF Occupancy Asking Rate 1 SouthPark Towers I 6100 Fairview Rd Owner: CalSTRS 226,706 93% $ SouthPark Towers II 6000 Fairview Rd Owner: CalSTRS 291,650 88% $ Piedmont Town Center One 4720 Piedmont Row Dr Owner: Principal Financial Group 212, % $ Piedmont Town Center Two 4725 Piedmont Row Dr Owner: Principal Financial Group 205,000 73% $ Rotunda Building 4201 Congress St Owner: Equus Capital Partners 230,790 88% $ One Morrocroft Centre 6805 Morrison Blvd Owner: Clarion Partners 93, % $ Two Morrocroft Centre 4064 Colony Rd Owner: Clarion Partners 95,918 97% $ Three Morrocroft Centre 6801 Morrison Blvd Owner: Clarion Partners 101,259 96% $ Carnegie Point 6101 Carnegie Blvd Owner: ICM Realty Group 107,405 77% $ MORRISON BOULEVARD SOUTHPARK MALL BARCLAY DOWNS DRIVE CAPITOL TOWERS THE COLONY REDEVELOPMENT 25 ACRES MIXED-USE PROPOSED 250,000 SF OFFICE 300,000 SF RETAIL 990 RESIDENTIAL UNITS 225 HOTEL ROOMS 5 9 CARNEGIE BOULEVARD SOUTHPARK - CHARLOTTE S PREMIER OFFICE SUBMARKET INSTITUTIONAL REAL ESTATE OWNERSHIP MAJOR CORPORATE OPERATIONS HIGHEST CLASS A RENTAL RATES IN CHARLOTTE LIMITED COMPETING SPACE AVAILABLE

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17 UPSIDE POTENTIAL PARKING REVENUE RETAIL OPPORTUNITY REDUCE BASIS This core investment offering provides prospective investors with a stable cash flowing asset as well as a unique opportunity for upside potential through an extremely attractive parking revenue opportunity, an additional retail concept, and the prospect of reducing the investment basis through the sale of the Novant medical office building. PARKING REVENUE: Ownership is currently providing free parking to tenants for both unreserved and executive reserved parking, presenting a tremendous upside opportunity for investors to generate long-term tenant parking income. Historically, the SouthPark submarket has not charged for tenant parking however given the area s urban infill location and robust tenant demand, Landlords are gaining leverage in leasing negotiations making charged parking a real prospect in the near term future. Please see the Parking Assumptions in the financial section for additional detail. RETAIL OPPORTUNITY: In the parking deck at Capitol Towers, there is an opportunity to build up to ~9,000 SF of retail space and ~2,200 SF of storage space in order to maximize value through an additional revenue stream at the property. Current ownership has received interest from a variety of prospects including fitness, dining, and salon users as well as a small grocer, demonstrating the viability of this unrealized value enhancement potential. Please see the Parking Garage Retail Analysis in the financial section for additional detail. REDUCE BASIS: Investors have the opportunity to reduce their basis in the Property by subdividing the Novant Medical Group 7,500 SF building from the existing parcel and selling the asset separately, taking advantage of an aggressively low cap rate environment in the medical office space. With a 10-year lease to the investment grade Novant Medical Group (Moody s: A1), this medical office opportunity would be aggressively pursued in a one-off transaction.

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19 INVESTMENT ADVISORS RYAN CLUTTER Senior Managing Director SCOT HUMPHREY Senior Director CHRIS LINGERFELT Director ZACK DROZDA Director ANALYSTS WILLIAM MORRIS Associate WILLIAM MANN Real Estate Analyst DEBT + STRUCTURED FINANCE TRAVIS ANDERSON Senior Managing Director tanderson@hfflp.com LEASING CONTACT 201 NORTH TRYON STREET SUITE 1400 CHARLOTTE, NORTH CAROLINA SIX FORKS ROAD SUITE 876 RALEIGH, NORTH CAROLINA CAMPBELL WALKER Lincoln Harris Senior Vice President campbell.walker@lincolnharris.com

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