Chick-fil-A (Ground Lease)

Transcription

1 UPTOWN HOUSTON DOWNTOWN HOUSTON (Approx. 8 Miles Northeast) THE GALLERIA MALL 2.4M Total SF & 400+ Retailers I-610 (270,111 VPD) US HWY 59/I-69 (352,431 VPD) WESTPARK DR (36,956 VPD) TEXAS MEDICAL CENTER (Approx. 8 Miles Southeast) S. RICE AVE (20,058 VPD) NE Subject Property Photos Offering Memorandum Chick-fil-A (Ground Lease) Uptown Crossing Houston, Texas Subject Property Rendering One-of-a-kind Generational Hold Acquisition Opportunity Less Than 1 Mile from The Galleria Mall Largest Shopping Center in Texas & 4th Largest Nationally

2 Confidential Disclaimer This Confidential Memorandum has been prepared by Stan Johnson Company ( SJC ) and is being furnished to you solely for the purpose of your review of the commercial property located at 5405 South Rice Avenue in Houston, Texas (the Property ). The material contained in this Offering Memorandum shall be used for the purposes of evaluating the Property for acquisition and shall not be used for any purpose or made available to any other person without the express written consent of Stan Johnson Company ( Broker ). By accepting the Confidential Memorandum, you acknowledge and agree that: (1) all of the information contained herein and any other information you will be receiving in connection with this transaction, whether oral, written or in any other form (collectively, the Materials ), is confidential; (2) you will not reproduce the Confidential Memorandum in whole or in part; (3) if you do not wish to pursue this matter, you will return this Confidential Memorandum to SJC as soon as practicable together with all other materials relating to the Property which you may have received from SJC; and (4) any proposed actions by you which are inconsistent in any manner with the foregoing agreements will require the prior written consent of SJC. This Confidential Memorandum has been prepared by SJC, based upon certain information pertaining to the Property and any information obtained from SJC to assist interested parties in making their own evaluation of the Property is offered on a no representation or warranty provision other than customary warranties of title and is sold on an as-is, where-is basis and with all faults. The material and transaction does not purport to be all inclusive. This Confidential Memorandum contains descriptive materials, financial information and other data compiled for the convenience of parties interested in the Property. The Materials are being delivered by SJC to prospective investors with the understanding that it is not all inclusive and that it is qualified in its entirety by independent investigation by prospective investors of those matters which they deem appropriate in evaluating this offering without reliance upon SJC, the Broker or any of their respective affiliates or any of the information set out in the Materials. Neither SJC, the Broker, nor any of their respective affiliates have independently verified any of the information contained herein or in any of the Materials, and no representations or warranties as to the accuracy or completeness thereof or of any other kind whatsoever are made or intended and none should be inferred. SJC, for itself and its affiliates of the Property, expressly disclaim any and all liability for statements or representations, express or implied, contained herein or for omissions from the Materials or for any other written, oral or other format of communication transmitted to a prospective investor in the course of its evaluation of the proposed transaction. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. The terms and conditions described herein are subject to change without notice. This Confidential Memorandum does not constitute an offer to accept any investment proposal but is merely a solicitation of interest with respect to the investment described herein. The Confidential Memorandum does not constitute an offer of security. The investment described herein may be financed or withdrawn from the market, without prior notice. By accepting this Confidential Memorandum you agree to release SJC and hold it harmless from any kind of claim, expense, or liability arising out of your discovery or purchase of the Property. SJC reserves the right to request the return of the Materials at any time. Ownership of the Property reserves the right to negotiate with one or more prospective investors at any time. Page 2

3 Table of Contents Section 1: About the Investment Investment Summary & Investment Highlights 5 Rendering 6 Pricing & Property Overview 7 Rent Roll & Income Statement 8 Lease Abstract & Rent Schedule 9 Tenant Overview 10 Site Plan 11 Section 2: Location Information Retail Aerial Map 13 Subject Aerial Photos 14 Retail & Business Map 15 Location Overview 16 Uptown Houston Market Overview 17 Houston Retail Overview 18 Houston Hotel & Hospitality Overview 19 Demographics 20 Offered Exclusively By Brandon Duff Regional Director bduff@stanjohnsonco.com Brad Feller Senior Director bfeller@stanjohnsonco.com Isaiah Harf Associate Director iharf@stanjohnsonco.com Jim Gibson Regional Director jgibson@stanjohnsonco.com TX Lic. # Todd Moore Associate Director tmoore@stanjohnsonco.com Marc Peeler Associate mpeeler@stanjohnsonco.com Stan Johnson Company 303 East Wacker Drive Suite 1111 Chicago, Illinois P: F: Stan Johnson Company Richmond Ave Suite 740 Houston, TX P: F: Page 3

4 Section 1: About the Investment I-610 (270,111 VPD) US HWY 59/I-69 (352,431 VPD) WESTPARK DR (36,956 VPD) S. RICE AVE (20,058 VPD) NE Page 4

5 Investment Summary Stan Johnson Company is pleased to exclusively offer for sale to qualified investors, the opportunity to purchase a 100% fee-simple interest in the ground leased commercial property located at 5405 South Rice Avenue in Houston, Texas (the Property ). The Property is currently under construction and will open as a Chick-fil-A restaurant in Q Roughly eight miles west of downtown Houston, the Property is a part of Uptown Crossing the new Walmart-anchored development adjacent to the I-69 and I-610 interchange. The Property is to be 4,791 SF and will be complete with a drive-thru and parking for 53 vehicles. The Property is leased to and corporately guaranteed by Chick-fil-A, Inc. The 15-year base lease commenced in December 2015 and features 10% rental increases every five years through the duration of the base lease, as well as at the start of each of five, five-year renewal option periods. The lease is Absolute NNN with no landlord responsibility. Uptown Crossing is a 38-acre mixed-use development anchored by Walmart Supercenter, directly across from Sam s Club and adjacent to the Uptown District of Houston, the 14th largest business district in the United States. Uptown is home to more than 180,000 people and offers 28+ million square feet of office space, 34 hotels and 5+ million square feet of retail space, including the Galleria, the 4th-largest retail complex in the country which draws more than 24 million people annually. Chick-fil-A is an American restaurant chain currently operating over 1,850 locations across 38 states and the District of Columbia. It is the industry leader in average sales per restaurant with an annual location sales average of $2.7 million. According to Technomic Inc. s annual report on the top U.S. restaurant organizations, Chick-fil-A logged sales of $5.7 billion in 2014 an 11.8% increase from the company s $5.1 billion in sales in Investment Highlights One-of-a-kind & Generational Hold Acquisition Opportunity The Property provides an investor the rare opportunity to secure a passive netlease investment, while at the same time acquiring premier urban infill real estate in Houston, Texas, one of the most sought after markets in the United States. Absolute NNN Lease Chick-fil-A is currently operating under a new 15- Year Absolute NNN Ground Lease with zero landlord responsibility for the duration of the base lease and renewal option periods. Excellent Real Estate Fundamentals & Residual Value Development is located on Rice Avenue along the Westpark Tollway, just west of downtown Houston and in close proximity to three of Houston s most prestigious and densely populated neighborhoods the Galleria, West University and Bellaire. Attractive Rental Escalations Property features 10% rental increases every 5 years throughout the base term, as well as in each option period. Outstanding Tenant Profile Chick-fil-A is the industry leader in average sales per restaurant, making an annual average of $2.7 million. The company logged sales of $5.7 billion in 2014, which represented an 11.8% increase from its $5.1 billion figure in Outparcel to Newly Constructed Walmart Supercenter Property is an outparcel of the brand new Uptown Crossing development anchored by Walmart. Additional tenants in center include MicroCenter Computer & Electronics, Starbucks, AT&T, Mattress Firm, Jack in the Box, El Pollo Loco, two medical offices and a TownPlace Suites by Marriott hotel. High Visibility & Superior Traffic Counts The Uptown Crossing site is located at the interchange of Interstate 69 and Interstate 610 with on- and off-ramps to each nearby. Combined traffic counts are in excess of 679,500 VPD. Exceptional Demographics Property will benefit from a population in excess of 200,000 and average household income of over $108,600 within a 3-mile radius. Page 5

6 Subject Property Rendering Construction Complete Q Page 6

7 Pricing Overview 5405 S Rice Avenue Houston, TX Offering Price: $2,933,333 Offering Cap Rate: 3.75% Year 1 Annual Rent: $110,000 Tenant/Guarantor: Property Type: Ownership Interest: Encumbrances: Chick-fil-A, Inc. Free-Standing QSR Fee Simple in Ground Lease None, Delivered Free & Clear Property Overview Building Size (SF): Land Area (Acres): +/- 4,791 SF +/ Acres Year Built: 2016 (1) Parking: 53 Spaces (1) Property has been delivered to Tenant and rent has commenced. Currently, Tenant is constructing their improvements to be completed Q N Page 7

8 Rent Roll & Income Statement Rent Roll Tenant Building SF Lease Term Year Monthly Base Rent Annual Base Rent Annual Rent PSF Rental Increase Lease Type Renewal Type 1-5 $9,167 $110,000 $ $10,083 $121,000 $ % $11,092 $133,100 $ % Chick-fil-A, Inc. +/- 4,791 SF 15 Years (Option 1) $12,201 $146,410 $ % (Option 2) $13,421 $161,051 $ % Absolute NNN Ground Lease 5, 5-year Options (Option 3) $14,763 $177,156 $ % (Option 4) $16,239 $194,871 $ % (Option 5) $17,863 $214,358 $ % *Lease corporately guaranteed by Chick-fil-A, Inc. Income Statement Investment Year Revenue Chick-fil-A Rental Income $110,000 $110,000 $110,000 $110,000 $110,000 $121,000 $121,000 $121,000 $121,000 $121,000 Total Revenue $110,000 $110,000 $110,000 $110,000 $110,000 $121,000 $121,000 $121,000 $121,000 $121,000 CASH FLOW BEFORE DEBT SERVICE $110,000 $110,000 $110,000 $110,000 $110,000 $121,000 $121,000 $121,000 $121,000 $121,000 *Lease is Absolute NNN with Tenant responsible for Pro Rata Share of CAM for Shopping Center (RET & Insurance are separately assessed). See lease abstract for further details. Page 8

9 Chick-fil-A Lease Abstract Tenant/Guarantor: Chick-fil-A, Inc. Address: 5405 South Rice Avenue Houston, TX Building Size (SF): +/- 4,791 SF Lot Size (Acres): +/ Acres Year Built: 2016 Lease Commencement: September 30, 2015 Rent Commencement: December 1, 2015 Lease/Rent Expiration: November 30, 2030 Base Lease Term: 15 Years Base Lease Term Remaining: 15 Years Annual Base Rent: $110,000 Base Rent PSF: $22.96 PSF RENT SCHEDULE Years Dates Annual Rent Monthly Rent /1/ /30/2020 $110,000 $9, /1/ /30/2025 $121,000 $10, /1/ /30/2030 $133,100 $11,092 Option /1/ /30/2035 $146,410 $12,201 Option /1/ /30/2040 $161,051 $13,421 Option /1/ /30/2045 $177,156 $14,763 Option /1/ /30/2050 $194,871 $16,239 Option /1/ /30/2055 $214,358 $17,863 Rent Increases: Renewal Options: Renewal Notice: Option Increases: Lease Type: Landlord Responsibilities: 10% Increase Every 5 Years 5, 5 Year Options 6 Months 10% Increase at Start of Each Option Absolute NNN (Tenant to Pay Pro Rata Share of CAM; RET & INS Separately Assessed) None Pro Rata Share**: 16.1% *Property has been delivered to Tenant and rent has commenced. Currently, Tenant is constructing their improvements to be completed Q **Calculated by 53,012 (square footage of land) divided by 330,286 (square footage of developer tract of land). **CAM expenses not to exceed $1,000 per year during first year, and will not increase by more than 10% during each successive 5-year period thereafter. Page 9

10 Tenant Overview - Chick-fil-A Chick-fil-A is an American fast food restaurant chain headquartered in the Atlanta suburb of College Park in Georgia. Specializing in chicken sandwiches, Chick-fil-A is frequently associated with the Southern United States and has become a cultural icon. Today, the chain operates over 1,850 restaurants in 38 U.S. states and the District of Columbia, and is focusing future growth in the American Midwest, Southern California, the Philippines, South Korea and Alberta. In 2010, Chick-fil-A took the industry lead in average sales per restaurant, making an annual average of $2.7 million (McDonald s was second with $2.4 million per restaurant). The company s culture is strongly influenced by its founder s Southern Baptist beliefs, and unlike most fast food restaurants and retail chain stores across the country, all Chick-fil-A locations are closed for business on Sunday. The chain s origin can be traced to the Dwarf Grill, a restaurant opened in 1946 by S. Truett Cathy, the chain s former Chairman and CEO. After 15 years, Cathy found a pressure-fryer that could cook the chicken sandwich in the same amount of time it took to cook a fast-food hamburger. Following that discovery, he registered the name Chick-fil-A, Inc., as well as the slogan, We Didn t Invent the Chicken, Just the Chicken Sandwich. In 1967, the first Chick-fil-A opened in the food court of the Greenbriar Mall, and subsequently expanded by opening new franchises in suburban malls food courts. The first freestanding franchise was opened in 1986, and the company began to focus more on this type of operation. Today, Chick-fil-A s can be found as stand-alone locations, drive-thru only locations or food court locations in malls, universities, hospitals and airports. Chick-fil-A uses a business model significantly different from other restaurant franchises, most notably retaining ownership of each restaurant. Chick-fil-A selects the restaurant location, builds it and retains ownership. While franchisees from competing chains pay almost $2 million up front to open a franchise, Chick-fil-A franchisees need only a $5,000 initial investment to become an operator. The company annually gets 10,000-25,000 applications from potential franchise operators for the slots they open each year. On the back end, Chick-fil-A gets a larger share of revenue from its franchises than other chains, but the formula works well for operators. Franchisees make an average of $190,000 per year. Beyond restaurant operations, Chick-fil-A has been the title sponsor of the Peach Bowl since 1994, an annual college football game played in Atlanta on New Year s Eve. Additionally, the company is heavily involved in SEC and ACC intercollegiate athletics. Company: Type: Industry: Founded: TENANT PROFILE Chick-fil-A, Inc. Private No. of Locations: 1,850+ Sales (FY2014): Sales (FY2013): Sales (FY2012): Headquarters: Key People: Website: Fast Food Restaurants 1946 (Dwarf Grill) $5.7 billion $5.1 billion $4.6 billion College Park, Georgia Dan T. Cathy (Chairman & CEO) According to Technomic Inc. s annual report on the top U.S. restaurant organizations, Chick-fil-A logged sales of $5.7 billion in 2014 an 11.8% increase from the companies $5.1 billion in sales in Page 10

11 Site Plan WESTPARK DR (36,956 VPD) Sam s Club directly West of Uptown Crossing Shopping Center Thoroughfare Vehicles Per Day S. Rice Ave: 20,058 VPD West Park Dr: 36,956 VPD US Hwy 59/ I-69: 352,431 VPD I- 610: 270,111 VPD Total: 679,556 VPD S. RICE AVE (20,058 VPD) N Page 11

12 UPTOWN HOUSTON Section 2: Location Overview NE Page 12

13 UPTOWN HOUSTON The Centre at Post Oak Westheimer Rd. (61,454 VPD) Houston Galleria I-610 (270,111 VPD) THE ART INSTITUTE OF HOUSTON LAKEWOOD CHURCH US HWY 59/I-69 (352,431 VPD) Westpark Dr. (24,061 VPD) FOX 26 HOUSTON COCA-COLA BOTTLING CO. Weslayan Plaza Shopping Center Rice Ave (16,607 VPD) HOUSTON COMMUNITY COLLEGE CHEVRON CORPORATION Page 13

14 Subject Property - Looking Northwest Subject Property - Looking Southwest Subject Property - Looking Southeast Subject Property - Looking Southeast Page 14

15 N N Page 15

16 Location Overview Houston is a city in and the county seat of Harris County in the state of Texas. It is the most populous city in Texas and the fourth most populous city in the United States. As of 2010, the city had a population of 2,100,263, representing a 7.5% increase since 2000 and continuing a trend a population growth in every decade since record-keeping began in Houston is the main component of the Houston-Woodlands-Sugar Land Metropolitan Statistical Area that stretches across nine counties and includes a population of over six million, making it the fifth most populated MSA in the country. Relative to other major U.S. markets, Houston continues to display solid fundamentals with projected positive growth that outperforms the nation. The city has one of the strongest economies in the country, derived from the city s ability to retain its position as the center of the world s energy industry, maintain conservative construction levels, diversify its economic base and enjoy rising employment and continuous population growth. Offering an unsurpassed pro-business environment, Houston is one of the least-expensive major cities to conduct business in and features a stable, yet dynamic economy. Galleria One Shopping Center Mission Control Center - NASA This economy is rooted in a broad industrial base in sectors such as energy, manufacturing, health care, aeronautics and transportation. It is the top U.S. market for exports, recently passing New York City, and in 2012, the Houston-Woodlands-Sugar Land MSA GDP was $449 billion, the fourth-largest of any metropolitan area in the United States. In fact, only 26 other countries have a GDP exceeding that of the Houston metro area. As of 2013, 24 Fortune 500 companies were headquartered in Houston. Only New York City can claim more with over 50. Some of these companies include Phillips 66, ConocoPhillips, Enterprise Products Partners, Sysco, Plains All American Pipeline, Halliburton, Baker Hughes, National Oilwell Varco, Apache, Marathon Oil and Waste Management, among others. Other major employers include Memorial Hermann Healthcare, Continental Airlines, the University of Texas Anderson Cancer Center, ExxonMobil, Shell Oil, Kroger, The Methodist Hospital, the University of Texas Medical Branch at Galveston, Baylor College of Medicine, HP, Aramark and Chevron. Lovett Hall - Rice University Houston is frequently awarded and recognized as the tremendous city it is. In 2006, the Houston metropolitan area ranked first in Texas and third in the U.S. on Forbes list of Best Places for Business and Careers. In 2008, the city received top ranking on Kiplinger s annual Best Cities list which ranks cities on their local economy, employment opportunities, reasonable living costs and quality of life. In that same year, Houston ranked first on both the Forbes lists of Best Cities for College Graduates and Best Cities to Buy a Home. In 2012, the city was ranked #1 for paycheck worth by Forbes. And in 2013, it was identified as America s top city for employment creation, as well as designated by the U.S. Bureau of Statistics as the #1 city for job creation as it was not only the first major city to regain all jobs lost during the economic downturn, but after the crash, more than two jobs were added for every one lost. Downtown Houston, TX Page 16

17 Uptown Houston Market Overview The Property is positioned adjacent to the Uptown District of Houston, an area located 6.2 miles west of downtown at the intersection of Interstates 69 and 610. Uptown Houston is an urban community of exceptional beauty, sophistication, style and international prominence in the heart of Houston. Defined by its unique blend of prestigious business and residential addresses, with the best in shopping, hotels, dining and entertainment, Uptown Houston is one of the world s great urban centers. BUSINESS DISTRICT At more than 28 million square feet of commercial office space, the Uptown District is the 14th-largest business district in the United States, comparable in size to the downtowns of Denver and Pittsburgh. The district is home to approximately 2,000 companies and represents more than 15% of Houston s total office space. Office Snapshot Five-Star, Class A International Community 90.4% Occupancy Rate (Q2 2015) Home to 2,000 Companies 28+ million SF of Commercial Office Space 14th-Largest Business District in U.S % of Houston s Total Class A Office Space Uptown Houston s Major Employers Air Liquide Aon International Energy Apache Corporation Bechtel Corporation BHP Billiton Blue Cross Blue Shield of Texas Cameron International Corporation Christus Health Clear Channel Communications GE Energy GDF SUEZ Energy Hines REIT Landry s Restaurants, Inc. NetIQ Corporation Panhandle Energy Spectra Energy Corporation Stewart Title Company Symantec Corporation Weatherford International Ltd. Williams NATION S LARGEST DOWNTOWNS Source: Grubb & Ellis; Commercial Gateway Downtown Houston, TX Westchase Business District - Houston, TX Page 17

18 Houston Retail Overview Uptown Houston is the shopping mecca of the Southwest, as more than 26 million people are drawn to the collection of stores at the Galleria (the 4th-largest retail complex in the U.S.) and the European-styled Uptown Park, as well as the new BLVD Place, Centre at Post Oak and Post Oak Shopping Center. Retail Snapshot Annual Gross Sales of $3.63+ Billion in 2014 Accounts for 10%+ of Houston Taxable Retail Sales 5+ Million SF of Retail Space 1,000+ Stores & 100+ Restaurants 99.9% Occupancy (Q2 2015) Home to 4 of the 7 AAA Ranked 4 Diamond Restaurants in Houston Galleria Area - Houston, TX Galleria Snapshot 4th-Largest Retail Complex in U.S. #1 Shopping & Tourist Attraction in Houston & the Southwest 24+ Million Annual Visitors Sales of $1,000+ PSF AVERAGE HOUSEHOLD INCOME COMPARISON The Galleria Mall - Houston, TX Source: Grubb & Ellis; Commercial Gateway The Galleria Mall - Houston, TX Page 18

19 Houston Hotel & Hospitality Overview Each year, more than 30 million visitors from around the globe come to Uptown Houston to experience the best in shopping, dining and business interaction. With more high quality, full-service hotels than any other district in Houston, Uptown offers lodging options from business class to premier luxury and everything between to serve everyone from the global traveler to the native Houstonian looking for a weekend getaway. Hotel Snapshot 30+ Million Annual Visitors 34 Hotels 7,800+ Hotel Rooms $313 Million in Hotel Room Revenue in 2014 Houston s Highest RevPAR (Revenue per Available Room) 77.1% Occupancy (Jun 15 Aug 15) 2013 HOTEL ROOM REVENUE RESIDENTIAL Uptown Houston is a community where the contemporary mingles beautifully with tradition and the scenic melds with the serene. The best in shopping and dining is at the front doors of residents in Uptown, and the living choices range from newlybuilt, upscale apartment complexes to luxurious high-rise condominiums and lofts, cozy patio homes and spaciously elegant town homes and estates. Source: Grubb & Ellis; Commercial Gateway Residential Snapshot 180,000+ Residents within 3-Miles 2,900+ Multi-Family Units Built Since Residential Towers of 30+ Stories 90% Apartment Occupancy 4,500 Class A Residential Units Coming Online within 18 Months Four Seasons Hotel - Houston, TX Page 19

20 Demographics 5405 S. Rice Avenue Houston, TX mi. 0-3 mi. 0-5 mi. Population 2015 Population 24, , , Population 26, , , Annual Rate 1.48% 1.27% 1.29% Annual Rate 1.70% 1.52% 1.50% Households 2015 Total Households 11,339 94, , Total Households 12, , , Annual Rate 1.17% 1.10% 1.18% Annual Rate 1.60% 1.48% 1.50% Housing Units by Age of Householder (2010 Census) Occupied Units Owner Occupied Units Number % of Occupied Total 10,667 2, % , % , % , % , % , % % % % 2015 Average Household Income $84,598 $108,637 $101,571 N Page 20

21 Brandon Duff Regional Director Brad Feller Senior Director Isaiah Harf Associate Director Jim Gibson Regional Director Lic. #TX: Todd Moore Associate Director Marc Peeler Associate Stan Johnson Company 303 East Wacker Drive Suite 1111 Chicago, Illinois P: F: Stan Johnson Company Richmond Avenue, Suite 740 Houston, Texas P: F: The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notice.

22 Approved by the Texas Real Estate Commission for Voluntary Use Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords. Information About Brokerage Services efore working with a real estate broker, you should Bknow that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner s agent by entering into an agreement with the owner, usually through a written - listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner s agent anything the buyer would not want the owner to know because an owner s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer s agent anything the owner would not want the buyer to know because a buyer s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensee s records. Buyer, Seller, Landlord or Tenant Date Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a question or complaint regarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas or EQUAL HOUSING OPPORTUNITY 01A TREC No. OP-K