YORKSHIRE PLACE YORKSHIRE PLACE 1

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1 YORKSHIRE PLACE A T I M P E R I A L C E N T E R R A L E I G H - D U R H A M N O R T H C A R O L I N A YORKSHIRE PLACE 1

2 EXECUTIVE SUMMARY 1

3 YORKSHIRE PLACE INVESTMENT OPPORTUNITY 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 Yorkshire Place, an 80,728 square foot, Class A office asset located in Raleigh-Durham's premier business park, Imperial Center. Ideally positioned in the center of the flourishing Raleigh-Durham market, the asset is 100% leased to an attractive tenant roster anchored by the Research Triangle s core industries. This fully stabilized investment opportunity features a weighted average remaining lease term of just under four years and is positioned for long-term success with an ideal location in the Research Triangle Park/Interstate 40 (RTP/I-40) submarket, Raleigh-Durham s top-performing submarket. Additionally, current in-place rents are approximately 7% below market, creating an excellent mark-to-market opportunity when current leases expire. Yorkshire Place presents investors with a unique opportunity to acquire an institutionally maintained, Class A asset at a discount to replacement cost in the country s fastest growing metropolitan area since YORKSHIRE PLACE 2

4 EXECUTIVE SUMMARY 3

5 N o. 01 EXECUTIVE SUMMARY investment highlights YORKSHIRE PLACE 4

6 A BEST-IN-CLASS, FULLY OCCUPIED ASSET LOCATED IN THE PRESTIGIOUS IMPERIAL CENTER BUSINESS PARK, FEATURING A NUMBER OF EXPANDING TENANTS OFFERING, LONG- TERM STABILITY, AND STABLE CASH FLOWS INVESTMENT SUMMARY OVERVIEW INVESTMENT SUMMARY BEST-IN-CLASS OFFICE ASSET Yorkshire Place offers the opportunity to acquire a Class A asset located in one of Raleigh-Durham s premier office parks featuring a center-of-the-market location and a market leading amenity package. This premier investment offering features a Research Triangle oriented tenant roster, offering investors a stabilized cash flowing asset in the flourishing Raleigh-Durham market. ADDRESS RENTABLE BUILDING AREA NUMBER OF STORIES 3 YEAR BUILT 1997 NO. OF TENANTS 6 PERCENT OCCUPIED 100% WALT Yorkshire Place 4307 Emperor Blvd Durham, NC ,728 RSF 4 years FINANCIAL SUMMARY ATTRACTIVE TENANT ROSTER ANCHORED BY THE RESEARCH TRIANGLE S CORE INDUSTRIES INCREASINGLY URBAN INFILL LOCATION STABLE ASSET LOCATED IN EXTREMELY TIGHT RALEIGH-DURHAM MARKET BELOW MARKET RENTS OFFER MARK-TO-MARKET OPPORTUNITY A PREMIER BUSINESS PARK IN THE TRIANGLE FLOURISHING CENTER OF THE MARKET LOCATION THE GREAT RESURGENCE OF THE SUBURBS Year 1 NOI (projected) $1,182,100 Year 2 NOI (projected) $1,250,757 5 Year Avg. NOI (projected) $1,283,823 TOP TENANTS INDUSTRY RSF % OF PROPERTY Genesys Technology 42,112 52% Telecommunications LabCorp Healthcare 17,944 22% Triangle Council of Non-Profit 9,492 12% Governments Traffic Tech Technology 6,424 8% 75,972 94% EXECUTIVE SUMMARY 5

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8 INVESTMENT HIGHLIGHT N O.1 STABLE ASSET LOCATED IN EXTREMELY TIGHT RALEIGH-DURHAM MARKET Currently 100% leased, Yorkshire Place provides investors with the opportunity to acquire a fully stabilized asset in the tightening Raleigh-Durham market. Yorkshire Place offers investors a unique opportunity to purchase an asset that was developed and owned by one institutional owner. Moreover, Yorkshire Place is located in one of the region's premier business park, Imperial Center, which draws unprecedented tenant demand and consistently achieves higher than market rents for investors. With staggered near-term rollover, Yorkshire Place is well-positioned to retain existing tenants and attract new tenants to the property maintaining a stable cash flow and offering an exceptional investment opportunity in one of the country s fastest growing markets. INVESTMENT HIGHLIGHT N O.2 BELOW MARKET RENTS OFFER MARK-TO-MARKET OPPORTUNITY Current in-place rents are approximately 7% below market creating a compelling mark-to-market opportunity for a potential investor. The building's second largest tenant, LabCorp, has a lease expiration in 2018 so the opportunity to release this space is in the very near term. LabCorp's current in-place rental rate is just over $20 PSF which is over 13% below the current market rate. The historical stability of Imperial Center further compounds this opportunity, as downtime regarding vacant space has been limited throughout Imperial Center. EXECUTIVE SUMMARY 7

9 INVESTMENT HIGHLIGHT N O.3 A PREMIER BUSINESS PARK IN THE TRIANGLE IMPERIAL CENTER Imperial Center is Raleigh-Durham s largest premier business park with more than four million square feet of mixed-use space situated on 456 beautifully landscaped acres in the Triangle Region. Ideally positioned at the interchange of I-40 and I-540, Imperial Center is located at the epicenter of the Raleigh-Durham market offering unparalleled access to the area s main economic drivers, including the world-renowned Research Triangle Park and the RDU International Airport. As a result, the park attracts the region s top companies including QuintilesIMS, EMC Corporation, Biogen, BB&T, Pfizer, Fidelity Investments, LabCorp and Zoetis many of which have a long-standing history at the park. QuintilesIMS, the world's largest provider of drug development services to pharmaceutical and life sciences companies, is headquartered in a state-of-the-art, 252,000 square foot office building at the primary entrance to Imperial Center highlighting the prestigious reputation of the park. In addition to housing major operations of a number of Fortune 500 companies, Imperial Center supports the growth of numerous businesses local to the Triangle region. The diverse tenant base represents STEM-sector firms, the healthcare industry, and research organizations, all of which have strong ties to the Raleigh-Durham area. With 69 companies and over 5,000 employees in the park, Imperial Center is consistently recognized as one of the premier business parks in the Southeast. In addition to the ideal location and prominent tenant roster at the park, Imperial Center offers a market-leading amenity package including various dining options, multiple retail destinations, four name brand hotels, and a host of health & fitness amenities. Notable retail centers include the Shops at Imperial Point and the Shiloh Crossing Retail Center which collectively offer a Starbucks, Mez Contemporary Mexican Restaurant, Page Road Bar & Grill, Jimmy John s, Bruegger's Bagels, Sam s Club, Walmart, and a FedEx Office store. Imperial Center also includes a full-service Fitness Connection gym and well-maintained jogging trails that run throughout the park. Prospective investors have the opportunity to gain access to these rare competitive advantages in the highly competitive Raleigh-Durham office market, further strengthening the investment opportunity at Yorkshire Place. IMPERIAL CENTER'S INCREDIBLE HISTORICAL PERFORMANCE Imperial Center Occupancy ( YTD) YTD IMPERIAL CENTER 90.4% 91.1% 90.9% 94.6% 91.7% 99.1% 98.5% 98.7% NOTABLE TENANTS AT IMPERIAL CENTER YORKSHIRE PLACE 8

10 DURHAM 40 Research Triangle Park RALEIGH-DURHAM INTERNATIONAL AIRPORT YORKSHIRE PLACE Morrisville 40 UMSTEAD P ARK RALEIGH 440 INVESTMENT HIGHLIGHT YORKSHIRE PLACE IS PRIMED FOR SIGNIFICANT LONG-TERM SUCCESS AS UNPRECEDENTED GROWTH IN THE AREA RESULTS IN AN INCREASINGLY INFILLED LOCATION N O.4 FLOURISHING CENTER-OF-THE-MARKET LOCATION RALEIGH-DURHAM Yorkshire Place is strategically located at the geographic center of the Raleigh-Durham market, offering convenient access to Interstate 40 (0.5 mi) and Interstate 540 (1 mi), which are the area s two primary transportation arteries. As a result, this location affords easy commutes from Raleigh s primary residential nodes in Cary (8 mi), West Raleigh (13 mi), and North Raleigh (15 mi) as well as convenient access to the Raleigh-Durham International Airport (3 mi) and the world-renowned Research Triangle Park (3 mi). With an ideal south-rtp location, Yorkshire Place benefits from close proximity to some of the fastest growing communities in the country such as Apex, Morrisville, and Holly Springs. Recent economic expansion in the area, specifically in innovative industries, attracts an increasingly young population to the Triangle region as evidenced by Cary s recognition as a top ten city in the US for millennials. Access to a talented growing population supporting Raleigh-Durham s innovation hub positions Yorkshire Place as a premier office destination for new-to-market companies as well as local expansions, making investments such as this increasingly rare. Yorkshire Place is primed for significant long-term success as unprecedented growth in the area has resulted in an increasingly infilled location. The asset offers convenient access to over one million square feet of retail amenities within a five mile radius including the Shops at Imperial Point, the Shiloh Crossing Retail Center, and the Creekstone Crossing Shopping Center. Prominent power retail centers such as the Brier Creek Shopping Center (5 mi) and the Streets at Southpoint (7 mi) are also within a short drive of the property. EXECUTIVE SUMMARY 9

11 RDU INTERNATIONAL AIRPORT RESEARCH TRIANGLE PARK WILLIAM B. UMSTEAD STATE PARK (5,599 ACRES) 540 TO RALEIGH MARRIOTT HOTEL SHERATON HOTEL FITNESS CONNECTION PERIMETER PARK YORKSHIRE PLACE SHILOH CROSSING SHOPPING CENTER WALMART SAM'S CLUB BRUEGGER'S BAGELS HEADQUARTERS COMFORT SUITES WINGATE BY WYNDHAM IMPERIAL CENTER 40 DOUBLE TREE HOTEL HOTEL INDIGO THE SHOPS AT IMPERIAL POINT STARBUCKS MEZ MEXICAN RESTAURANT PAGE ROAD BAR & GRILL JIMMY JOHN'S FEDEX OFFICE STORE TO DURHAM / CHAPEL HILL HOMEWOOD SUITES S MIAMI BLVD YORKSHIRE PLACE 10

12 NON-PROFIT 12% HOSPITALITY 3% HEALTHCARE 22% INVESTMENT HIGHLIGHT N O.5 TECHNOLOGY 63% TENANT MAKEUP BY INDUSTRY ATTRACTIVE TENANT ROSTER ANCHORED BY THE RESEARCH TRIANGLE S CORE INDUSTRIES Yorkshire Place features an impressive tenant roster anchored by some of the Research Triangle s core industries such as healthcare and technology. The asset contains a blend of rapidly expanding regional companies and well established national firms. With over 80% of the property leased to healthcare and technology companies, the tenant roster is strongly tied to the flourishing life sciences and innovation hub in the Raleigh-Durham market offering highly coveted long-term stability to investors. The largest tenant, Genesys, has a growing presence in the region and occupies 52% of the asset. Currently, Genesys employs over 3,000 professionals across the country. Genesys has been a tenant in the building since After acquiring Interactive Intelligence Group in 2016 the company signed a five year lease extension and expanded its space by 5,364 SF. The lease now expires in January, TENANT INDUSTRY BREAKDOWN Tenant SF % of Total SF Chart Industry Genesys Telecommunications 42, % Technology LabCorp 17, % Healthcare Triangle Council of Governments 9, % Non-Profit Traffic Tech 6, % Technology SugarCRM 2, % Technology Serazen 2, % Hospitality EXECUTIVE SUMMARY 11

13 INVESTMENT HIGHLIGHT N O.6 INCREASINGLY URBAN INFILL LOCATION The RTP/I-40 submarket is experiencing unprecedented economic growth resulting in increased urbanization of the area. Historically recognized as a suburban office hub, the RTP/I-40 submarket boasts a development pipeline largely made up of retail and multifamily projects that will further amenitize the area and position the submarket as a true urban infill location. While traditional suburban office locations are characterized by sprawling layouts with limited nearby amenities, Yorkshire Place offers close proximity to numerous restaurants and retail options. Given the notable future developments in the area, the asset is poised for long-term success. RTP/I-40 SUBMARKET DEVELOPMENT PIPELINE N ,546 TOTAL NUMBER OF UNDER CONSTRUCTION APARTMENTS/TOWNHOMES WATKINS ROAD IMPROVMENT TOTAL NUMBER OF UNDER CONSTRUCTION OFFICE SF YORKSHIRE PLACE MIXED-USE HOSPITALITY MULTIFAMILY OFFICE/FLEX RETAIL OTHER 54 MCCRIMMON PARKWAY EXTENSION (U/C) 214,000 20, TOTAL NUMBER OF UNDER CONSTRUCTION RETAIL SF RALEIGH-DURHAM INTERNATIONAL AIRPORT LAKE CRABTREE TOTAL NUMBER OF UNDER CONSTRUCTION HOTEL ROOMS UMSTEAD STATE PARK ,000 TOTAL NUMBER OF UNDER CONSTRUCTION MIXED-USE SF NO. PROJECT NAME 1 Davis Park West Davis Drive & Hopson Road 2 Davis Park East Hopson Road 3 Churchill Hall Page Road & S Miami Blvd DEVELOPER PRODUCT TYPE DEVELOPMENT SIZE STATUS COMMENTS Pollack Shores Mixed-Use 330 Multifamily Units 20,000+ SF of Street-Level Retail Davis Development Tri Properties and Principle Real Estate Investors Mixed-Use Mixed-Use 1,414 Multifamily Units 201 Townhomes 120,000 SF of Mixed-Use Development 150,000 SF of Office 25,000 SF Medical Office Building 5 Street-Level Retail Outparcels Under Scheduled to deliver Construction early 2017 Proposed 4 Limited Service Hotel Crown Realty Hospitality Proposed South Miami Blvd & Old Page Road 5 Multifamily Development Site Page Road & Slater Road Crown Realty Multifamily Proposed 6 Hilton Home2 Suites 1100 Shiloh Glenn Drive 7 Shiloh Park Slater Road, Imperial Center 8 Shiloh Crossing Lower Shiloh Way 9 Sorrell at Perimeter Park Slater Road & Carrington Mill Blvd 10 INC Research BTS Carrington Mill Blvd 11 Perimeter Park - Six & Seven Carrington Mill Blvd 12 Wake Tech RTP Campus Paramount Parkway 13 Town Hall North McCrimmon Parkway & Harris Mill Road 14 Twin Lakes Center Davis Drive & Airport Blvd 15 Bainbridge Lake Crabtree 5005 Evans Road 16 Wake Competition Center Nova Drive & Aviation Parkway 17 Aerial Center Business Park 3000 Aerial Center Parkway 18 Element RDU 804 Airport Blvd 19 Ovation at Weston Weston Parkway & Evans Road RevPar Management Hospitality 99 Hotel Rooms Under Construction Tri Properties Office/Flex 138,000 SF of Office 61,000 SF of Flex Proposed - Multifamily 330 Multifamily Units Under Construction Davis Development Trinity Capital Advisors and Starwood Capital Trinity Capital Advisors and Starwood Capital - Educational Facility Multifamily 262 Multifamily Units Under Construction Under Scheduled to deliver Construction Q Office 214,000 SF of Office Under Class A office space Construction that will serve as the new headquarters for INC Research. Scheduled to deliver in Office 2 Office Sites Totaling Proposed 536,000 SF 109,000 SF Educational Facility Under Plans for the 94-acre Construction site include up to 10 educational facilities CalAtlantic Multifamily 116 Townhomes Under Construction Leyland Alliance Retail 5 buildings with 173,000 SF of Retail, Restaurant, and Office Proposed Bainbridge Multifamily 200 Multifamily Units Under Construction Ammons Building Corporation (Jeff Ammons) Recreational 30-acre indoor and outdoor multi-sport facility Proposed Wegmans will anchor the retail development. A second phase could include 12 acres of additional retail and a possible residential component $15 million building project will include two ice skating rinks, turf soccer fields and championshiplevel volleyball and gymnastics facilities Sentinel Office - Proposed 4.83-acre site with additional office development proposed OHM Hotels Hospitality 100 Hotel Rooms Under Construction Woodfield Investments Multifamily 308 Multifamily Units Under Construction YORKSHIRE PLACE 12

14 INVESTMENT HIGHLIGHT N O.7 THE GREAT RESURGENCE OF THE "SUBURBS" Urban office appeal has been a prevalent theme in the real estate industry over recent years; however, data suggests employment trends and demographic migration increasingly favor suburban product. The long-term outlook for suburban office is extremely positive as investors are poised to capitalize on the upside potential displayed in the corresponding suburban office trends. Located in one of the country s fastest growing metropolitan area, Yorkshire Place is primed for long-term success driven by the underlying economic fundamentals of the Raleigh- Durham suburban office market. SHARE OF HOUSEHOLD GROWTH BY DECADE FORECAST 100% 90% 23% 14% 21% 15% 8% 6% 80% SHARE OF HOUSEHOLD GROWTH 70% 60% 50% 40% 30% 71% 79% 69% 77% 71% 79% SUBURBS EXPECTED TO GAIN SHARE % 10% 0% 21% 15% 6% 7% 10% 8% P 2015P-2025P DECADE TODAY S RURAL TODAY S SUBURBS TODAY S URBAN Source: John Burns Real Estate Consulting, LLC based on US Census data; Moody s Analytics EXECUTIVE SUMMARY 13

15 U.S. EMPLOYMENT SINCE 2009, 15 MILLION JOBS CREATED IN THE U.S. Source: Bureau of Labor Statistics AS JOB GROWTH NUMBERS CONTINUE ON AN UPWARD TREND, THE CORRESPONDING PERCENTAGE OF THE WORKFORCE IN THE SUBURBS WILL INEVITABLY INCREASE AS WELL. 64% OF CURRENT WORKFORCE SITS IN THE SUBURBS 64% 36% SUBURBS CBD Source: Bureau of Labor Statistics YORKSHIRE PLACE PLACE 14 14

16 THE RESURGENCE OF THE SUBURBS CBD VS. SUBURBAN OFFICE CAP RATES.5% FROM A CAP RATE PERSPECTIVE, THE GAP BETWEEN CBD AND SUBURBAN OFFICE CONTINUES TO NARROW SUBURBAN CBD Source:CoStar Portfolio Strategy PRICE PER SQUARE FOOT INDEX OVER THE PAST FOUR YEARS, SUBURBAN OFFICE HAS REALIZED APPROXIMATELY 5% MORE VALUE GROWTH COMPARED TO THE CBD S SUBURBAN CBD Source:CoStar Portfolio Strategy EXECUTIVE SUMMARY 15

17 MILLENNIAL HOME OWNERSHIP BREAKDOWN WILL NOT PURCHASE 16% ALREADY OWN 24% PLAN TO PURCHASE 60% MILLENNIALS LIVING IN CITIES MILLENNIALS LIVING IN SUBURBS WELL-LOCATED, HIGHLY AMENITIZED SUBURBAN OFFICE PRODUCT is positioned for outsized growth in the coming years, as an aging millennial population is expected to migrate out of urban areas in search of more affordable housing and better schools as they begin to start families. A DEMOGRAPHIC SHIFT IS UNDERWAY. Urban areas realized impressive growth from , largely driven by the inward migration from millennials. However, for the first time since 2010, urban growth is moderating while suburban demand continues to outpace the CBDs. THIS TREND IS ALREADY TAKING PLACE IN RALEIGH-DURHAM, as Cary was recently ranked #4 among cities with the most millennial homeowners (Source: SmartAsset, 2016) and Wake County is projected to be the 8th most active market where millennials are most likely to purchase homes (Source: CoreLogic, 2016) IN MANY WAYS, SUBURBAN OFFICE NEVER SLOWED DOWN, as suburbs still account for 79% of the population, 75% of 25-to-35 year olds and 77% of office inventory (Source: ULI Emerging Trends in Real Estate 2017) YORKSHIRE PLACE 16

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19 investment advisors SCOT HUMPHREY Senior Director RYAN CLUTTER Senior Managing Director CHRIS LINGERFELT Director CHRIS NORVELL, SIOR Senior Managing Director associate & analyst ZACK DROZDA Associate WILLIAM MORRIS Real Estate Analyst debt & structured finance TRAVIS ANDERSON Senior Managing Director ROGER EDWARDS Senior Director CORY FOWLER Senior Director NORTH TRYON STREET SUITE 1400 CHARLOTTE, NORTH CAROLINA SIX FORKS ROAD SUITE 876 RALEIGH, NORTH CAROLINA 27522

20 Atlanta Austin Boston Carolinas Chicago Dallas Denver Houston Indianapolis Los Angeles Miami New Jersey New York City Orange County Orlando Philadelphia Phoenix Pittsburgh Portland San Diego San Francisco Tampa Washington, D.C. London EXECUTIVE SUMMARY NORTH TRYON STREET SUITE 1400 CHARLOTTE, NORTH CAROLINA SIX FORKS ROAD SUITE 876 RALEIGH, NORTH CAROLINA 27522