Three Crosswoods OFFERING MEMORANDUM

Transcription

1 Three Crosswoods OFFERING MEMORANDUM

2 NON-ENDORSEMENT AND DISCLAIMER NOTICE NON-ENDORSEMENT S Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. DISCLAIMER THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULD NOT BE CONSIDERED AN APPRAISAL. This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc Marcus & Millichap. All rights reserved.

3 THREE CROSSWOODS Multi-Tenant Professional Office PRESENTED BY JOSEPH DISALVO First Vice President Investments Indianapolis, Indiana Office (317) Cell (317) License IN: RB TYLER SHIRLEY Director of Operations Indianapolis, Indiana Office (317) Cell (765) EVAN DAVIES Financial Analyst Indianapolis, Indiana Office (317) Cell (317) O F F I C E S N A T I O N W I D E AND T H R O U G H O U T C A N A D A

4 Three Crosswoods 200 E Campus View Blvd Columbus, OH 43235

5 THREE CROSSWOODS M U L T I - T E N A N T P R O F E S S I O N A L O F F I C E 07 PROPERTY ANALYSIS 19 SECTION 1 Executive Summary Investment Overview Photos Property Details 25 MARKET OVERVIEW SECTION 5 Market Overview Economy Demographics TABLE OF CONTENTS FINACIAL ANALYSIS SECTION 2 Operating Statement Tenant Summary Sales / Lease Comparables PRESENTED BY

6 This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc Marcus & Millichap ACT ID Z

7 T H R E E C R O S S W O O D S // PROPERTY ANALYSIS PROPERTY ANALYSIS THREE CROSSWOODS

8 OFFERING HIGHLIGHTS T H R E E C R O S S W O O D S // P R O P E R T Y A N A L Y S I S THREE CROSSWOODS MULTI-TENANT PROFESSIONAL OFFICE 200 E Campus Blvd., Columbus, OH OFFERING PRICE $11,750,000 VITAL DATA CAP RATE 8.52% Price $11.750,000 Cap Rate 8.52% Price/SF $99.55 Rentable Building Area 118,030 SF Occupancy 95.22% Net Operating Income $1,001,179

9 Three Crosswoods Multi-Tenant Professional Office T H R E E C R O S S W O O D S / / P R O P E R T Y A N A L Y S I S

10 PROPERTY OVERVIEW The DiSalvo Group of Marcus & Millichap is pleased to present Three Crosswoods, a three-story, multi-tenant Class B+ suburban office building located on the north side of Columbus, Ohio. The Subject Property is situated in the suburban submarket of Polaris along Campus View Road just east of North High Street / Ohio-23, and just north of Interstate-270. This location is in the center of the massive, soon-to-be-completed Interstate-270 / US 23 (North High Street) redevelopment that is dramatically enhancing the accessibility of the Polaris and north-central submarket of Columbus to the rest of the metro area and state of Ohio. This expansion, enhancement, and completion is one of the driving forces behind the recent surge of leasing activity to both new tenants and expansion / extensions of existing tenants in this submarket and the Subject Property. The Property also benefits from a significant number of amenities within walking distance of the property such as restaurants, entertainment, hotels, etc. - as well as newly development multi-family immediately next door to the site. T H R E E C R O S S W O O D S // P R O P E R T Y A N A L Y S I S Three Crosswoods is the third building in the Crosswoods Office Park of similar design and layout, but Three Crosswoods has the unique benefit of excess parking beyond its neighboring buildings, providing it a distinct advantage over the immediate competition and helping account for its current 95 percent occupancy with new and expanding tenants. The Property is occupied by seven regional and national tenants, all but one of which are bound by attractive triple-net leases with the sole exception on a base-stop lease, so there is no additional leakage on the Landlord for any potential future increases in operating expenses. The anchor tenant Facility Source has been in the property for the past ten years and just recently shopped the market for more space as they needed to expand. After scouring the local market for competitive solutions to Three Crosswoods, Facility Source recently signed a new six-year extension and expansion of their space as they could not find any alternative solutions in the market, displaying the unique intrinsic value of this asset against the competition. With a strong tenant mix bound by triple-net leases with rental escalations, a location that has just been dramatically enhanced with the newly opened interchange at Interstate 270 and U.S. 23 (North High Street), amenities such as restaurants, entertainment, and hotels immediately surrounding the Subject Property, and more parking than any competitive option in the submarket, Three Crosswoods is uniquely positioned to be an incredibly stable asset for the foreseeable future for any Investor. PROPERTY OVERVIEW 95% occupied, Class B+ multi-tenant suburban office building Strong real estate fundamentals enhanced access, excess parking, tons of amenities Occupied by strong mix of national and regional tenants on NNN leases In the heart of newly expanded Interstate-270 / US 23 (North High Street) Interchange Surrounded by restaurants, theaters, shopping, new apartment communities, and hotels

11 Three Crosswoods Multi-Tenant Professional Office T H R E E C R O S S W O O D S / / P R O P E R T Y A N A L Y S I S

12 PROPERTY DETAILS T H R E E C R O S S W O O D S // P R O P E R T Y A N A L Y S I S The DiSalvo Group of Marcus & Millichap is pleased to present Three Crosswoods, a three-story, multi-tenant Class B+ suburban office building located on the north side of Columbus, Ohio. The Subject Property is situated in the suburban submarket of Polaris along Campus View Road just east of North High Street / Ohio-23, and just north of Interstate-270. This location is in the center of the massive, soon-to-be-completed Interstate-270 / US 23 (North High Street) redevelopment that is dramatically enhancing the accessibility of the Polaris and north-central submarket of Columbus to the rest of the metro area and state of Ohio. This expansion, enhancement, and completion is one of the driving forces behind the recent surge of leasing activity to both new tenants and expansion / extensions of existing tenants in this submarket and the Subject Property. The Property also benefits from a significant number of amenities within walking distance of the property such as restaurants, entertainment, hotels, etc. - as well as newly development multi-family immediately next door to the site. Three Crosswoods Property Address 200 E Campus View Blvd Topography Flat Number of Units 8 Highway Access Interstate 270 Number of Buildings 1 Foundation Concrete Slab Number of Stories Three (3) + Basement Framing Steel Frame Year Built 1986/2003 Exterior Brick Lot Size 6.08 Acres / 264,844 sf Parking Surface Asphalt Type of Ownership Fee Simple Roof Flat Roof w/ EPDM Covering Parking 530 Free Surface Spaces / 5.00/1,000 Parking Ratio HVAC Roof-Mounted Utilities: Water Municipal Elevators Two (2). Utilities: Electric Municipal Life Safety Smoke Detectors and Fire Alarms

13 Three Crosswoods Multi-Tenant Professional Office T H R E E C R O S S W O O D S / / P R O P E R T Y A N A L Y S I S

14 T H R E E C R O S S W O O D S // P R O P E R T Y A N A L Y S I S

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16 Local Map

17 Regional Map

18 Three Crosswoods This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc Marcus & Millichap ACT ID Z

19 T H R E E C R O S S W O O D S // FINANCIAL ANALYSIS FINANCIAL ANALYSIS THREE CROSSWOODS

20 OPERATING STATEMENT Projected Expenses* T H R E E C R O S S W O O D S // F I N A N C I A L A N A L Y S I S Utilities Electric $ 240,000 Water $ 15,500 Gas $ 18,000 Phone $ 3,600 Internet / WiFi $ 780 Sewer $ 12,259 $ 290,980 Common Area Maintenance Janitorial $ 282 Janitorial First Shift $ 11,420 Janitorial Second Shift $ 97,527 Janitorial Supplies $ 18,000 Snow Removal $ 23,000 Trash Removal $ 18,000 Pest Control $ 2,040 Fire Alarm $ 941 Window Washing $ 4,465 HVAC Contract $ 5,132 Elevator Contract $ 5,868 Landscaping Contract Services $ 13,468 Property Supplies $ 900 Mats / Floor Care $ 3,000 Interior Plantscaping $ 16,560 HVAC Supplies / Repairs $ 9,000 Elevator R & M $ 600 Electric $ 400 Plumbing R & M $ 900 Light Bulbs Interior $ 600 Light Bulbs Exterior $ 6,000 Fire / Life Safety $ 600 Electrical Repair $ 2,525 Plumbing Repair $ 900 Parking Lot $ 6,600 Locks & Keys $ 480 Parking Lot Sweeping $ 1,800 Concrete / Sidewalks $ 1,260 Roof Repair $ 4,000 Landscape Repairs $ 3,024 **Maintenance Personnel $ 40,000 $ 299,293 Real Estate Taxes $ 193,600 Insurance $ 17,705 Total Expenses $ 877,783 (*) Expenses calculated from 2017 annualized budget (**) This is a projected expense

21 T H R E E C R O S S W O O D S // F I N A N C I A L A N A L Y S I S TENANT SUMMARY Approx. % of Ctr Current Lease Current Current Approx. Increase Increase Annual Annual Annual Annual Base Option Rentable vs Total Term Expiration Monthly Annual Annual Effective Annual CAM TAX INS MGMT. Stop Terms Suite Tenant Sq.Ft. Space Start End Rent Rent ($) Rent/SF Date Rent/SF Reimb. Reimb. Reimb. Reimb. Reimb. 100 Vacant 4, % $3,518 $38,378 $9.90 $21,324 $3,989 $640 $2,640 $0 150 Data Recognition Corp 18, % Feb-17 Aug-20 $14,597 $175,167 $9.25 Feb-18 $9.50 $94,705 $17,313 $2,841 $11,725 $0 Jan-00 Feb-19 $9.75 Feb-20 $ Gallant Ventures 18, % May-17 May-27 $14,029 $168,345 $9.00 Jun-18 $9.25 $94,705 $17,313 $2,841 $11,581 $0 Extension Options Two (5) Year Jun-19 $9.50 Options Jun-20 $ Vacant 1, % $945 $11,336 $8.25 $6,299 $1,152 $189 $780 $0 250 Maxim Healthcare Services 11, % Oct-15 Feb-21 $9,460 $113,520 $10.00 Oct-18 $10.25 $56,772 $10,379 $1,703 $7,028 $0 Termination Option Oct-19 $10.50 August 2018 Oct-20 $ Robert Half International 6, % Jan-14 Jan-19 $4,576 $54,912 $8.25 Jan-18 $8.50 $33,287 $6,085 $998 $4,121 $0 310 UnitedLex Corporation 10, % Sep-14 Feb-20 $14,210 $170,515 $16.75 Jan-00 $0 $0 $0 $0 $0 Jan-00 Jan Facility Source 46, % Dec-07 Sep-23 $35,892 $430,698 $9.25 Oct-18 $9.45 $232,858 $42,570 $6,984 $28,828 $0 Termination Option Oct-19 $9.75 July 2021 Oct-20 $ , % $97,414 $1,168,974 $538,790 $98,499 $16,160 $66,703 $0 Occupied 112, % 95.23% $1,113,158 $9.90 $511,166 $93,449 $15,332 $63,283 $0 Vacant 5, % 4.77% $55,816 $9.90 $27,623 $5,050 $829 $03,420 $0

22 Lease Rollover (By Year) GLA (By Tenant) T H R E E C R O S S W O O D S // F I N A N C I A L A N A L Y S I S

23 T H R E E C R O S S W O O D S // F I N A N C I A L A N A L Y S I S MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIES MMCC our fully integrated, dedicated financing arm is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms. We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options. Our dedicated, knowledgeable experts understand the challenges of financing and work tirelessly to resolve all potential issues to the benefit of our clients. WHY MMCC? Optimum financing solutions to enhance value Our ability to enhance buyer pool by expanding finance options Our ability to enhance seller control Through buyer qualification support Our ability to manage buyers finance expectations Closed 1,651 debt and equity financings in 2016 National platform operating within the firm s brokerage offices $5.1 billion total national volume in 2016 Access to more capital sources than any other firm in the industry Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file

24 Three Crosswoods This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc Marcus & Millichap ACT ID Z

25 T H R E E C R O S S W O O D S // PROPERTY ANALYSIS MARKET OVERVIEW THREE CROSSWOODS

26 COLUMBUS OVERVIEW T H R E E C R O S S W O O D S // M A R K E T O V E R V I E W The Columbus metro is composed of 10 counties located in the gently rolling hills of central Ohio: Delaware, Licking, Fairfield, Pickaway, Union, Morrow, Madison, Perry, Hocking and Franklin. It is Ohio s most populated metropolitan area and has natural landmarks that include reservoirs to the north and the Scioto River, which bisects the city. Franklin County, home to Columbus, is surrounded by mainly rural counties. Columbus is a national transportation and distribution hub, with nearly 60 percent of the U.S. population within an eight-hour driving radius. Interstates 70 and 71 intersect in Columbus, while I-270 forms a beltway around the metro and I-670 bisects the city. Port Columbus International Airport, located east of downtown, is the primary passenger facility. METRO HIGHLIGHTS LOGISTICS HUB Rickenbacker Inland Port is a multimodal logistics hub that provides air, truck and rail transport throughout the U.S. and Canada, making the metro a key point for distribution activities. MIDWESTERN COMMERCIAL CENTER Greater Columbus is home to multiple Fortune 500 companies and many regional operations, drawing a variety of other employers and residents. AFFORDABLE HOUSING COSTS The median home price in Columbus is well below the national level, channeling more expendable income to local retailers and entertainment. THREE CROSSWOODS

27 THREE CROSSWOODS ECONOMY The state capital and Ohio State University provide a diverse array of employment opportunities. A lower cost of doing business, a strong education system and a strategic location draw major corporations to the metro. The area is home to multiple Fortune 500 companies such as L Brands, Cardinal Health, American Electric Power and Nationwide, along with regional and subsidiary operations. Information technology is a growing sector in Columbus with the recent addition of IBM s Client Center for Advanced Analytics. MAJOR AREA EMPLOYERS JPMorgan Chase Nationwide Insurance Honda of America L Brands Nationwide Children s Hospital PNC Financial Services Group Huntington Bancshares, Inc. Cardinal Health American Electric Power Wal-Mart * Forecast SHARE OF 2016 TOTAL EMPLOYMENT 7% MANUFACTURING 18% PROFESSIONAL AND BUSINESS SERVICES 16% 10% 8% GOVERNMENT LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES 18% TRADE, TRANSPORTATION AND UTILITIES 3% CONSTRUCTION + 15% EDUCATION AND HEALTH SERVICES 2% INFORMATION 4% OTHER SERVICES

28 THREE CROSSWOODS T H R E E C R O S S W O O D S // M A R K E T O V E R V I E W DEMOGRAPHICS The metro is expected to add nearly 100,000 people through 2021, resulting in the formation of roughly 40,000 households. A median home price of $180,000 has afforded 62 percent households to own a home, which is slightly below the national rate of 64 percent. Approximately 33 percent of residents age 25 and older hold bachelor s degrees; of those residents, 12 percent also have obtained a graduate or professional degree Population by Age 7% 0-4 YEARS 2016 POPULATION: 2M Growth *: 5% 20% 5-19 YEARS Columbus may be best known as a college town, but for a midsize community, it offers residents big-city amenities. The metro is home to major-league sports teams: the Blue Jackets (NHL) and the Crew (MLS). The city is host to the Columbus Symphony Orchestra, Ballet Met and Opera Columbus, as well as theater companies, art galleries and dealers, and a variety of museums. Many of the galleries and restaurants are located in Short North, a vibrant neighborhood north of downtown. The region s economic vitality and social scene are supported by a strong post-secondary education network, including the nationally recognized Ohio State University, as well as many other four-year colleges, universities, and two-year institutions HOUSEHOLDS: 795K 5.5% 7% YEARS Growth *: 29% YEARS 2016 MEDIAN AGE: 35.8 U.S. Median: 37.7 QUALITY OF LIFE 26% YEARS 12% 65+ YEARS 2016 MEDIAN HOUSEHOLD INCOME: $56,700 U.S. Median: $54,500 SPORTS EDUCATION ARTS & ENTERTAINMENT * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau

29 THREE CROSSWOODS COLUMBUS METRO AREA Pre-Leasing and Build-to-Suit Propel Columbus Office Market Market demand brings build-to-suit and speculative space to market. Broad-based job growth is improving 2016 Annual Office Forecast occupancy in office buildings, with demand spreading from the core to the outlying suburban markets. This demand has supported the development of new office space throughout the metro, especially from its core up to the north and west. In the downtown area, the historic Buggy Works, a 115,000-square-foot office space is anticipated to be completed in the fourth quarter. This speculative renovation is expected to fill quickly as space remains limited in the core Arena District. A number of build-to-suit projects are slated for delivery during 2016, including a 280,000-square-foot building in the Grandview Yards campus for Nationwide Mutual. The facility opened in May to house 1,900 workers. A second building for Nationwide, about half the size, will open next to it later this year, putting it within 2 miles of its corporate headquarters downtown. Farther north, Scientific Expert Analysis is opening a 90,000-square-foot headquarters in Worthington. Some submarkets will face a temporary moderation to vacancy improvement, as an influx of new buildings begin leasing this year. Buyer interest spreading. While the core, which includes the Short North and University areas, is in particular demand, properties near Grandview Yard, the Arena District and downtown are drawing buyer interest. In particular, investors are seeking assets in the 50,000- to 100,000-square-foot range. Properties in this size range can generate cap rates in the 8 to 9 percent span, rising higher in smaller office assets. Some investors face retenanting concerns, as new renters may have renovation and buildout requirements prior to signing new leases in key areas. Other buyers willingly search for such value-add potential, targeting high-vacancy multi-tenant assets. Many investors seeking stability are purchasing medical office buildings, which can trade in the 6 to 7 percent range near Ohio State Medical Center, Dublin Methodist and other medical facilities in high-demand neighborhoods. Many such buildings have low vacancy rates, as consultants and health providers desire the convenience and proximity to health centers. Overall, investor competition will heat up for local office assets this year in a wider array of submarkets, pushing down cap rates for the most desirable assets. 1.4% increase in total employment 1.6 million sq. ft. will be completed 50 basis point increase in vacancy 3.8% increase in asking rents Employment: Employers are on track to contribute 15,000 positions to employment this year, a 1.4 percent advance. This sum includes nearly 5,500 office-using jobs, an increase of 2.0 percent. In 2015, a total of 20,200 spots were created. Construction: In 2015, nearly 440,000 square feet of office space was delivered. Builders are expanding the development pipeline and will complete approximately 1.6 million square feet of inventory this year in multiple submarkets. Vacancy: The metro s average vacancy rate will rise 50 basis points to 12.2 percent this year, as the most square footage of offices is delivered in more than a decade. This follows a 20-basispoint rise in 2015 on net absorption of 155,000 square feet. Rents: During 2015, Columbus office asking rent ticked up 0.8 percent, as an increased amount of dated office product cycled back onto the market. This year, marketed rent will rise 3.8 percent to $16.96 per square foot.

30 THREE CROSSWOODS COLUMBUS METRO AREA T H R E E C R O S S W O O D S // M A R K E T O V E R V I E W Economy Columbus employers created 12,200 jobs during the past 12 months through June, a 1.2 percent gain. This included nearly 2,000 office-using positions, up 0.7 percent year over year. In the prior period, staffs increased by 25,400 workers, including 6,000 in office-using sectors. The leisure and hospitality sector led employment growth, as 6,500 new hires came on board, a 6.3 percent rise. Construction followed with 2,600 new workers, or 7.9 percent growth. The government segment grew by 1,700 positions, a 1.0 percent advance, in the state s capital. An increasing number of residents seeking work, combined with slowing job creation in the retail and industrial sectors, resulted in the unemployment rate rising 20 basis points to 4.2 percent. The rate has remained below 5 percent since Outlook: Employers will create 15,000 positions this year, a 1.4 percent gain. This total includes nearly 5,500 office-using jobs, a hike of 2.0 percent. Construction Roughly 670,000 square feet of office space was completed during the past four quarters through midyear. In the prior 12-month term, nearly 720,000 square feet was put into place, the largest inventory increase since Developers were most active in the Columbus North submarket where approximately 400,000 square feet was delivered in the last four quarters. This includes medical office space and build-to-suit projects such as the headquarters for Scientific Expert Analysis. * Forecast Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; Economy.com In the last 12 months, builders completed B/C offices in multiple submarkets; Delaware County received nearly 115,000 square feet and 70,000 square feet was delivered in Columbus East. Marketwide, the construction pipeline includes 1.7 million square feet of office space, with delivery dates slated into Outlook: Developers will bring into service nearly 1.6 million square feet of office inventory this year. The submarkets of Columbus North, Columbus West, Central Columbus and Delaware County will receive the bulk of the new space. * Forecast Sources: Marcus & Millichap Research Services; CoStar Group Inc.

31 THREE CROSSWOODS COLUMBUS METRO AREA Vacancy Strong tenant demand resulted in metrowide vacancy tumbling 120 basis points to 11.0 percent in the last 12 months through June. One year earlier, the rate rose 60 basis points, ending four annual periods of reductions. Among submarkets with more than 10 million square feet, vacancy is tightest in Central Columbus at 8.9 percent after decreasing 110 basis points year over year. Columbus North has one of the highest vacancy rates at 13.6 percent, after receiving the metro s largest inventory supply during the last two years. Vacancy in Class A buildings fell 280 basis points to 13.0 percent in the last four quarters. All submarkets compressed more than 100 basis points during this time. The Columbus Central submarket declined 170 basis points to 11.6 percent. Vacancy in Class B/C properties declined 60 basis points to 10.0 percent; Fairfield County and Columbus Central registered vacancies of 4.5 and 7.5 percent, respectively. Outlook: Vacancy in the metro will increase 50 basis points to 12.2 percent this year, as deliveries exceed the prior high reached in Rents Average asking rent rose 4.7 percent to $16.88 per square foot in the past four quarters ending at midyear. This follows a 2.5 percent increase in the prior 12-month period. * Forecast Sources: Marcus & Millichap Research Services; CoStar Group Inc. Marketed rent in Class A buildings advanced 2.0 percent to $18.67 per square foot year over year in the second quarter. An above-average rent gain was registered in Delaware County where demand remains robust compared with available supply. Here, rents jumped 7.3 percent to $19.89 per square foot during the period. Rent in Class B/C offices rose 6.2 percent to $16.05 per square foot over the last 12 months ending in June, as tenants sought lower-tier space in prime locations. Marketed rent in the core rose 4.5 percent to $15.20 per square foot as vacancy tightened. Outlook: During 2016, the metro s average asking rent will escalate 3.8 percent to $16.96 per square foot. This follows a 0.8 percent rise last year. * Forecast Sources: Sources: Marcus & Millichap Research Services; CoStar Group Inc.

32 THREE CROSSWOODS COLUMBUS METRO AREA T H R E E C R O S S W O O D S // M A R K E T O V E R V I E W Sales Trends** Transaction velocity increased 41 percent during the past 12 months ending at midyear. This marks a decadelong high in trading activity with buyers targeting Class A and B product in particular. In the prior period, exchanges decreased nominally. Pricing declined 6 percent in the last four quarters to average of $117 per square foot as older properties traded. Class A properties exchanged hands near $300 per square foot, a 45 percent increase year over year. The average cap rate was relatively unchanged from a year ago in the high-7 percent span. Overall, local office assets traded with initial yields between 6 and 10 percent, based on quality and location. Outlook: Buyers will target the Columbus metro for yields above those available on the coasts, supported by the stability of various corporate tenants in the area. Medical Office*** Developers added more than 300,000 square feet of medical office space during the past 12 months. This follows the completion of 70,000 square feet in the prior period. Builders also have more than 220,000 square feet of space under construction with delivery dates in An inventory expansion has contributed to a 20-basis-point year-over-year rise in vacancy, to 6.9 percent in June. In the previous 12 months, the rate ebbed 10 basis points. During this time, asking rent growth of 3.0 percent was recorded, after decreasing 0.7 percent in the prior period when older properties were leasing. ** Trailing 12-month period through 2Q16 Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics Medical office transactions jumped 52 percent, to a decade high, building upon an 11 percent gain in the prior period. Pricing ranged from $30 to $300 per square foot, while cap rates generally spanned from the mid-6 to high-8 percent range. Outlook: Medical office properties throughout the metro will garner the attention of buyers. Assets near hospitals or medical research facilities will receive heightened interest. *** 2Q16 Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics

33 THREE CROSSWOODS COLUMBUS METRO AREA Capital Markets The 10-year U.S. Treasury has been trading lower, closing below 1.7 percent, since the Federal Reserve decided to leave the federal funds rate unchanged in September. Policymakers left the door open for a rate increase before the end of December and proposed how interest rates could rise over the coming years. The S&P 500 Index and other U.S. equity indexes continue to hover around all-time highs. The Federal Open Market Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities and rolling over maturing Treasury securities at auction. It anticipates doing this until normalization of the level of the federal funds rate is well underway. The committee anticipates holding longer-term securities at sizable levels should help maintain accommodative financial conditions. Interest rate volatility has moved over to the commercial loan markets and 10-year fixed-rate loans are now pricing between 3.9 and 4.4 percent. Loan to values range from 60 to 75 percent for commercial properties depending on location, as underwriters remain competitive in an effort to do business. Floating-rate bridge loans for stabilized assets will require LTVs of 70 percent and price with a spread between 275 and 425 basis points over Libor, while repositioning will be underwritten at 80 percent LTV with a 375- to 475-basis-point spread. A Federal Reserve survey of lenders indicates that commercial real estate loan standards tightened in the second quarter. Debt providers are likely seeking to balance risk exposure to commercial real estate and take a more conservative lending approach while the current cycle matures, rather than expressing a bearish outlook on commercial property. Some of the greatest tightening occurred for construction loans, a trend that may potentially prevent some early-stage developments from advancing and ultimately minimize the upward pressure of new supply on vacancy rates. Local Highlights Nationwide has started moving into the Grandview Yard campus in Grandview Heights. When completed, the campus will include three buildings, each consisting of four stories along with three parking garages and two and a half acres of green space. The site officially opened its first 320,000-square-foot building this year, slated to be home to 1,900 workers. By the end of this year, the Columbus core will have nearly 11,700 Nationwide workers. Little speculative construction is resulting in strong occupancy in existing office complexes, though many areas will face headwinds as employers vacate older space to occupy newer buildings. Nationwide is moving out of offices in Dublin, leaving a large amount of unused space in the submarket. A portion of this space will be occupied by Cardinal Health. The health provider will consolidate about 2,000 workers from four different Dublin offices into the space starting in The company has approximately 5,000 employees throughout Central Ohio.

34 PROPERTY NAME T H R E E C R O S S W O O D S // M A R K E T O V E R V I E W Created on September 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 10,174 88, , Estimate Total Population 9,627 85, , Census Total Population 9,042 79, , Census Total Population 8,533 72, ,772 Current Daytime Population 2016 Estimate 11,949 98, ,795 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 4,713 37, , Estimate Total Households 4,427 35, ,379 Average (Mean) Household Size Census Total Households 4,169 33,195 96, Census Total Households 3,684 30,031 87,223 HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $200,000 or More 5.76% 7.01% 6.12% $150,000 - $199, % 7.34% 6.98% $100,000 - $149, % 17.42% 15.82% $75,000 - $99, % 15.09% 13.61% $50,000 - $74, % 19.17% 18.83% $35,000 - $49, % 13.03% 12.76% $25,000 - $34, % 9.69% 9.43% $15,000 - $24, % 6.09% 7.79% Under $15, % 8.07% 10.91% Average Household Income $89,013 $97,324 $90,004 Median Household Income $65,110 $70,533 $64,465 Per Capita Income $41,143 $40,848 $37,964 MARKETING DEMOGRAPHICS TEAM POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 9,627 85, ,074 Under % 25.56% 25.59% 20 to 34 Years 34.64% 23.71% 23.62% 35 to 39 Years 8.21% 7.77% 7.35% 40 to 49 Years 11.26% 13.33% 13.47% 50 to 64 Years 15.14% 18.49% 18.14% Age % 11.13% 11.84% Median Age Population 25+ by Education Level 2016 Estimate Population Age 25+ 6,809 58, ,093 Elementary (0-8) 1.98% 1.05% 1.34% Some High School (9-11) 3.43% 2.92% 3.48% High School Graduate (12) 20.85% 18.08% 19.25% Some College (13-15) 16.32% 18.02% 19.57% Associate Degree Only 6.75% 7.09% 7.13% Bachelors Degree Only 33.42% 32.81% 30.94% Graduate Degree 16.14% 19.41% 17.64% Source: 2016 Experian

35 PROPERTY NAME Created on September 2017 MARKETING TEAM POPULATION BY TRANSPORTATION TO WORK 1 Miles 3 Miles 5 Miles 2016 Estimate Total Population Bicycle 0.29% 0.23% 0.25% Bus or Trolley Bus 0.22% 0.74% 0.97% Carpooled 5.61% 6.10% 6.49% Drove Alone 87.05% 86.12% 85.30% Ferryboat 0.31% 0.10% 0.04% Motorcycle 0.33% 0.11% 0.12% Other Means 0.28% 0.57% 0.50% Railroad 0.00% 0.01% 0.02% Streetcar or Trolley Car 0.00% 0.00% 0.04% Subway or Elevated 0.00% 0.00% 0.00% Taxicab 0.00% 0.06% 0.07% Walked 2.91% 1.18% 1.50% Worked at Home 3.01% 4.78% 4.70% POPULATION BY TRAVEL TIME TO WORK 1 Miles 3 Miles 5 Miles 2016 Estimate Total Population Under 15 Minutes 32.84% 25.99% 24.59% Minutes 43.07% 49.01% 49.90% Minutes 14.80% 17.33% 18.05% Minutes 1.62% 1.18% 1.18% 90 or More Minutes 0.34% 0.59% 0.91% Worked at Home 3.01% 4.78% 4.70% Average Travel Time in Minutes Source: 2016 Experian

36 PROPERTY NAME MARKETING TEAM T H R E E C R O S S W O O D S // M A R K E T O V E R V I E W Population In 2016, the population in your selected geography is 9,627. The population has changed by 12.82% since It is estimated that the population in your area will be 10, five years from now, which represents a change of 5.68% from the current year. The current population is 48.68% male and 51.32% female. The median age of the population in your area is 31.91, compare this to the US average which is The population density in your area is 3, people per square mile. Households There are currently 4,427 households in your selected geography. The number of households has changed by 20.17% since It is estimated that the number of households in your area will be 4,713 five years from now, which represents a change of 6.46% from the current year. The average household size in your area is 2.12 persons. Income In 2016, the median household income for your selected geography is $65,110, compare this to the US average which is currently $54,505. The median household income for your area has changed by 17.34% since It is estimated that the median household income in your area will be $77,053 five years from now, which represents a change of 18.34% from the current year. The current year per capita income in your area is $41,143, compare this to the US average, which is $29,962. The current year average household income in your area is $89,013, compare this to the US average which is $78,425. Race and Ethnicity The current year racial makeup of your selected area is as follows: 73.52% White, 10.04% Black, 0.02% Native American and 10.77% Asian/Pacific Islander. Compare these to US averages which are: 70.77% White, 12.80% Black, 0.19% Native American and 5.36% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 6.96% of the current year population in your selected area. Compare this to the US average of 17.65%. Housing The median housing value in your area was $182,394 in 2016, compare this to the US average of $187,181. In 2000, there were 1,858 owner occupied housing units in your area and there were 1,827 renter occupied housing units in your area. The median rent at the time was $654. Employment In 2016, there are 24,594 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 79.04% of employees are employed in white-collar occupations in this geography, and 20.56% are employed in blue-collar occupations. In 2016, unemployment in this area is 2.92%. In 2000, the average time traveled to work was minutes. Source: 2016 Experian

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38 P R E S E N T E D B Y Joseph DiSalvo First Vice President Investments Director - National Office and Industrial Properties Group Indianapolis Office Tel: (317) Fax: (317) joseph.disalvo@marcusmillichap.com License: IN RB