PERIMETER PARK PARAMOUNT PARKWAY RALEIGH-DURHAM, NORTH CAROLINA

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1 PERIMETER PARK 2250 PERIMETER PARK PARAMOUNT PARKWAY RALEIGH-DURHAM, NORTH CAROLINA

2 2250 PERIMETER PARK AND 3800 PARAMOUNT 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 of 2250 Perimeter Park and 3800 Paramount, two 100% occupied institutional-quality office buildings totaling 226,328 square feet and located in Perimeter Park at the epicenter of the flourishing Raleigh-Durham market. The portfolio consists of two best-in-class multi-story office buildings and features a creative tenant roster including a number of noteworthy healthcare and technology companies. With in place rents that are 11% below market, the portfolio presents investors with immediate upside potential and the opportunity to capitalize on strong recent leasing momentum within the nation s top innovation economy, having led the U.S. with 39% Science, Technology, Engineering and Mathematics ( STEM ) employment growth over the last decade. This below replacement cost acquisition opportunity is located within the Research Triangle Park/Interstate 40 (RTP/I-40) submarket which led the market in net absorption and generated over 22% rental rate growth over the last 36 months PERIMETER PARK AND 3800 PARAMOUNT 2

3 2250 PERIMETER PARK & 3800 PARAMOUNT TWO BEST-IN-CLASS OFFICE ASSETS 2250 Perimeter Park & 3800 Paramount offer the opportunity to acquire two assets located in Raleigh-Durham s premier office park featuring an attractive tenant roster, a marketleading amenity package, and an extremely compelling belowmarket rent story. the resurgence of the suburbs diverse tenant roster anchored by triangle s core industries with mark-to-market opportunity institutional quality Class A office assets with a marketleading amenity package opportunity to acquire significant critical mass below replacement cost Raleigh-Durham s premier business park, Perimeter Park flourishing center-of-the-market location 2250 PERIMETER PARK AND 3800 PARAMOUNT 3

4 2250 PERIMETER PARK & 3800 PARAMOUNT PRESENT THE OPPORTUNITY TO GAIN AN INSTANT FOOTHOLD IN ONE OF THE COUNTRY S FASTEST GROWING MARKETS WITH STABLE CASH FLOWS, A HIGH-QUALITY RENT ROLL, AND SIGNIFICANT UPSIDE POTENTIAL INVESTMENT SUMMARY RENTABLE BUILDING AREA 226,328 SF ADDRESSES 2250 Perimeter Park Drive 3800 Paramount Parkway YEAR BUILT 2006 (3800), 2008 (2250) NO. OF TENANTS 12 PERCENT OCCUPIED 100% WALT 4.30 years PORTFOLIO SUMMARY BUILDING ADDRESS RSF % OCCUPIED 2250 PERIMETER PARK 107, % 3800 PARAMOUNT 119, % 226, % TOP TENANTS INDUSTRY RSF % OF PORTFOLIO TrialCard Tech/Healthcare 73,014 32% Beacon Health Options, Inc. Healthcare 30,000 13% Worldwide Clinical Trials Pharmaceutical 30,000 13% Liggett Vector Brands, LLC Agriculture 22,218 10% 155,232 68% 2250 PERIMETER PARK AND 3800 PARAMOUNT 4

5 U.S. EMPLOYMENT SINCE 2009, 15 MILLION JOBS CREATED IN THE U.S. INVESTMENT HIGHLIGHT N O.1 THE 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 the premier suburban office park of the country s fastest growing metropolitan area, 2250 Perimeter Park & 3800 Paramount are primed for long-term success driven by the underlying economic fundamentals of the Raleigh-Durham suburban office market. Source: Bureau of Labor Statistics SHARE OF HOUSEHOLD GROWTH BY DECADE 100% 90% 23% 14% 21% 15% 8% FORECAST 6% 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 80% SHARE OF HOUSEHOLD GROWTH 70% 60% 50% 40% 30% 20% 71% 79% 69% 77% 71% 79% SUBURBS EXPECTED TO GAIN SHARE % 36% 10% 0% 21% 15% 6% 7% 10% 8% P 2015P-2025P DECADE TODAY S RURAL TODAY S SUBURBS TODAY S URBAN SUBURBS CBD Source: John Burns Real Estate Consulting, LLC based on US Census data; Moody s Analytics Source: Bureau of Labor Statistics 2250 PERIMETER PARK AND 3800 PARAMOUNT 5

6 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 2250 PERIMETER PARK AND 3800 PARAMOUNT 6

7 THE RESURGENCE OF THE SUBURBS MILLENNIAL HOME OWNERSHIP BREAKDOWN WILL NOT PURCHASE 16% ALREADY OWN 24% PLAN TO PURCHASE 60% MILLENNIALS LIVING IN CITIES 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) MILLENNIALS LIVING IN SUBURBS 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) SURGING DEMAND AND LIMITED NEW SUPPLY IS DRIVING IMPRESSIVE RENT GROWTH. With only two buildings totaling 276,000 SF in the RTP / I-40 submarket currently under construction (nearly 50% of which is preleased), rents in the submarket have risen an impressive 22% over the past 36 months and appear poised to exceed that going forward PERIMETER PARK AND 3800 PARAMOUNT 7

8 PHARMACEUTICAL 20% HEALTHCARE 15% OTHER 19% INVESTMENT HIGHLIGHT N O.2 DIVERSE TENANT ROSTER ANCHORED BY TRIANGLE S CORE INDUSTRIES WITH MARK-TO-MARKET OPPORTUNITY TENANT MAKEUP BY INDUSTRY TECHNOLOGY 46% WEIGHTED AVERAGE RENTAL RATE OF $21.31 PER SQUARE FOOT (11% BELOW MARKET) 2250 Perimeter Park & 3800 Paramount have tenant rosters anchored by some of the Research Triangle s core industries such as healthcare and technology. The portfolio contains a blend of rapidly expanding regional companies and well-established national and international firms, many with their corporate headquarters located at 2250 & The largest tenant, TrialCard Incorporated, is one of the fastest growing tenants in the region and represents 32% of the portfolio. Since the company s inception in 2001, TrialCard has become an industry-leading pharmaceutical solutions provider with 450 employees in the Raleigh-Durham area. In addition to the rapid growth of the company, TrialCard moved its corporate headquarters to 2250 Perimeter Park in 2016 under an eight-year lease term adding to the stability of the asset. The fully-leased portfolio offers great stability for investors as a number of recent deals have been for seven year terms. The entire tenant roster boasts a weighted average lease term over four years. Currently 100% leased, 2250 Perimeter Park & 3800 Paramount provide investors with the opportunity to invest in a fully stabilized asset and capitalize on tenant lease expirations in a rising rental rate environment. Rents at 2250 & 3800 are significantly below market with a weighted average rental rate of $21.31 per square foot, offering attractive future upside potential to investors. Given the strong market fundamentals of the RTP/I-40 submarket and the significant leasing momentum at Perimeter Park, prospective investors are poised to capitalize on this exceptional mark-to-market opportunity in a tightening Raleigh-Durham office market PERIMETER PARK AND 3800 PARAMOUNT 8

9 INVESTMENT HIGHLIGHT N O.3 INSTITUTIONAL QUALITY CLASS A OFFICE ASSETS WITH A MARKET-LEADING AMENITY PACKAGE 2250 Perimeter Park & 3800 Paramount offer attractive, high-quality construction within an institutionally maintained business park setting. The assets feature well-landscaped exteriors and provide a market-leading amenity package including access to a Hyatt House hotel, conference centers, walking trails, two fitness centers, several cafés, and rotating food trucks all within the park Paramount contains a 5,000 SF state of the art fitness center, offering tenants direct access to a highly utilized amenity within the park. Furthermore, the assets provide abundant employee parking on site with an impressive 4.17 spaces per thousand square feet at 2250 and 4.70 spaces per thousand square feet at Institutional quality as well as an abundance of amenities help consistently attract new tenants to the assets and successfully retain existing tenants PERIMETER PARK AND 3800 PARAMOUNT 9

10 INVESTMENT HIGHLIGHT N O.4 OPPORTUNITY TO ACQUIRE SIGNIFICANT CRITICAL MASS BELOW REPLACEMENT COST The ability to acquire Class A assets in the Raleigh-Durham office market has become increasingly competitive as the area is the fastest growing metropolitan in the country since As a result, the opportunity to acquire office assets in the RTP/I-40 submarket, one of Raleigh-Durham s top submarkets, has become difficult with high barriers to entry and limited available supply. Access to two assets with 226,328 SF of institutionally maintained, Class A office space that is 100% occupied and poised for long-term success is a unique prospect for investors. Moreover, 2250 Perimeter Park & 3800 Paramount represent an exceptional opportunity to obtain significant critical mass in Raleigh-Durham s premier business park. With an estimated replacement cost of $250 per square foot for surface-parked office, investors are presented with an excellent opportunity to invest at an attractive basis, in turn, driving significant bottom line growth. Bolstered by a center of the market location and strong economic fundamentals, investment opportunities such as this one are truly rare. INVESTMENT HIGHLIGHT N O.5 RALEIGH-DURHAM S PREMIER BUSINESS PARK PERIMETER PARK Perimeter Park is the premier business park in the Raleigh-Durham area with more than three million square feet of mixed-use space located at the epicenter of the flourishing Triangle market. Currently 97.6% occupied, Perimeter Park houses major operations of the market s top companies such as Oracle, Lenovo, Microsoft, Credit Suisse, SciQuest, BASF, Time Warner Cable, and Fujifilm. In addition to attracting a number of Fortune 500 firms, this center of innovation fosters the growth of numerous local entrepreneurial companies. Perimeter Park is designed to meet the needs of the rapidly expanding roster of healthcare, technology, research organizations, and entrepreneurial companies that are highly concentrated in the Triangle area. High-quality construction and a market-leading amenity package supplement the ideal location of the park offering extraordinary competitive advantages to investors in the thriving Raleigh-Durham office market. Despite the delivery of three speculative buildings over the past two years totaling 649,986 SF, the five year average historical occupancy for Perimeter Park is approaching 93%. Significant leasing momentum in Perimeter Park over the last 12 months, including notable leases from INC Research (~225,000 SF), UNC Health Care (~182,000 SF), and Credit Suisse (~70,000 SF), illustrates the rare opportunity for investors to capitalize on two assets in the region s premier business park PERIMETER PARK AND 3800 PARAMOUNT 10

11 DURHAM 40 Research Triangle Park RALEIGH-DURHAM INTERNATIONAL AIRPORT Morrisville UMSTEAD P ARK PERIMETER PARK 40 RALEIGH 440 INVESTMENT HIGHLIGHT PERIMETER PARK IS PRIMED FOR SIGNIFICANT LONG-TERM SUCCESS AS UNPRECEDENED GROWTH IN THE AREA PROMPTS MARKET MOVING PROJECTS N O.6 FLOURISHING CENTER-OF-THE-MARKET LOCATION RALEIGH-DURHAM 2250 Perimeter Park & 3800 Paramount are strategically located at the geographic center of the Raleigh-Durham market, offering convenient access to Interstate 540 (1 mi) and Interstate 40 (1.5 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 (5 mi), West Raleigh (8 mi), and North Raleigh (10 mi) as well as convenient access to the Raleigh-Durham International Airport (3 mi) and the world-renowned Research Triangle Park (4 mi). With an ideal south-rtp location, 2250 Perimeter Park & 3800 Paramount benefit 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 Perimeter Park as the premier office destination for new-to-market companies as well as local expansions, making investments such as 2250 & 3800 increasingly rare. Perimeter Park is primed for significant long-term success as unprecedented growth in the area has prompted marketmoving projects surrounding the park. Major projects include the development of Wake Tech Community College s RTP Campus, the fully funded Department of Transportation extension of McCrimmon Parkway, the paving of Watkins Road, and two luxury multifamily projects being developed at the entrance of the park. As these projects deliver in 2017, additional long-term value will be added to the park presenting potential investors with the opportunity to capitalize on increased investment in the area immediately proximate to 2250 Perimeter Park & 3800 Paramount PERIMETER PARK AND 3800 PARAMOUNT 11

12 3800 PARAMOUNT PARKWAY 2250 PERIMETER PARK BRIER CREEK COUNTRY CLUB investment advisors SCOT HUMPHREY Director RDU INTERNATIONAL AIRPORT WILLIAM B. UMSTEAD STATE PARK (5,599 ACRES) RYAN CLUTTER Senior Managing Director CHRIS LINGERFELT Associate Director analysts ZACK DROZDA Real Estate Analyst PARAMOUNT PARKWAY 40 TO RALEIGH WILLIAM MORRIS Real Estate Analyst debt + structured finance AIRPORT BLVD 2250 PERIMETER PARK DRIVE TRAVIS ANDERSON Senior Managing Director tanderson@hfflp.com ROGER EDWARDS Director redwards@hfflp.com leasing contact WILLIAM ALLEN Trinity Partners wallen@trinity-partners.com RETAIL AMENITIES WAKE TECHNICAL COLLEGE RTP CAMPUS First phase scheduled to deliver in 2017 MCCRIMMON PKWY 2017 HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 24 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter at twitter.com/hff. MCCRIMMON PARKWAY EXTENSION