AUSTIN VALUE-ADD OFFICE PORTFOLIO

Transcription

1 EXCHANGE PARK LAKEWOOD ON THE PARK B & C ATRIUM OFFICE CENTRE AUSTIN VALUE-ADD OFFICE PORTFOLIO MERIDIAN EXECUTIVE PLAZA 812 SAN ANTONI0 1

2 AUSTIN VALUE-ADD OFFICE PORTFOLIO LAKELINE EXECUTIVE SUMMARY HFF has been exclusively retained by the Owner to offer to qualified investors an opportunity to purchase the 100% fee simple interest in the JOLLYVILLE Austin Value-Add Office Portfolio (the Portfolio ), a five-property ANDERSON value-add MILL portfolio totaling 569,916 square feet in three of the top submarkets in Austin, Texas. The properties in the Portfolio are offered individually, as sub-portfolios, or as a single portfolio transaction. The 81% leased Portfolio features a diverse tenant base and lease maturities providing stable cash flow with contractual rent increases. Upside in value exists through the lease-up of vacant space and rollover of below-market leases in an increasingly strong rental rate environment. The offering provides an investor the unique opportunity to acquire a critical mass of cash-flowing and value add office properties in an infill location through a single portfolio in one of the premier office markets in the country. 1 WELLS BRANCH PFLUGERVILLE LAKEWOOD ON THE PARK B & C Lakewood on the Park B & C NORTHWEST HILLS Exchange Park Atrium Office Centre CRESTVIEW INVESTMENT HIGHLIGHTS CRITICAL MASS The Portfolio offers investors an opportunity to gain a significant foothold in Austin with the acquisition of over 569,000 square feet in five distinct, highly desirable office developments located in the city s most dynamic submarkets: Downtown, North MoPac and Loop 360. Each property in the Portfolio has unique strengths and opportunities that a new owner can capitalize on as the fundamentals in Austin continue to strengthen. STRONG CASH FLOW WITH SUBSTANTIAL UPSIDE POTENTIAL At 81% occupancy, the Portfolio offers a unique value enhancement opportunity to upgrade an infill office portfolio of size in one of the nation s hottest real estate markets. The current tenant base provides stable cash flow from a diverse rent roll that well represents Austin as a whole. Technology (33%) is the largest industry represented in the Portfolio with no other industry representing greater than 18%. Strong upside potential exists through the repositioning and lease up of vacant space as well as the near term roll of the existing tenancy, which has an average remaining lease term of 3 years and rates 29% below market. BARTON CREEK WESTLAKE HILLS Meridian Executive Plaza AUSTIN OFFICE MARKET The Austin office market remains one of the best performing office markets in the country with occupancy levels of 92%, the highest levels in recent history. Additionally, rental rates have reached an all-time high of $30.68 per square foot gross. This continued strength has led to new construction deliveries of 3.9 million square feet, which has been exceeded by the absorption of 4.2 million square feet in 2015 alone. WESTLAKE TARRYTOWN 812 San Antonio DOWNTOWN EAST AUSTIN THRIVING AUSTIN ECONOMY Austin remains one the preferred investment markets in America and was recently ranked by ULI as the #2 market to watch and #4 market for investment for Additionally, it is one of the most robust economies in the nation with employment growth of more than twice the national average. Dubbed the Silicon Hills, Austin is one of the nation s preeminent locations for technology, with more than 108,000 employees at 4,444 technology companies including Apple, Facebook, AMD, NXP Semiconductor, Samsung, Cisco Systems, Intel, Dell, Oracle, National Instruments, GM, Cirrus Logic and many others. 2 SOUTH AUSTIN

3 TENANT DIVERSIFICATION Business Services 33% 4% 2% 13% 9% 6% 5% 2% 5% 18% 3% Education Energy Engineering Financial Services Healthcare Insurance Legal Other Real Estate Technology MERIDIAN EXECUTIVE PLAZA EXCHANGE PARK ATRIUM OFFICE CENTRE 812 SAN ANTONI0 PROPERTY ADDRESS SUBMARKET SIZE OCCUPANCY YEAR BUILT/ YEAR RENOVATED % BELOW MARKET MAJOR TENANTS 812 SAN ANTONIO 812 San Antonio Street Downtown 59,321 99% 1974/ % AISD, Fenimore, Kay & Harrison MERIDIAN EXECUTIVE PLAZA 1601 Rio Grande Street Downtown 56,219 93% 1984/ % Presidium Group, Andrew Harper EXCHANGE PARK 7800 Shoal Creek Blvd North MoPac 151, % 1975/ % E-MDS, Austin Heart Cardiology ATRIUM OFFICE CENTRE 8701 N. Mopac Expy North MoPac 121,901 64% 1982/ % Select Care, Community Care LAKEWOOD ON THE PARK B&C 7600 Capital of Texas Hwy Loop ,558 68% % Centaur Tech., Bulldog Solutions TOTAL/AVERAGE 569,916 81% 29% 3

4 AUSTIN VALUE-ADD OFFICE PORTFOLIO DOWNTOWN SUBMARKET 812 SAN ANTONIO 812 San Antonio is situated in northwest Downtown in a niche location adjacent to the Travis County Courthouse. The Property has historically attracted smaller tenants, largely attorneys, who desire a location near the Courthouse and surrounding county and state offices. As Downtown continues to evolve and shift west, 812 San Antonio is positioned on a rare half block in the path of new development expanding west, such as the new adjacent Aspen Heights apartment tower under construction. 812 San Antonio provides an excellent opportunity to purchase a downtown asset below replacement cost and below recent downtown sales comparables in a highly desired market. The rent roll is largely comprised of smaller tenants (2,393 SF average tenant size) which limits rollover risk and provides income diversity as well as an opportunity to reset market rents as tenants roll, with an average in place rate of $15.21 NNN, 38% below market. Rental rates downtown have grown 8.4% annually over the past 10 years. MERIDIAN EXECUTIVE PLAZA Meridian Executive Plaza s location downtown benefits from its proximity to Austin s largest demand drivers, the Capitol and University of Texas. This location drives the tenancy - a mix of associations, government-related tenants and general office users who want to be near the state, financial and legal center of town. Austin s most prestigious neighborhoods including Pemberton Heights, Tarrytown and Clarksville are within a five minute drive, providing convenient access for executives. In addition to an opportunity to purchase the Property at a discount to replacement cost, it also boasts an above average downtown parking ratio of 3.4:1,000 overall, the majority of which is in a below-building parking structure with direct access into the Property. With balanced rollover through the first five years and 62% of the Property expiring at average rates approximately 25% below market, the Property provides substantial upside as the existing tenants roll to market. The largest tenant, Andrew Harper, is 16% of the property and does not expire until 2021, providing a source of stable long-term cash flow as the remainder of the Property rolls. 4

5 LAMAR BLVD DARRELL K ROYAL MEMORIAL STADIUM TARRYTOWN MARTIN LUTHER KING JR BLVD FRANK ERWIN CENTER MERIDIAN EXECUTIVE PLAZA 15TH STREET GUADALUPE STREET SAN JACINTO BLVD UT DELL MEDICAL SCHOOL RIO GRANDE STREET SAN ANTONIO STREET STATE CAPITOL 812 SAN ANTONIO CLARKSVILLE 6TH STREET CONGRESS AVENUE 1ST STREET LADY BIRD LAKE 5

6 AUSTIN VALUE-ADD OFFICE PORTFOLIO NORTH MOPAC SUBMARKET EXCHANGE PARK Due to the infill location, the Anderson Lane/Burnet Road corridor is experiencing a renaissance with neighborhoods seeing rising home prices and the retail experiencing redevelopment resulting in a young, fresh vibe for the area similar to its South Lamar and South Congress counterparts. This demographic shift has created opportunity for office owners to capitalize on rising rental rates and evolving tenant demand. Exchange Park currently has a strong medical tenancy due to its location in a vibrant medical corridor which stretches from Seton Hospital at Lamar Boulevard and 38th Street and along MoPac in North Central Austin up to Far West Boulevard. The generous 8.29-acre lot size provides ample parking and a park-like setting. Additionally, the land provides the future owner with a covered land play and the future potential for future redevelopment into multiple commercial uses. The current occupancy level of 100% provides strong initial cash flow and the opportunity to raise rents as leases expire with in-place rates approximately 28% below market. The largest tenant, emds which is 26% of the Property, comes up for renewal in ATRIUM OFFICE CENTRE Atrium Office Centre is located in North Central Austin at the intersection of MoPac Expressway (Loop 1) and Highway 183, less than one mile south of Austin s premier mixed-use development, The Domain. This intersection is the demographic center of the city, providing access to Austin s housing as well as the largest concentration of retail and multifamily outside of Downtown. With an occupancy rate of 64%, the Property is currently well below market occupancies of 92%. Additionally, the competitive set boasts above market average occupancies of 93%. The availability of large blocks of space is rare in the area and provides an immediate lease-up opportunity for the next investor. Large, split floor plates allow for both single or half floor tenant configurations, and the parking ratio of 4:1,000 square feet is ample for dense users. Minor aesthetic upgrades provide an opportunity to increase occupancy and rental rates. The Property has an immediate value-add opportunity in the lease up of 43,742 square feet with rental rates 29% below market and the ability to rapidly increase occupancy in an extremely strong leasing environment. 6

7 BRAKER LANE ATRIUM OFFICE CENTRE BURNET ROAD NORTHWEST HILLS EXPRESSWAY MOPAC NORTH CREEK BLVD SHOAL WEST ANDERSON LANE EXCHANGE PARK 7

8 AUSTIN VALUE-ADD OFFICE PORTFOLIO LOOP 360 SUBMARKET LAKEWOOD ON THE PARK B & C Lakewood on the Park B&C enjoy a superior location on the picturesque Loop 360 just north of FM 2222, which provides easy access to some of Austin s most affluent neighborhoods including West Lake Hills and Northwest Hills. The Property has attracted a diverse tenant roster including many technology tenants which flock to the northwest region of Austin. Structured parking of 4.0:1,000 and a park-like setting on Loop 360 near greenbelts and parks provide appealing amenities for tenants. The Loop 360 corridor is Austin s strongest performing suburban submarket. Despite the addition of over 650,000 square feet of deliveries, the area has maintained an occupancy level of 90% and seen rent growth of 6% over the past five years. With 65,812 square feet of space available, an investor is presented with the opportunity to immediately increase cash flow with the lease up of vacancy in an increasing rental rate environment and an extremely tight submarket. 8

9 WEST LAKE HILLS LAKE AUSTIN HIGHWAY NORTH CAPITAL OF TEXAS PLAZA ON THE LAKE CAT MOUNTAIN CHAMPION PARK NORTHWEST HILLS LAKEWOOD ON THE PARK B & C BULL CREEK GREENBELT BULL CREEK 9

10 AUSTIN VALUE-ADD OFFICE PORTFOLIO AUSTIN OFFICE MARKET Led by record-setting population and employment growth, Austin has been one of the nation s fastest growing metropolitan areas over the past decade. The Austin office market has benefited from these trends evidenced by tremendous rental rate growth in major office submarkets and continued vacancy rate compression across the city despite new deliveries. Citywide office rental rates have increased by an astounding 40% since 2006 including an impressive yearover-year boost of 8.9% as of year-end Rental rates in Austin overall and submarkets including Downtown, North MoPac and Loop 360 have all eclipsed pre-recession peaks and currently stand at new all-time highs. The Austin office occupancy rate currently sits at a healthy 92%, the highest level since Occupancies accross the Portfolio submarkets are even tighter at 95% Downtown, 93% in North MoPac and 93% along Loop 360. As limited new contstruction struggles to match the pace of continued robust demand, the trends of increasing rental rates and occupancies are expected to remain in place as Austin continues to experience rapid growth and maturation. Austin AUSTIN Office OFFICE Occupancy OCCUPANCY 96.00% 94.00% 92.00% 90.00% 88.00% 86.00% 84.00% ADDITIONAL INFOR M ATION If you have any questions or require additional information, please contact any of the individuals below. Andrew Levy, Senior Managing Director alevy@hfflp.com, Todd Savage, Managing Director tsavage@hfflp.com, Kelsey Roop, Associate Director kroop@hfflp.com, Patrick McCord, Senior Real Estate Analyst pmccord@hfflp.com, Drew Fuller, Real Estate Analyst dfuller@hfflp.com, Financing Guidance Jeremy Womack, Managing Director jwomack@hfflp.com, % 80.00% Austin Overall Downtown Loop 360 North Mopac $45 $40 $35 $30 AUSTIN OFFICE RENTAL RATES 2015 HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 22 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 10 $25 $20 $15 $ Austin Overall Downtown Loop 360 North Mopac HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties] described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.