SINGLE-STORY OFFICE PORTFOLIO

Transcription

1 CHARLOTTE MSA 117,117 SF 81% LEASED OFFICE PORTFOLIO IN RAPIDLY EXPANDING NORTH CHARLOTTE THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO THE PARK HUNTERSVILLE

2 executive summary THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 117,117 SF 81% LEASED OFFICE PORTFOLIO IN RAPIDLY EXPANDING NORTH CHARLOTTE 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 The Park Huntersville Single-Story Office Portfolio (the Park, Property or Portfolio ), a 117,117 square foot, Class A office portfolio located in one of Charlotte s premier business parks. Strategically positioned in the explosive Charlotte, North Carolina MSA, the portfolio is approximately 81% leased to a diverse tenant roster anchored by longstanding tenants with attractive remaining term. With two best-in-class assets and in-place rents that are 14.8% below market, the portfolio presents investors with immediate upside potential and the opportunity to capitalize on strong leasing velocity in the nation s fastest growing metropolitan area over the last ten years. This below replacement cost acquisition opportunity is located along the flourishing I-77 corridor in the Northeast/I-77 submarket, one of Charlotte s fastest growing submarkets as a result of rapid population growth and unmatched regional connectivity. The Portfolio provides investors with a rare opportunity to acquire two assets strategically located in one of the region s renowned master planned business parks featuring an attractive tenant roster, unprecedented regional connectivity, an extremely compelling below market rent story, and a significant value enhancement repositioning opportunity. INVESTMENT SUMMARY ADDRESSES Bostick Calhoun 9801 Kincey Avenue Huntersville, NC Kincey Avenue Huntersville, NC SQUARE FEET Bostick 57,214 Calhoun 59,903 PORTFOLIO 117,117 MARK-TO-MARKET OPPORTUNITY DIVERSE, INVESTMENT GRADE TENANT ROSTER FLOURISHING SUBMARKET FUNDAMENTALS URBAN INFILL LOCATION IN A NATURAL, PARK SETTING STRATEGICALLY LOCATED, MASTER PLANNED PARK DISPOSITION OPTIONALITY UNPARALLELED CONNECTIVITY PROXIMITY TO NOVANT MEDICAL CENTER ATTRACTIVE REPOSITION POTENTIAL PERCENT OCCUPIED Bostick 96.9% Calhoun 65.4% PORTFOLIO 80.7% WEIGHTED AVERAGE REMAINING LEASE TERM (EXISTING TENANTS) Portfolio 3.05 Years THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 2

3 NORTHEAST/I-77 MARKET RENTS PER SQUARE FOOT CLASS A RENTAL RATES $23.52 VALUE-ADD OPPORTUNITY SINGLE-STORY PORTFOLIO IN-PLACE RENT $17.24* $25.00 $24.75 $24.50 $24.25 $24.00 $23.75 $23.50 $23.25 $23.00 $22.75 $22.50 $22.25 $22.00 $21.75 $21.50 $21.25 $21.00 $20.75 $20.50 $20.25 $20.00 ROLLOVER SCHEDULE (ANNUAL % OF TOTAL SF) YEAR % YEAR 3 10% YEAR 2 0% YEAR % *SAMPLE IN-PLACE RENTAL RATE USED MARK-TO-MARKET OPPORTUNITY UPON ROLLOVER Currently, the Portfolio features a mix of net, modified net and full-service leases, with the adjusted in-place rents $12.35/SF (full-service and modified net lease rates adjusted to NNN), which is an astounding 14.85% below current asking rates of $14.50/SF (NNN). If prospective investors choose to convert existing leases to full-service leases, they are afforded enormous upside with the Class A market average rental rate of $23.52/SF and the only full-service tenant currently paying $17.24/SF, 26.7% below market. Furthermore, 29% of current leases roll in year one. The Portfolio offers prospective investors both immense upside through this rare mark-to-market opportunity and an immediate value add chance to lease up 22,500 (19.2% of total) square feet of vacant space. THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 3

4 DIVERSE, CREDITWORTHY TENANT ROSTER ANCHORED BY LONG-TERM TENANTS WITH EXCEPTIONAL TERM The Portfolio offers an attractive tenant roster representing local, regional, national and international companies from a variety of industries, some of which are headquartered within the Bostick and Calhoun buildings. The top industries within the portfolio consist of Engineering, Healthcare, Research, and Insurance. The tenant roster is heavily influenced by other industrial tenants and owners within The Park - Huntersville including Forbo Siegling, Joe Gibbs Racing, and the global headquarters for American Tire Distributors, Inc. With the Novant Health Huntersville Medical Center located within The Park, tenants enjoy enviable and easy access to a full range of quality medical care as all of the Portfolio assets lie less than a quarter mile from the regional hospital facility. Notable companies in the offering include Liberty Mutual Insurance (Moody s: A2), SMC Corporation of America (Publicly Traded: Tokyo Stock Exchange) and BioCytics, Inc. (HQ, affiliate of Carolina BioOncology Institute). Not only is The Portfolio comprised of a diverse tenant base, it is anchored by tenants with long-term tenancy at the assets and attractive remaining lease term. Pace Analytical Services, BioCytics, Inc., and Pratt & Miller Engineering currently occupy approximately 37% of The Portfolio. These three anchor tenants have a weighted average tenancy of nearly 15 years and boast 4.73 years of remaining lease term, providing attractive security to prospective investors. TENANT MAKEUP BY INDUSTRY ENGINEERING 27% 25,774 SF HEALTHCARE 23% 21,540 SF RESEARCH 18% 16,774 SF INSURANCE 11% 10,584 SF SPORTS & ENTERTAINMENT 11% 10,373 SF OTHER 10% 9,480 SF THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 4

5 16 THE PARK HUNTERSVILLE n FLOURISHING SUBMARKET FUNDAMENTALS Situated along the I-77 corridor, the Northeast/I-77 submarket is one of Charlotte s fastest growing submarkets due to explosive population growth, access to key decision makers and exceptional regional connectivity. As a result, the area boasts strong market fundamentals as demand increases from major corporate users and expanding regional companies. NORTHEAST/I-77 SUBMARKET - CLASS A Rental Rate Growth & Occupancy ( Q2 2017) Asking rents in the Northeast/I-77 submarket have grown by an impressive 6.6% in the past twelve months, to now average $21.21/SF. Class A asking rents continue to lead the overall submarket with an astounding 8.6% rent growth over the same time frame, to now average $23.52/SF. Organic growth and minimal new supply have been primary drivers for rent growth and absorption in the market. Furthermore, vacancy has compressed from 11.5% in 2015 to 6.2%% in Q2 2017, while Class A vacancy improved dramatically from 14.8% in 2015 to 5.9% in Q RENTAL RATES OCCUPANCY (%) THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 5

6 URBAN INFILL LOCATION IN A NATURAL, PARK-LIKE SETTING The Park - Huntersville has redefined the traditional parameters that characterize suburban office property. The Bank of America Pension Plan was truly ahead of its time when establishing the layout of this suburban jobs center, providing best in class product while working to retain a natural park setting. The Kemp Building, which serves as management offices and the Park conference center, is carefully positioned at the epicenter of both the multi-story and single-story office buildings and numerous other Park assets. Within this extraordinary focal point, Park tenants and owners enjoy access to a state of the art boardroom facility and multiple conference room options. Kemp offers outstanding views of the pristine 6-acre lake, its highly walkable half-mile paved track, and the surrounding landscapes. Traditional suburban office parks are characterized by sprawling layouts with limited nearby amenities. Such concepts limit walkability and inconvenience tenants who lack proximity to dining and retail options. The Park, however, not only offers walkability to numerous eateries and retail options, but also offers immediate access to Novant Health Huntersville Medical Center, a primary economic driver within the development. Recent nearby retail and apartment developments provide a mix of amenities and further demonstrate the Park s urban infill nature. These include: EarthFare, Publix and Harris Teeter food markets, restaurants such as Famous Toastery, City Barbeque, Verde, Starbucks, Five Guys, Hawthorne s Pizza, Salsarita s, and Firehouse Subs among others. Pharmacies include Walgreens and CVS. The Park s carefully located buildings surrounded by parking help to establish a pedestrian friendly, walkable office park creating a true urban environment desirable to Millennials and nearby decision makers. THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 6

7 6,000+ DAILY EMPLOYEES (EST.) 2.6+ MSF DEVELOPED 1,460,000 SF OFFICE/FLEX (18% MEDICAL-FOCUSED) 949,000 SF INDUSTRIAL STRATEGICALLY LOCATED, MASTER PLANNED PARK IN THE HEART OF NORTH CHARLOTTE 125,700 SF RETAIL 560 APARTMENT UNITS The Park Huntersville Single-Story Portfolio is strategically located in the heart of the north Charlotte submarket benefitting from unprecedented regional connectivity with immediate access to Interstate 77 Charlotte s main North-South thoroughfare. Convenient access to this major highway offers seamless connectivity to the entire MSA including Uptown Charlotte (12 mi.) and the Charlotte Douglas International Airport (17 mi.). Given the region s rapidly expanding economy, The Park benefits from close proximity to a number of prestigious academic institutions including UNC Charlotte, Central Piedmont Community College, Queens University, and Davidson College, which provide a well-educated labor force to support local corporate expansions and new-to-market job announcements. Additionally, The Park is located minutes from the affluent Lake Norman area which is highly concentrated with decision making executives and boasts an average household income of more than $111,000 (Source: Claritas). Offering a live-work-play balance that is unique to the Huntersville Lake Norman area, The Park appeals to the Millennial workforce and high net worth executives in the surrounding area. The Park benefits from excellent access and visibility along Interstate 77. Total vehicles per day traveling past The Park on I-77 exceed 107,000 (Source: NCDOT) and this count is expected to continue on an upward trajectory as residential growth flourishes in the surrounding area. THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 7

8 DISPOSITION OPTIONALITY The Park Huntersville Single Story Portfolio sits on two separate tax parcels. While these assets have never been marketed and/or sold, they are currently packaged and marketed as a portfolio. The individual tax parcels provide prospective investors the option to sell and/or finance the individual properties on a one-off basis, or take a long-term approach which affords investors redevelopment flexibility. EXIT STRATEGY OPTIONALITY Sell as a portfolio Provides an investor the ability to more effectively manage their basis by splitting the assets and selling as two separate offerings, which allows future investors the ability to target a different range of investors Affords the ability to finance both assets separately Long-term redevelopment potential ASSET ADDRESS PARCEL ID ACRES ZONING Bostick 9801 Kincey Avenue CB Huntersville, NC Calhoun 9800 Kincey Avenue Huntersville, NC CB FAVORABLE ZONING WITH FLEXIBLE USAGES Bostick and Calhoun enjoy the Town of Huntersville s favorable CB zoning that is geared towards large-scale, employment-oriented development with numerous allowable uses. There is additional potential to minimize development costs as the site is vested under the 1991 Huntersville Zoning Ordinance requirements. THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 8

9 CASCADE/NC 150 MOORESVILLE IREDELL COUNTY MT. MOURNE DAVIDSON CORNELIUS SAM FURR THE PARK HUNTERSVILLE HUNTERSVILLE HAMBRIGHT EASTFIELD CABARRUS COUNTY 77 HARRIS/NC 115 UNPARALLELED CONNECTIVITY WITH SIGNIFICANT INFRASTRUCTURE INVESTMENT IN THE SURROUNDING AREA GASTONIA 85 TRYON DERITA 36TH ST Given Charlotte s rapid northward expansion, the area surrounding The Park is receiving significant infrastructure investment to accommodate the rapidly growing I-77 corridor. A $650 million project is currently under construction and will add four express toll lanes to I-77 stretching from Uptown Charlotte to Mooresville. Scheduled to deliver in early 2018, the I-77 express lanes will greatly reduce traffic in the area and improve regional connectivity. Additionally, the Charlotte light rail service proposed a Red Line extension that would add a 25-mile commuter rail system with 12 stations between Uptown Charlotte and Mooresville. Estimates show that this project would accommodate more than 5,000 passengers a day with a rail station less than 1.5 miles from The Park offering new levels of connectivity between The Park and Greater Charlotte. Potential investors have the unique opportunity to take advantage of the significant capital investment in the area that directly benefits The Park. CHARLOTTE DOUGLAS INTERNATIONAL AIRPORT Wilkinson Blvd. 77 Central Ave. THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 9

10 PAYOR MIX PRIVATE/ SELF PAY 85% MEDICARE 12% MEDICAID 3% PROXIMITY TO NOVANT MEDICAL CENTER Novant Health (Moody s: A1) is a not-for-profit system of 15 medical centers and 1,380 physicians across 530 locations in North Carolina, South Carolina, Virginia, and Georgia. With an integrated system of physician practices, hospitals, and outpatient centers, Novant served over four million patients in 2016 and was recognized as a top healthcare provider in the Carolinas and Southeast region. With the Novant Health Huntersville Medical Center located within The Park, tenants enjoy enviable and easy access to a full range of quality medical care as all of the Portfolio assets lie less than a quarter mile from the regional hospital facility. The 370,899 SF facility contains 91 licensed beds and serves more than 44,845 patients a year ranking as the fourth best performing hospital in the Charlotte metropolitan area. This investment grade medical provider serves as an economic driver on the I-77 corridor, increasing job growth in the area and situating The Park as the primary destination for tenants supporting the hospital. ATTRACTIVE REDEVELOPMENT POTENTIAL Novant Health Huntersville Medical Center is the leading care provider in Huntersville. Within a 5-mile radius of The Park, Novant has 100% market share with no competing hospitals in the area. Given Novant s significant investment in Huntersville and the limited surrounding opportunities for expansion, the Portfolio is ideally positioned to capitalize on the healthcare system s future growth. MARKET SHARE NOVANT HEALTH PRESBYTERIAN MEDICAL CENTER 20% CAROLINAS MEDICAL CENTER - UNIVERSITY 7% LAKE NORMAL REGIONAL MEDICAL CENTER 5% NOVANT HEALTH HUNTERSVILLE MEDICAL CENTER 4% CAROLINAS HEALTHCARE - CAROLINAS MEDICAL CENTER 64% The Park Huntersville Single-Story Office Portfolio provides potential investors with the opportunity to invest in two assets neighboring Novant Huntersville Medical Center. The primary use for the Bostick and Calhoun buildings is traditional office, with a small component of medical office and lab space. There exists an underlying opportunity to convert both buildings to full medical office by leveraging the location and proximity to one of the area s fastest growing hospitals. Currently landlocked by Interstate 77 and neighboring parcels owned by different entities, a potential investor could convert the Bostick and Calhoun buildings to medical office and absorb the future demand of Huntersville Medical Center. Higher rental rates along with a higher tenant retention rate make the medical office conversion an appealing and viable option for investors. THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 10

11 A1 CREDIT RATING (MOODY S) $443 MILLION TOTAL REVENUE (2017) CALHOUN BOSTICK ~ 45,000 PATIENTS SERVED ANNUALLY 4TH BEST PERFORMING HOSPITAL IN CHARLOTTE 5 MILE RADIUS WITH NO COMPETING HOSPITALS NOVANT HEALTH HUNTERSVILLE MEDICAL CENTER STATISTICS 2017 CLINICAL METRICS 2017 FINANCIAL METRICS Avg. Length of Stay 4.0 days Total Patient Revenue $443,449,707 Bed Utilization Rate 83% Net Patient Revenue $168,224,704 Total Acute Days 25,652 Net Medicare Revenue $20,391,549 Medicare Advantage Days 3,401 Adjusted Patient Days 60,306 Net Medicaid Revenue $5,312,801 No. of Discharges 6,448 Net Income $44,944,207 ER Visits 37,883 Total Assets $91,390,924 No. of Inpatient Surgeries 1,658 Net Operating Margin 26.4% THE PARK HUNTERSVILLE SINGLE-STORY OFFICE PORTFOLIO 11

12 HUNTERSVILLE SHOPPING CENTER / STANDALONE AMENITIES: Food Lion Taco Bell Bojangles Cook Out Autozone LAKE NORMAN ROSEDALE SHOPPING CENTER: CVS Harris Teeter Salsarita s Fresh Cantina Jet s Pizza TCBY Domino s Pizza Killingtons Restaurant & Pub NOVANT HEALTH HUNTERSVILLE MEDICAL CENTER 77 CHARLOTTE WALGREENS CALHOUN BOSTICK SILVER COLLECTION AT THE PARK APARTMENTS investment advisors medical office analysts debt + structured finance RYAN CLUTTER Senior Managing Director rclutter@hfflp.com ZACK DROZDA Associate zdrozda@hfflp.com RYAN EKLUND Associate reklund@hfflp.com BRENT BOWMAN Senior Director bbowman@hfflp.com SCOT HUMPHREY Senior Director shumphrey@hfflp.com CHRIS LINGERFELT Director clingerfelt@hfflp.com WILLIAM MORRIS Real Estate Analyst wmorris@hfflp.com THE PARK HUNTERSVILLE SINGLE-STORY PORTFOLIO 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.