1710 N STREET, NW WASHINGTON, DC Proposal for Brokerage Services

Transcription

1 1710 N STREET, NW WASHINGTON, DC Proposal for Brokerage Services COLLIERS INTERNATIONAL APRIL 2018

2 Table of Contents Executive Summary... 2 Market Overview... Sale Comparables and Aerial Lease Comparables Plat Map and Zoning Regulations CBD Submarket Metrics 4 Sale Strategy... Marketing Strategy Timeline Fee Structure Team Organizational Chart 11 Appendix: Resumes N STREET, NW 1

3 Executive Summary INTRODUCTION On behalf of Colliers International, thank you for your interest in engaging us to market 1710 N Street, NW in Washington, DC. Our team has experience in marketing office assets in the area as well as marketing available spaces / buildings to users (please see resumes on page 16). STRENGTHS AND CHALLENGES Below are a number of strengths and attributes of the asset which we will highlight in our marketing effort. These features include: Superior location in the Central Business Distrcit (CBD) Two (2) blocks from both DuPont Circle and Farragut North Station stops on MetroRail s Red Line ( the business line ); Accessible road network via Connecticut Avenue, Massachusetts Avenue, 17th Street and N Street; Walkable Amenities Nearby hotels include: The Tabard Inn, Topaz House, The Mayflower, Beacon Hotel, Courtyard by Marriott, The Jefferson, The DuPont Circle Hotel and others; Nearby restaurants and bars include: Iron Gate, The Palm, I Ricchi, Teddy & The Bully Bar, Vapiano, Ankara, Rosebar, Dirty Martini and more; Physical Characteristics Charming architecture with historical significance; Four (4) levels of open space; including a fully built out kitchen; Expansive finished Floor to Ceiling Height (estimated to be 12 ) Excellent window lines which allow a great deal of natural light into the spaces; Passenger elevator which serves all floors; Full bathrooms on floors 2, 3, 4; half bathroom on First floor; Numerous fireplaces which may be restored into working order; Parking for two (2) vehicles Although we are confident that the property and its characteristics will resonate with a large segment of the potential buyer pool, some concerns may arise as noted below; we have prepared to handle objections as follows: Concern: Age of product and configuration Property has functioned well for current owner / tenant and can be renovated as needed; Concern: Limited street exposure Plenty of room for signage at N Street level; In spite of these potential challenges, we are confident that we can overcome objections of this nature. SALE COMPARABLES We would envision this property to be best suited for a small association or law firm. Detailed sale comparables are provided on pages 5 and 6; summary details follow: Pricing ranges from $475/sf at N Street, NW to $806/sf at nd Street, NW; Smaller spaces drive per square foot values higher, while larger spaces generate a lower per square foot value; Comparables include smaller, user oriented sales, as well as larger, multitenant investment-oriented sales; Our best guess is that 1710 N Street, NW falls in the range of $675/sf to $725/sf; 1710 N STREET, NW 2

4 Executive Summary (cont.) MARKETING STRATEGY Our sense is that a sale to a user or local investor buyer will ultimately drive the highest value for AMRPA, and our primary goal will be to market to users directly as well as through the brokerage community that represents those users who may be a candidate to acquire the asset. In addition, our marketing effort would include canvassing investor or developer groups who would be interested in converting the existing asset to residential use. As part of our premarketing process, we would further investigate the possibility of residential use by consulting with architects and attorneys who can provide insight into the viability of this strategy. While the highest value is likely to come from an owner occupant, we would want to be conversant in the adaptability of the site for residential use. It would be an important part of our process to create competition for the assets and understand values achieved by both a user sale and a developer sale. If we are engaged, there are a number of items that we would like to review in order to further refine pricing and the focus of our marketing strategy: Historical operating statements to get a sense of the costs associated with running the building(s); Any property condition reports done which might identify capital needs going forward; A list of capital improvements / investments made by the AMRPA during its ownership Other materials in this document include: Plat map and zoning regulations Sale and lease comparables CBD submarket metrics Marketing strategy and timeline Compensation proposal Team organizational chart Resumes We are excited about the opportunity to work with the AMRPA and would begin marketing preparations immediately upon being hired. Thank you for your attention in this matter and we look forward to hearing from the organization N STREET, NW 3

5 Market Overview Sale Comparables and Aerial Lease Comparables Plat Map and Zoning Regulations CBD Submarket Metrics 1710 N STREET, NW 4

6 Sale Comparables Aerial nd Street, NW Marketing $806/sf Q Street, NW 8/2/2017 $650/sf Jefferson Place, NW 11/14/2016 $700/sf th Street, NW Marketing $650/sf th Street, NW 4/24/2017 $651/sf N Street, NW 4/26/2016 $475/sf th Street, NW 9/29/2017 $538/sf th Street, NW 12/12/2016 $798/sf 1710 N Street, NW 1710 N STREET, NW 5

7 Sale Comparables Size (RSF) Class Year Built nd Street, NW th Street, NW, Unit G th Street, NW 1410 Q Street NW 5,500 4,400 5,116 5,000 B B C B Occupancy 100% 100% 0% 100% Date of Sale Marketing Marketing 9/29/2017 8/2/2017 $4,435,000 $2,860,000 $2,750,000 $3,250,000 $806 $650 $538 $650 Seller Republic of Columbia Thomas B. Fordham Foundation Christopher O'Neill Jonathan D. Taylor & Michael W. Rankin Buyer TBD TBD Saltzman & Evinch Paragon Title & Escrow Company th Street, NW th Street, NW 1821 Jefferson Place, NW N Street, NW 5,600 7,830 5,430 5,537 Price Price PSF Size (RSF) Class B C C B Year Built Occupancy 0% 100% 100% 0% Date of Sale 4/24/ /12/ /14/2016 4/26/2016 Price (PSF) $3,645,000 $6,250,000 $3,800,000 $4,788,000 $651 $798 $700 $475 Seller MGA, Inc Goldberg, Godles, Wiener and Wright LLP Matador Solutions American Foreign Service Protective Association Buyer Marwick Associates, LLC th Street, LLC The Humanist Foundation Barbaricum, LLC Cap Rate 1710 N STREET, NW 6

8 Lease Comparables Address Tenant Size (SF) Sign Date Type Rental Rate Service Type Term 1829 M Street, NW Unknown 3,500 4/1/2018 Direct $32.31 FS Jefferson Place, NW FP1 Strategies LLC 3,796 1/1/2018 Direct $33.00 Plus Util 11 Months th Street, NW Unknown 5,600 1/1/2018 Direct $43.00 Plus E&C 5 Years 1711 N Street, NW Armenian National Committee of America 2,506 10/1/2017 Direct $44.73 FS th Street, NW The New Washington Land Co Inc 2,930 4/1/2017 Direct $42.28 MG 5 Years th Street, NW BlueCart, Inc 3,180 11/1/2016 Direct $52.00 FS Connecticut Avenue, NW Wilkenfeld, Herendeen, & Atkinson 2,816 12/1/2016 Direct $35.00 Plus E&C 5 Years 1712 N Street, NW Unknown 1,300 3/1/2017 Direct $36.00 FS 2 Years 1710 N STREET, NW 7

9 Plat Map and Zoning Regulations 1710 N ST, NW ZONING REGULATIONS Zoning Designation MU-15 Total Building SF 4,500 Total Land SF 1,822 Current FAR 2.47 Maximum Commercial FAR 2.5 Maximum Residential FAR 4 Residential FAR with Inclusionary Zoning N STREET, NW 8

10 CBD Submarket Metrics THE MARKET BY THE NUMBERS CBD INVENTORY BY CLASS Metric All Classes Class A Class B/C Inventory (SF) 46,927,211 33,322,908 13,604,303 Vacancy Rate 8.70% 10.00% 7.50% Class A 42.4% Change from Beginning of Year (Basis Points) Absorption (SF) 56, , ,605 New Construction (SF) 432, ,271 18,618 Under Construction (SF) 2,000,000 1,800, ,000 Direct Asking Rental Rate $56.86 $63.42 $48.88 Trophy 7.6% Class B 50.0% Change from Beginning of Year ($1.11) ($1.49) $0.10 CBD / EAST END DEVELOPMENT PIPELINE Total Development RBA (Thousands SF) Q Q Q Q Q Q Q th St NW 901 4th St NW th St NW 2001 K St NW th St NW 2112 Pennsylvania Ave NW 655 New York Ave NW 1441 L St NW E Street NW 1701 Rhode Island Ave NW th St NW 700 K Street NW 1301 Pennsylvania Ave NW 1900 N St NW th St NW 2100 K St NW 2050 M St NW 1401 Massachusetts Ave NW 1710 N STREET, NW 9

11 CBD Submarket Metrics (cont.) HISTORICAL VACANCY AND RENTAL RATE TRENDS Overall Vacancy Direct Vacancy Direct Asking Rate 11% $60 10% 10% 9% $58 $56 $54 $52 Direct Asking Rate ($/SF) $50 9% $48 8% $ YtD 2018 Vacancy (%) DIRECT ASKING RENTAL RATES BY CLASS Class A Class B Class C $70 Direct Asking Rental Rate ($/SF) $65 $60 $55 $50 $45 $40 $35 $ YtD N STREET, NW 10

12 Sale Strategy Marketing Strategy Timeline Fee Structure Team Organizational Chart Resumes 1710 N STREET, NW 11

13 Marketing Strategy and Timeline MARKETING STRATEGY To market 1710 N Street, NW, we will pursue a targeted strategy of outreach to owner/users in two organizational areas to ensure the widest exposure for the asset. 1. Associations, boutique law and lobbying firms, strategy and communications firms: Most tenants in the market looking for space in these groups are also seriously considering owning the space they occupy. There is a cachet to ownership that drives executive decisions to look at options such as 1710 N St. Witness the number of owner/users in the N Street corridor. 2. Government Contractors: Contractors who wish to attract the best talent look towards their space to do so. The ceiling heights and historic character of 1710 N St. provide the ability for contractors to creatively attract the talent who will push their business to the next level. TIMELINE Phase One - PRE-MARKETING (15 DAYS) Execute exclusive listing agreement Gather due diligence information Review financials and rent rolls Discover hidden values Photograph asset(s) Gather and create site plans, floor plans, and site renderings Create rough draft of brochure Establish initial contact list Create Internet-based marketing materials Phase Two - MARKETING (SEE PHASE THREE) Invite target buyers to review information Publish property brochure Distribute executive summaries and brochures to initial contact list Publish offering memorandum Personally contact each prospect Expand to national and international database Initiate full exposure Phase Three - PROSPECT SOLICITATION (120 DAYS) Conduct property tours Assist with potential buyer underwriting Contact all initial offers; best and final process Bids due Phase Four - DUE DILIGENCE / ESCROW (60 DAYS) Collect bids and select winner Negotiate and execute purchase and sale agreements Open escrow Coordinate buyer s debt placement Distribute due diligence documentation Coordinate and conduct site inspection Phase Five - CLOSING PERIOD (60 DAYS) Complete due diligence Resolve title issues (if necessary) Remove all contingencies including financing Finalize prorations Review settlement statement with escrow officer Obtain and confirm all documentation from buyer, seller and lenders Confirm transfer of funds and close escrow 1710 N STREET, NW 12

14 Compensation Proposal AGREEMENT / TERM: Exclusive right to sell - twelve (12) month term COMPENSATION STRUCTURE: 6.0% of the total sales price; 4.0% to Colliers and 2.0% to the co-broker COST REIMBURSEMENT: For all out of pocket third-party marketing related expenses, including printing of the offering materials and related teasers, photography, architecture schemes, artwork, Real Capital Markets and distribution / tracking (web hosting service), postage and electronic war room. Budget to be presented for approval to Ownership, anticipated to be no more than $5,000 for the entire portfolio s marketing materials. Invoices will be provided for all vendor costs. CO-BROKERS: Colliers International will cooperate with co-brokers but initially request that they look to their respective client for compensation. In the event that an investor / user is unwilling to compensate the co-broker directly, we will request that they incorporate the requested co-broker fee in their offer. CARVE OUTS: None 1710 N STREET, NW 13

15 Team Organizational Chart OUR TEAM The team that we have assembled for 1710 N Street, NW is a highly experienced, multi-faceted team who will provide in-depth knowledge and expertise to fulfill the requirements of this disposition. Included on our team are local investment sales professionals with over 60 years of combined experience. The Colliers Capital Markets Group is a real estate advisory practice offering tailored investment services to both local and global clients. As an individualized and client-focused practice, we assist our clients with all aspects of their investment initiatives. This includes but is not limited to overall strategy support, acquisition advisory, debt structuring, asset services, and disposition advisory. Members of the team have advised foreign and domestic clients on over 300 national commercial real estate transactions. Please see the organizational chart below as well as the resumes in the following appendix to learn more about each member s unique skills and experience. INVESTMENT SALES - BROKERAGE & LEADERSHIP David W. Parker Regional Managing Director, Market Leader William E. Kaye Executive Vice President Matthiessen Chatfield-Taylor Associate FINANCIAL ANALYSIS / DEBT John Broderick Senior Vice President Troy Zieman Senior Financial Analyst MARKETING AND RESEARCH Robert Hartley Director of Research Carina Bedor Regional Marketing Manager Hilary Sayre Marketing Associate 1710 N STREET, NW 14

16 Appendix Resumes 1710 N STREET, NW 15

17 Resume David W. Parker REGIONAL MANAGING DIRECTOR & MARKET LEADER Colliers Washington, DC EDUCATION BA, Williams College CONTACT DETAILS DIR MAIN Colliers International 1625 Eye Street, NW Suite 700 Washington, DC AREA OF EXPERTISE - INVESTMENT SALES David Parker joined Colliers in March of 2016 as Regional Managing Director for the Greater Washington DC Metro area. Dave is a 30-year commercial real estate veteran, with a track record of building and growing successful real estate enterprises. In his three-decade career, he has marketed, leased, and sold more than 10 million square feet of commercial real estate. Most recently, he was Managing Director and Partner of PM Realty Group s (PMRG), where he oversaw a portfolio of 25 million square feet, from South Florida to Boston. Prior to joining PMRG, he served as SVP with Cassidy & Pinkard, Inc., where he expanded the Northern Virginia office and directed the firm s efforts to build its brokerage business in the market. Dave also held positions at the Mid-Atlantic office of Prentiss Properties and at The Kaempfer Companies. CREDENTIALS & ACHIEVEMENTS Commissioner for the Loudoun County Industrial Development Authority Chairman of the Loudoun County Economic Development Commission President of the Dulles Area Transportation Association Board Member of the Loudoun Chamber of Commerce and Loudoun Cares INDUSTRY MEMBERSHIPS Loudoun County Industrial Development Authority Loudoun County Ecomomic Development Commission Dulles Area Transportation Association Loudoun Chamber of Commerce Loudoun Cares DCBIA NAIOP Urban Land Institute 1710 N STREET, NW 16

18 Resume William E. Kaye EXECUTIVE VICE PRESIDENT Colliers Washington, DC EDUCATION BA, History The University of Virginia CONTACT DETAILS DIR MAIN MOB Colliers International 1625 Eye St NW Suite 700 Washington, DC AREA OF EXPERTISE - INVESTMENT SALES (OFFICE, INDUSTRIAL, RETAIL, MULTIFAMILY) Bill Kaye is an Executive Vice President of Colliers International. Mr. Kaye has worked on the institutional side of real estate since 1979, and has strong personal and professional associations at the most active institutions. In his 35 years of commercial real estate brokerage, Bill Kaye has participated in the sale of over ten (10) million square feet of office and industrial space which has had an aggregate value in excess of $6 Billion. His primary area of focus has been in and around the Washington, DC and metropolitan area, but he has been involved in a number of transactions throughout the Mid-Atlantic region in areas ranging from the Tidewater area of Virginia, Baltimore, MD and up to Philadelphia, PA. He has represented both local and institutional owners. BUSINESS AND EDUCATIONAL BACKGROUND Over the course of his career, Mr. Kaye has built enduring relationships with both institutional and private investors. His experience with the investment community, give him an in-depth understanding of investors internal buying and selling processes. His attention to detail and clear and direct communication with both owners and investors are tenets of his business practice. Mr. Kaye personally is actively involved in the entire sale process and provides senior-level attention to detail from the preparation of the offering memorandum to the marketing phase, including qualification of prospective purchasers, contract negotiation and due diligence. He utilizes comprehensive marketing brochures that anticipate and identify buyer questions, thereby defending against buyer retrades and facilitating a swift closing of the sale transaction. CREDENTIALS & ACHIEVEMENTS Licensed real estate broker in District of Columbia, Virginia and Maryland Greater Washington Commercial Associate Realtors (GWCAR) Trammell Crow Company Brokerage Top Producer (Nationally) Greater Washington Commercial Associate Realtors, Northern Virginia Sale of the Year 2002 EMPLOYMENT HISTORY Colliers International: present CBRE: Trammell Crow Company: Barnes Morris & Pardoe: N STREET, NW 17

19 Resume Matthiessen Chatfield-Taylor ASSOCIATE Colliers Washington, DC EDUCATION BA, College of William & Mary CONTACT DETAILS DIR MAIN MOB Colliers International 1625 Eye St NW Suite 700 Washington, DC AREA OF EXPERTISE - INVESTMENT SALES (OFFICE, INDUSTRIAL, RETAIL, MULTIFAMILY) Matthiessen Chatfield-Taylor is a licensed commercial real estate consultant, specializing in tenant representation and investment sales in the Washington DC, Northern Virginia and suburban Maryland markets. Matthiessen prioritizes the evaluation of each client s organizational goals and objectives in order to deliver a detailed strategic plan for effective transactions. Matthiessen brings several years of professional experience in commercial real estate. Throughout his career, Matthiessen has represented the interest of foreign and domestic buyers seeking investments, as well as retail and office tenants with real estate requirements. Prior to working at Colliers International, Matthiessen interned for a leading commercial real estate finance firm where he arranged due diligence and prospected new business for multifamily properties nationally. Matthiessen attended Woodberry Forest School in Orange, Virginia and received a Bachelor of Arts in History from the College of William & Mary. PROFESSIONAL ACCOMPLISHMENTS Matthiessen was selected to be a participant of the prestigious Colliers International Accelerate Program consisting of eight, highly-motivated individuals N STREET, NW 18

20 Resume John Broderick SENIOR VICE PRESIDENT Colliers Boston, MA EDUCATION BS, Finance Bentley College CONTACT DETAILS DIR MAIN Colliers International 160 Federal Street 11th Floor Boston, MA AREA OF EXPERTISE - DEBT & EQUITY FINANCE John Broderick joined Colliers International in 2003 as part of the Capital Markets group. John is involved in all aspects of real estate finance, including permanent, development, mezzanine, joint venture and equity placements. John has originated and closed in excess of $2.5 billion in debt and equity transactions since joining the firm. BUSINESS AND EDUCATIONAL BACKGROUND Prior to joining Colliers International, John worked at Fantini & Gorga. Mr. Broderick earned his Bachelor of Science degree in finance at Bentley College N STREET, NW 19

21 Resume Troy Zieman SENIOR FINANCIAL ANALYST Colliers Washington, DC EDUCATION MS, Real Estate Finance Georgetown University BS, Environmental Sciences University of Virginia CONTACT DETAILS DIR MAIN AREA OF EXPERTISE Troy Zieman is a Senior Financial Analyst in Washington, DC supporting the Capital Markets team. Troy provides detailed underwriting as well as market research to aid in the marketing and sale of office and industrial assets. Troy s main focus is risk assessment, financial analysis and discount cash flow analysis for assets in the Washington, DC metro region as well as the Mid-Atlantic region. Troy recently completed his Masters in Commercial Real Estate Finance from Georgetown University and graduated from the University of Virginia with a Bachelor of Science in Environmental Sciences in Formerly an environmental consultant for real estate developers in Virginia and the Carolinas, Colliers International 1625 Eye St NW Suite 700 Washington, DC N STREET, NW 20

22 Resume Robert Hartley DIRECTOR OF RESEARCH Colliers Washington, DC EDUCATION MBA, George Mason University BA, Wofford College CONTACT DETAILS DIR MAIN Colliers International Northern Virginia Region 7900 Tysons One Place Suite 260 McLean, VA AREA OF EXPERTISE As Director of Research, Rob Hartley oversees the research operations for Colliers International within the Greater Washington, DC region. For 17 years, Rob has supported owners and users of real estate by tracking and reporting on the commercial real estate market. Prior to joining Colliers in 2013, Rob served as the Research Director for CRESA within the Mid-Atlantic Region. Before CRESA, he headed research operations for CB Richard Ellis s Mid-Atlantic offices. COMMUNITY INVOLVEMENT In 2015, Rob received the prestigious award of Researcher of the Year for Colliers. Rob is a contributing writer to the Washington Post Capital Business publication and serves as Co-Chair of the Northern Virginia NAIOP Bus Tour N STREET, NW 21

23 Resume Carina Bedor REGIONAL MARKETING MANAGER Colliers Washington, DC EDUCATION BS, The University of North Carolina at Charlotte CONTACT DETAILS DIR MAIN Colliers International Northern Virginia Region 7900 Tysons One Place Suite 260 McLean, VA AREA OF EXPERTISE Carina Bedor, Regional Marketing Manager with Colliers International, has been an influential member of the commerical real estate community for 10 years, gaining marketing, business development and sales management experience. Carina leads the Marketing team s efforts in providing administrative support to the Brokerage team through strategic and effective marketing initiatives. As editor-in-chief, she oversees the execution of significant RFP responses and new collateral templates, ensuring compliance with all branding guidelines as outlined by Global Marketing directives. Carina also partners with the Director of Research in delivery of quarterly reports. Serving as the liaison between Colliers corporate and the Washington, DC regional marketing teams, Carina is accountable for communicating company guideline updates. As the Marketing team Manager, Carina constructively supervises the marketing/client services support team, which includes performance management, oversight, development, hiring, staffing and priority management. These responsibilities remain at the forefront of Carina s duties. Carina manages all third-party relationships with vendor and publications for material delivery and PR. She also has oversight of the Brokerage teams social media strategy and execution, as well as internal and external communication strategy and process. INDUSTRY MEMBERSHIPS Commerical Real Estate Women (CREW), DC Chapter Special Events Committee Co-chair Northern Virginia NAIOP Northern Virginia Chamber of Commerce COMMUNITY INVOLVEMENT Carina is an active member in the Washington, DC Comericial Real Estate Women (CREW) Chapter and serves as Co-Chair for the Special Events Committee N STREET, NW 22

24 Resume Hilary Sayre MARKETING ASSOCIATE Colliers Washington, DC EDUCATION MS, Accounting UNC Kenan-Flagler Business School BA, English Davidson College CONTACT DETAILS DIR MAIN Colliers International 1625 Eye St NW Suite 700 Washington, DC AREA OF EXPERTISE Hilary Sayre is a Marketing Associate in Washington, DC, supporting the Capital Markets team to market large-scale investment properties in the DC metropolitan region. Hilary designs broker opinions of value, offering memorandums, and marketing campaigns for clients. In addition, she works with property owners to execute individualized marketing strategies for their investments, employing analytics programs to produce marketing reports which provide sellers with up-to-date information on deal progress. Hilary joined Colliers International in June 2014 as a Marketing Assistant in Tysons Corner, where she supported the marketing team by designing advertising materials and assisting the brokers with events and expenses. Hilary worked primarily with the industrial team to market warehouse, land, and flex property listings in Northern Virginia, Maryland, and West Virginia. She also served as an administrator, responsible for internal and external communication and vendor relations. Hilary is a graduate of Davidson College with a Bachelor of Arts in English and is currently obtaining her Masters of Accounting through the University of North Carolina Kenan-Flagler Business School. CREDENTIALS & ACHIEVEMENTS Licensed Real Estate Salesperson in Virginia and the District of Columbia Colliers National Service Excellence Award Winner, 2018 Member of CREW (Commercial Real Estate Women) and UWIB (United Women in Business) 1710 N STREET, NW 23

25 Colliers International 1625 Eye Street NW Suite 700 Washington, DC David W. Parker, Regional Managing Director & Market Leader William E. Kaye, Executive Vice President Matthiessen Chatfield-Taylor, Associate John Broderick, Senior Vice President Troy Zieman, Senior Financial Analyst Robert Hartley, Director of Research Carina Bedor, Regional Marketing Manager Hilary Sayre, Marketing Associate N STREET, NW 24