I DEER PARK II Bryan Rosenberg Pat Shields, licensed real estate brokers in the state of Illinois, along with Holliday Fenoglio Fowler, L.P. (collectively HFF ).
I DEER PARKII Investment Overview Holliday Fenoglio Fowler, L.P. ( HFF ) has been retained to sell a 100% fee simple interest in Deer Park I II ( the Property, Portfolio or Deer Park ); a highly visible two-asset, 167,077 RSF (property total), Class A office portfolio located in Deer Park, IL. The portfolio is 89.8% leased and derives income stability from its two largest tenants, Robert Half International (Deer Park I) and the Plexus Groupe (Deer Park II), who have anchored their respective assets since their construction in 2002 and 2007. Situated in the epicenter of the master-planned DEER PARK II 230-acre Deer Park Triangle Commercial Business District, the Portfolio has direct access to over 350,000 RSF of retail, shops and restaurants. This unmatched location provides tenants quick access to Route 53 and the Metra station via Lake Cook Road, a major east west thoroughfare which borders the Development. Further, the Portfolio s proximity to the communities of as well as other prestigious suburbs, near the home of many of the Chicago area s executives and decision makers, makes Deer Park I II the premier, boutique Class A option in the Northwest suburbs. DEER PARK I KEY PROPERTY STATISTICS Deer Park I (91,864 RSF) and Deer Park II (75,213 RSF) combine to present a unique opportunity to benefit from in-place stable long term leases and to increase value by capitalizing on recent leasing momentum to continue the stabilization of the assets and roll existing tenancy to market. Due to the flexibility of the assets within the portfolio, investors are welcome to bid on the portfolio in its entirety, or the individual DEER PARK I DEER PARK II Building Address 21925 Field Parkway 21805 Field Parkway Rentable Area 91,864 RSF 167,077 RSF 75,213 RSF Land Area 7.97 Acres 12.53 Acres 4.56 Acres Percent Leased 92.5% 89.8% 86.5% Completed 2002 2007 Stories 2 3 Typical Floor Plate 46,000 RSF 25,000 RSF Parking Ratio 7.0/1,000SF 5.30/1,000SF 4.0/1,000SF Remaining WALT 4. 4 Years 4.9 Years 5. 5 Years 2 assets respectively.
Executive SUMMARY LAKE COOK ROAD DEER PARKII DEER PARKI HAMILTON PARKWAY WEST FIELD PARKWAY 3
I DEER PARKII SUMMARY OF PRIMARY TENANTS TENANT BUILDING LEASED RSF % SHARE (1) CURRENT RENT/RSF EXPIRES REMAINING TERM Robert Half International Deer Park I 47,334 28.3% $16.50 (2) Jun-23 5.2 yrs QCSS Inc Deer Park I 8,949 5.4% $23.77 (Gross) Mar-22 4.0 yrs The Plexus Groupe Deer Park II 19,753 11.8% $16.00 Dec-27 9.8 yrs Merrill Lynch Deer Park II 11,708 7.0% $18.66 Jun-21 3.2 yrs Logical Position Deer Park II 11,552 6.9% $24.07 (Gross) (3) Mar-20 2.0 yrs Net 56, Inc Deer Park II 7,920 4.7% $15.50 Jan-28 9.8 yrs Total/Weighted Average 107,216 64.1% $15.99 5.8 yrs (1) Proportionate Share is based on Portfolio total of 167,077 RSF. (2) Rent as of April-2019 (3) Rent is weighted average of Suite 210 and Suite 215 DEER PARK II - LOBBY DEER PARK I - LOBBY 4
Holiday Hills Round Lake Park Chardon Road Gos sell Executive SUMMARY Roa oad 83 d Gr Oa Winchester R 45 Prairie Prem i e r B o u ti qu e O f f i ce Bui ldi ng Ide al for Marke t Grove The Deer Park s proximity to many high-earning executives residing in several nearby affluent communities gives the property an inherent access to a deep Island Libertyville tenant pool. The Deer Park A building location in the area, allowing the Property to attract decision makers from Deer Park, the Lake is the premier, classwauconda Mundelein area and other surrounding affluent communities, offering a 10-minute door to door commute with dynamic surrounding retail options. This has allowed the Property to attract 176 companies looking for a regional presence, such as branches of large corporations which include Robert Half International, Merrill 60 Lynch, Honeywell International, and Georgia Pacific Consumer Products. These tenants have regional hubs at Deer Park given the property s central location in the Northwest Suburbs, with easy access to Chicago and a Oakwood Hills Port skilled labor pool. Deer Park is also an exceptional location for professional or financial service firms, such as Tassi and Company, LJ Soldinger, and Stifel Nicolaus Hawthorn Co, which Center require smaller spaces in premier office buildings. These tenants also command a presence within the property rather than getting lost in the rent roll of a larger building. This Mall Tower Lakes results in both ownership and the tenancy being equally invested in maintaining the Property s superior quality. i 59 Cary Trout Valley Hawthorn Woods North Bar Lake r ington Population: 10,635 Fox River Grove Long Grove LAKE CO. ive r Fox R MC HENRY CO. COOK CO. KANE CO. est Hig hw ay Inverness Crab Tree Forest Preserve 68 53 14 Palatine Whee 83 5 NORT East Deer Park Buffalo Grove Road (10 Minute Drive) Lake -NCook or Hills 68 53 thw 25 Lincolnshire 83 Kildeer Hal nue 62 PARK I DEER II 45 e kee Av 12 Lake Zurich 21 Milwau $570,100 22 Average household income: $184,905 Median housing value: Hills Indian Creek Vernon Hills Mettaw
I DEER PARKII Tremendous Recent Leasing Activity Since the beginning of 2017, the Portfolio has benefited from nearly 91,076 RSF of leasing activity. This impressive velocity emphasizes the strong desirability tenants have to position themselves in the quality of these boutique Class A assets. Additionally, the opportunity to be steps from the Rand Road retail corridor allows tenants to solidify a spot in a burgeoning market. Recent activity is highlighted on the chart to the right which includes renewals from the Portfolio s two anchor tenants in Robert Half and The Plexus Groupe. Robert Half recently signed a renewal at Deer Park I through June of 2023, while The Plexus Groupe extended their lease at Deer Park II through December 2027 all while expanding their footprint to 19,753 RSF. RECENT LEASING TENANT LEASE TYPE LEASED RSF DATE RATE The Diamond Collection New 1,285 Feb-18 $26.00 (Gross) Andersen Pharma New 2,143 Mar-18 $14.00 Eton Expansion 2,548 Apr-18 $14.50 Logical Position Expansion 2,943 Mar-18 $25.74 (Gross) Ethos Lending New 5,109 Sep-17 $23.50 (Gross) Tassi New 4,119 Aug-17 $15.50 Eton New 2,959 Jul-17 $14.00 Robert Half International Renewal 47,334 Jun-17 $16.50 (1) Stifel Renewal 1,950 Jun-17 $18.01 The Plexus Groupe Expand and Extend 19,753 Apr-17 $16.00 Logical Position Expand and Extend 8,609 Apr-17 $23.50 (Gross) Georgia Pacific Renewal 1,729 Jan-17 $14.00 TOTAL 100,481 (1) Rent as of April-201 9 DEER PARK II 6
Executive SUMMARY Committed Anchor Tenants and Long-Term Tenancy Recent lease extension of Robert Half International Deer Park I s anchor tenant, Robert Half International, executed a lease renewal in June of 2017, extending it s term through June of 2023. Deer Park I was built for Robert Half, and it s recent extension TENANT 15 YEAR CLUB CURRENT RSF % OF PORTFOLIO TENANT SINCE TENURE INDUSTRY further emphasizes its overall commitment to the site. Robert Half occupies 47,334 RSF, or 51.5% of Deer Park I. Robert Half International 47,334 28.3% Apr-02 16.0 Years Professional Services 15 Year Club Subtotal 47,334 28.3% Recent expansion and extension of the Plexus Groupe Deer Park II s anchor tenant, the Plexus Groupe, signed a lease amendment expanding their premises by 1,952 RSF, effective April of 2017. The expansion included a lease extension through December of 2027. Deer Park II functions as The Plexus Groupe s headquarter location, and their commitment to the property bolsters its overall value. The Plexus Groupe now 10 YEAR CLUB The Plexus Groupe 19,753 11.8% Nov-07 10.4 Years Consulting LJ Soldinger 4,865 2.9% Jan-04 14.2 Years F.I.R.E 10 Year Club Subtotal 24,309 14.7% occupies 19,753 RSF or 26.3% of Deer Park II. Exceptional Quality Maintained Through Pride of Development Management The Property was developed by Hamilton Partners, who continues to maintain and manage the building. Hamilton Partners operates a 25 million square foot portfolio of office, retail, multi-family and industrial assets across the nation, grown over time through the company s expertise and excellence in operating standards. The Property has truly benefited from the pride of management that Hamilton Partners has demonstrated through continuous repairs and preventative maintenance initiatives. While Deer Park I (2002) and Deer Park II (2007) were both recently completed, the dedicated on-site management team ensures that the quality of the building remains excellent through continuous repairs. Most recently, both parking lots and roof anchors were repaired, and Deer Park I s 2nd floor corridor and roof top units were improved through over $100,000 of capital outlay. DEER PARK II - ENTRANCE 7
Island DEER PARK Lake I 176 176 Libertyville Mundelein 60 Th e L a ke Co un t y Tax B e n e f i t d Port The Property possesses a distinct competitive advantage in location as Lake County offers a significant discount in taxes compared to neighboring Cook County, which decreases Mettawa Hawthorn occupancy costs for tenants and increases net rent for investors. The Property s current taxes are inflated as the Property has an existingcenter annual SSA debt service obligation, Tower Lakes Mall 60 which is depicted in the annual tax bill. The last year of debt service payment is 2021, further decreasing the Property s real estate taxes in 2022. The SSA debt service inflates the annual tax bill by over $1.00 PSF. PSF YEAR 1 PROFORMA TAX(1) 53 No rth Hills we st H igh wa y Inverness Buffalo Grove 68 6.30 $ 14 Palatine 294 Pal-Waukee Airport ICE Mount A Rolling Meadows SERV Arlington Heights Prospect Heights L NTRA H CE 8 Wheeling 83 62 South Du COOK COUNTY 53 AVERAGE PSF TAX. (1) Does not include SSA debt service obligation. Year 1 proforma tax bill with SSA debt service obligation is $4.29 PSF. See the financial overview for more detail. Spring Lake Forest Preserve Higgins Road D LAKE CO. COOK CO. 68 59 Riverwoods NORT Crab Tree Forest Preserve 45 River Road LAKE CO. Kildeer Banno enue 3.19 $ PARK I DEER II 83 kee Av 12 Lincolnshire Milwau 22 Half Day Road y ollwa 45 Long Grove Lake Zurich 21 T tate Hawthorn Woods North Lake Fox River Grove RY CO. Indian Creek Vernon Hills Tri-S 59 ton Hills COOK CO. II Wauconda
Executive SUMMARY PLEXUS 9
I DEER PARKII Immediate Access to Class A Amenities Deer Park I and Deer Park II benefit from being centrally located in the 230-acre master planned Deer Park Triangle commercial business district and more specifically Deer Town Center Promenade Positioned at the intersection of Rand Rd Long Grove Rd, the Town Center Promenade is anchored by Dick s Sporting Goods. Park, a 90-acre mixed-use campus within the triangle. The office center presents tenants the rare opportunity to be located in a natural setting of over 25 acres of preserved wetlands, pedestrian trail systems and landscaped areas. Picnic areas and walking paths enable tenants to take advantage of the Property s offerings while providing unmatched access to the dynamic retail options surrounding the Property. The areas dynamic retail options include: Kildeer Marketplace Kildeer Marketplace is a 70,000 SF retail center anchored by Whole Foods and Bank of America. The Property is positioned along Rand Road, just south of the Deer Park Town Center and has enjoyed high demand since its opening in 2012. The presence of the market s premier grocer, Whole Foods, allows tenants the opportunity to either walk over during lunch and get a fresh sandwich or stop and get groceries on the way home from work. Hampton Inn Suites The Hampton Inn Suites Deer Park is located in the business park, allowing corporate guests convenient, on-property lodging. The hotel KILDEER MARKETPLACE has been operating since 2010, and offers courtesy shuttle transportation to all village retail destinations. Bright Horizons Bright Horizons Early Education Preschool center is located in the business park, serving as a convenient day care option for children of Deer Park s tenants. Deer Park Town Center Steps away from the property, Deer Park Town Center is the area s premium retail destination, offering a unique outdoor shopping experience. The collection of Chicagoland s best retail opportunities includes the Apple Store, Barnes Noble, Crate Barrel and dozens more. The Deer Park Town Center is a crucial development to the Deer Park economy, resulting in continued retail development up Kildeer Village Square Kildeer Village Square is a 200,000 SF retail project that commenced in 2015. The square will feature up to 18 stores, while Nordstroms and Nike have already opened on-site. The project is being developed by Bond Companies and is located next to Kildeer Marketplace. and down the Rand Road corridor. The Deer Park is positioned in the epicenter of this development boom, allowing an investor to take advantage of the strong market outlook. The Shops at Kildeer The Shops at Kildeer is another retail center located directly across from the Deer Park Town Center. The Shops at Kildeer feature a wide array of shopping and dining options such as Old Navy, Bed Bath Beyond, Chili s, Potbelly s, and Chipotle. 10
Executive SUMMARY Deer Park Town Center The Shops at Kildeer Kildeer Village Square (9 MINUTES TO PALATINE METRA) I WEST LONG GROVE ROAD DEER PARK Town Center Promenadere II Offices at Deer Park Town Center I Deer Park Town Center WEST FIELD PARKWAY RAND ROAD NORTH DEER PARK AVENUE (6 MINUTES TO IL-68) Village Retail Center Site Continental at the Reserve at Deer Park Kildeer Marketplace Deer Park Crossing Hamilton Partners Site 7.63 Acres The Solana at Deer Park Hamilton Partners Site 1.50 Acres (9 MINUTES TO BARRINGTON METRA) LAKE COOK ROAD 11
I DEER PARKII New Area Development Deer Park Development Boom In addition to the aforementioned retail development, the area surrounding Deer Park I II has under gone a development boom ranging from a 180 unit senior living/assisted living facility to a luxury 236 unit apartment rental community at Deer Park Crossing. The below time-line highlights development in the immediate area since 2012. Kildeer Marketplace Solana at Deer Park Kildeer Village Square Deer Park Crossing 70,000 SF Retail Center 180-unit assisted living facility 200,000 SF 11.2 Acres, 236 Units Completed 2012 Completed Spring 2016 Completed Spring 2016 Completion November 2018 2012 2016 2018 2013 2014 2015 2017 12
(9 MINUTES TO PALATINE METRA) Long Grove Road Shops at Kildeer Executive SUMMARY DEERPARK TOWNCENTER SHOPPING CENTER Kildeer Village Square Rand Road Village Retail Center Site (6 MINUTES TO IL-68) Body Shop On Rand Quentin Road Field Parkway I DEER PARK II Hamilton Pkwy. Deer Park Crossings Field Parkway Deer Park Blvd. Continental Automotive Systems Puff-N-Stuff The Solana at Deer Park Lake Cook Road (9 MINUTES TO BARRINGTON METRA) (6 MINUTES TO IL-53) 13
I DEER PARKII DEER PARK II - LOGICAL POSITION 14
Executive SUMMARY Strength of the Suburbs Media reports have consistently portrayed a lagging suburban market, one that has fallen to the wayside to the Chicago CBD s real estate fundamentals and HISTORIC SUBURBAN V. CBD CUMULATIVE ABSORPTION investment potential. Contrary to this portrayed image, suburban fundamentals continue to improve and often outperform the CBD in key indicators including 8,000,000 7,000,000 6.00% cumulative absorption, which has outpaced CBD absorption by over 500,000 RSF since 2010. The continued strength of economic growth in the Chicago suburban markets provides well informed investors the opportunity to enter a rising market at a highly competitive basis. Cumulative Absorption (RSF) 6,000,000 5,000,000 4,000,000 3,000,000 5.00% 4.00% 3.00% 2.00% Absorption (%) 2,000,000 Substantial Discount to Replacement Cost 1,000,000 1.00% Deer Park III offer investors the opportunity to acquire a prime core-plus office - 2010 2011 2012 2013 2014 2015 2016 0.00% building on the Rand Rd retail corridor at a significant discount to replacement cost, providing a competitive basis for years to come. With increasingly difficult financing terms and rising replacement costs, the lack of new multi-tenant office Cumulative CBD Absorption (RSF) Cumulative Suburban Absorption (RSF) Suburban Resurgence: 2.4 million RSF of net absorption in the suburbs since 2014, versus 1.6 million RSF of net aborption in the CBD construction experienced throughout the current cycle is projected into the forseeable future, protecting Deer Park s upside potential. Due to increasing construction costs as well as rising tenant demand for significant parking ratios, market replacement costs for properties similar to Deer Park I and II with additional surface parking are projected to be approaching $295 per RSF. Accordingly, required replacement rents would fall in the range of $25.00 Net per RSF, while current Deer Park Office rents are offered at over a 38% discount. This substantial markup to current office NET RENTS $30.00 $20.00 $10.00 $25.00 /RSF NET RENTAL RATE COMPARISON 38% discount to replacement cost $15.50/RSF market rates provides investors the potential to remain competitive in the marketplace while continuing to push rents. $0 New Construction Deer Park I II 15
Contact Information HFF Chicago 150 North Riverside Plaza Suite 2500 Chicago, IL 60606 Telephone: 312.528.3650 Fax: 312.528.3651 Investment Contacts Patrick M. Shields Director 312.528.3685 pshields@hfflp.com Debt Contacts Christopher S. Carroll Managing Director 312.980.3609 ccarroll@hfflp.com Bryan D. Rosenberg Director 312.300.7282 brosenberg@hfflp.com Trent R. Niederberger Senior Director 312.528.3682 tniederberger@hfflp.com Jeffrey M. Bramson Senior Managing Director/Managing Broker 312.528.3687 jbramson@hfflp.com Jaime M. Fink Senior Managing Director 312.528.3683 jfink@hfflp.com Leasing Contacts Brian Lunt Partner 847.459.2249 Brian@hpre.com Andrew M. Juiris Analyst 312.528.3677 ajuiris@hfflp.com Michael J. Rolfs Partner 847.459.5561 mrolfs@hpre.com Copyright 2018 Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, HFF ), HFF Securities L.P. and HFF Securities Limited (collectively, HFFS ) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 25 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment advisory, equity placement, funds marketing, MA and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF. HFF has been engaged by the owner of the property to market it for sale. Information concerning the property 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.