Tempe Arizona January 2019
EXECUTIVE SUMMARY Newmark Knight Frank (NKF) is pleased to present the opportunity to acquire the leasehold interest in the Wells Fargo Building at Papago Park (the Property), a 214,303-square-foot, Class A office building located in the prestigious Papago Park Center in Tempe, Arizona. The Wells Fargo Building is 100% leased on a FSG basis to Wells Fargo (NYSE: WFC), providing investors with an exceptional high-quality, low-risk core investment opportunity in one of Phoenix MSA s most vibrant and dynamic markets. Wells Fargo is a diversified, community-based financial services company with approximately $1.9 trillion in assets, serving one in three households in the United States. It ranked fourth in assets and third in common stock market value among all U.S. banks as of September 30, 2018. Company Highlights REVENUE $86.4B FY 2018 NET INCOME $22.4B FY 2018 MARKET CAP $234.5B as of January 2019
Property Summary 1150 W WASHINGTON ST. TEMPE, AZ 85281 located in the prestigious Papago Park Center 214,303 RSF TOTAL SIZE one, three-story building 2004 YEAR built 100% LEASED to Wells Fargo 1,485 Ground Lease Summary TOTAL PARKING SPACES 1,035 surface, 338 deck, 112 canopy ±6.9/1,000 SF PARKING RATIO 7.0/1,000 SF oversell Lessor Papago Park Center, Inc. The Wells Fargo Building at Papago Park provides investors the opportunity to acquire a secure and attractive income stream with investment-grade credit tenancy. Expiration Rent Increases March 31, 2083 approximately 64 years remaining Every 5 years based on CPI
INVESTMENT HIGHLIGHTS COMMITTED, INVESTMENT- GRADE CREDIT TENANT Wells Fargo features superior investment-grade credit and has occupied space in the building since 2004. In 2018, the company reaffirmed its commitment to the Property by signing a lease renewal for the entire 214,303-square-foot premises, which serves as a business operations center for nearly 1,700 employees. Stellar Investment-Grade Credit A+ FITCH A2 MOODY S A- S&P SECURE CASH YIELDS WITH FIXED RENTAL RATE ESCALATIONS The Wells Fargo lease is corporate guaranteed and is subject to $0.50 per square foot annual rent escalations, providing the new owner with secure in-place cash flow and embedded upside. Lease Summary ANNUAL $0.50 PSF escalations LEASE FSG type FIVE-YEAR RENEWAL OPTIONS 3 at 95% of FMR
EXCELLENT SUBMARKET FUNDAMENTALS As of 4Q2018, Tempe boasted the lowest vacancy rate and highest rental rate of any other metro Phoenix submarket for Class A office product. This submarket has performed extremely well historically by attracting a diverse tenant mix of various size ranges, evidenced by recent high-profile corporate headquarters relocations in the vicinity. In the fourth quarter, Class A rental rates in the Tempe Submarket overtook the historically top-ranked, luxury South Scottsdale and Camelback Corridor. 4.1% $37.36 PSF CLASS A VACANCY RATE the lowest rate in the Phoenix MSA AVERAGE RENTAL RATE Class A product 7.4 MSF 282,069 SF TOTAL INVENTORY 682,481 SF under construction FY 2018 NET ABSORPTION 365,132 SF yearly average (last 3 years)
INFILL, HIGHLY DESIRABLE LOCATION WITH EXCELLENT REGIONAL ACCESS Tempe is a thriving center of commercial and residential activity with a young and educated workforce of nearly 2 million people within a 30-minute commute, connected via public transit and unrivaled regional access. Situated just north of the Loop 202 and Priest Drive interchange, the Wells Fargo Building is central to a multitude of transit options, making it easy to take advantage of the abundant amenities proximate to the site. Phoenix Sky Harbor International Airport is just minutes away, and direct access to the Wells Fargo Building is available via the Metro Light Rail System. In addition, Papago Hills retail center is located within walking distance, providing five on-site restaurants for tenants. The Mill Avenue District in Downtown Tempe is located just two stops away on the Metro Light Rail System, offering a vibrant, urban collection of dining, hotel and shopping options. PAPAGO PARK CENTER A TRUE LIVE, WORK, PLAY DESTINATION The Wells Fargo Building is located within Papago Park Center, a ±500-acre, mixed-use development spanning 2.6 MSF of office space (existing and under construction). The area is also a hotbed for multifamily development with 1,316 units (existing and under construction). Papago Park Center is one of Tempe s most active and robust micro-submarkets with $67.3 million invested in office product in the past 24 months. Average Class A office rental rates in Papago Park Center are at an all-time high, pushing toward $32.69 FSG. Papago Park Center s run in rents is fueled by demand from STEM and FIRE tenants, all with a desire to be located within Tempe s urban core. Location Highlights IDEAL TEMPE LOCATION in prestigious Papago Park Center CONVENIENT ACCESS TO MAJOR AIRPORT four miles to Sky Harbor Intl Airport & connected via Metro Light Rail EXCELLENT FREEWAY ACCESS Loop 202, SR 143, Loop 101, I-10 & US 60 PROXIMITY TO LIGHT RAIL STOP located on the Papago Park Center station
Hayden Butte ~103,567 students 188,000 VPD Tempe Town Lake Center Parkway 466 Units, Class A Broadstone at The Grand Apartments 550 Units, Class A February 2020 estimated delivery OPTION TO INCLUDE IN OFFERING Washington Street Mixed-use development currently under construction Priest Dr./Washington St. Light Rail Stop Papago Hills Shopping Center Priest Drive
INVESTMENT CONTACTS CJ OSBRINK T +1 602 952 3841 cj.osbrink@ngkf.com AZ RE Lic #BR672532000 PAUL JONES T +1 949 608 2083 paul.jones@ngkf.com BRUNSON HOWARD T +1 858 875 3610 brunson.howard@ngkf.com KEVIN SHANNON Co-Head, U.S. Capital Markets T +1 310 491 2005 kevin.shannon@ngkf.com KEN WHITE T +1 310 491 2006 ken.white@ngkf.com RICK STUMM Senior Managing Director T +1 310 491 2013 rick.stumm@ngkf.com LEASING CONTACTS MICHAEL GARLICK T +1 602 952 3825 mgarlick@ngkf.com FINANCING CONTACTS DAVID MILESTONE Vice Chairman T +1 310 491 2015 david.milestone@ngkf.com BRETT GREEN Senior Managing Director T +1 310 491 2009 brett.green@ngkf.com January 2019 Corporate License #01355491 The information contained herein has been obtained from sources deemed reliable but has not been verified and no guarantee, warranty or representation, either express or implied, is made with respect to such information. Terms of sale or lease and availability are subject to change or withdrawal without notice.