322 STATE HIGHWAY 322 LAKE JACKSON, TEXAS 77577 EXECUTIVE SUMMARY [ HFF 1 ]
HFF has been exclusively retained to sell a fee-simple interest in the Dow Administration Building (the Property ), a recently constructed suburban Class A office building that is located in Lake Jackson, Texas and is 100% leased to The Dow Chemical Company ( Dow ) (BBB/Baa2) through February 28, 2030 (13.6 years of remaining term). Dow is currently the second largest chemical company in the world, as ranked by total revenue, and is under definitive agreement to merge with DuPont, the eighth-ranked chemical company by revenue, in what will create DowDuPont. The Property consists of a four-story, LEED Gold Certified (Core and Shell) office building with 230,000 rentable square feet on a 13.4-acre site that offers a generous surface parking area with approximately 4.5 spaces per 1,000 rentable square feet. The state-of-the art construction and large open floor plates offer tremendous flexibility for Dow. On-site amenities are available to Dow employees (past and present) at the adjacent Amenities Building, and include a cafeteria, pharmacy, fitness center, and a full-service first response health clinic, creating a true corporate campus in feel and function. The Dow Chemical Company has been an integral part of the Lake Jackson and Freeport community for 76 years, having founded Lake Jackson in the early 1940 s when it faced a housing shortage and sought out the ideal site to build housing for its employees. The Company continues to make investments in the community and the production facility that currently produces 44% of its products that are sold in the United States and over 20% of its products sold internationally. Dow just delivered a new world scale propylene production facility in December 2015, and is currently developing a new world scale ethylene production facility in addition to spending $4.0 billion to expand capacity at its Freeport plant. It is safe to say that the Dow name is synonymous with Lake Jackson and Freeport, and the Company is committed to the continued growth in this strategic market. The Property is being offered free and clear of existing financing, allowing investors the flexibility to deploy an optimal amount of equity or take advantage of today s historically-attractive debt markets. [ HFF 2 ]
Tenant/Guarantor: The Dow Chemical Company, a Delaware Corporation INVESTMENT HIGHLIGHTS Tenant/Guarantor Credit Rating: BBB / Baa2 / BBB (S&P/Moody's/Fitch) Rentable Area: 230,000 SF Primary Lease Term: 15 Years Remaining Lease Term: 13.6 Years Expenses: NNN PROPERTY OVERVIEW Address: Dow Administration Building 322 State Highway 322 Lake Jackson, Texas 77577 Location: Lake Jackson Texas. West of Hwy 332 just north of Abner Jackson Parkway. Approximately 42 miles south of Houston, Texas. Net Rentable: 230,000 square feet Land Size: 13.409 acres Leased: 100% Developer: CORE Real Estate, LLC Architect: Powers Brown Architecture Year Built: 2015 Contractual Cash Flow Backed By Investment-Grade Credit The Dow Administration Building is leased under a long-term net lease to The Dow Chemical Company (NYSE: DOW) offering attractive risk-adjusted returns and yield certainty, backed by an investment-grade tenant and real estate that is strategic to the core operations of the Company. Founded in 1897, The Dow Chemical Company has grown to become the 2nd largest chemical company in the world as ranked by 2015 revenues, second only to Germany s BASF. In 2015 Dow generated revenue of $48.8 billion and employed 49,500 people around the globe. Dow currently boasts investment-grade ratings by all three of the largest credit rating agencies with stable outlook, and is projected to maintain substantially similar ratings upon the closing of the announced merger with DuPont. Desirable Net Lease Structure The net lease holds the Tenant responsible for all property operating expenses, as well as non-structural repairs. As a result, the Tenant will ensure that Property maintains the attractive image and reputation as a best-in-class office building throughout the term of lease. In addition, contractual rent increases averaging 1.67% annually over the remaining hold period serve as a hedge against unforeseen capital costs and general inflationary risks, while improving the loan economics with each escalation. In the event the Lease is terminated prior to the expiration of the initial Lease term as a result of an event of default or the Lease is terminated at the end of the initial Lease term, the Tenant shall at its expense restore the Premises to general office condition of comparable quality to Class A suburban office buildings in Houston, Lake Jackson, Katy Freeway, Pearland, Sugar Land, Energy Corridor and surrounding area. Exceptional Quality Asset with Corporate Campus-Style Amenities The Dow Administration building is the front door to the Texas Innovation Center, a world-class research and development campus, and is an integral part of the complex which also includes two R&D facilities totaling 564,100 square feet, a 60,000 square foot amenities building, and a 40,000 square foot warehouse. The Property itself is state-of-the-art and offers what today s large, corporate users demand, namely large and flexible floor plates, secure entry and access, efficient building operating systems and abundant parking provided by surface parking spaces. The amenities building that is adjacent to the Property houses a robust fitness center, cafeteria, conference center, clinic and pharmacy. Together, the buildings that make up the Texas Innovation Center are a true campus in feel and function, offering superior structural and design elements, desirable on-site amenities, exceptional views and landscaping, and an environment that is conducive for collaboration and innovation. The Project has achieved LEED Gold Core+Shell Certification. Floors: 4 [ HFF 3 ]
Proven Tenant Commitment & Significant Market Presence The city of Lake Jackson was founded by the The Dow Chemical Company in 1941 as a community for workers at the Freeport plant just to the south. The Freeport Plant has since grown to become the largest chemical plant in the western hemisphere and is strategically critical to Dow s global operations. Today, 41% of Dow Chemical s employees still live in Lake Jackson the largest percentage of any city in the area. In total, the site employs more than 7,000 people and has 65 manufacturing units working together to produce 44% of Dow s products sold in the United States and 20% of the Company s products sold globally. Furthermore, Dow announced that the Texas Innovation Center will bring an additional 2,000 employees to the area. DOW TEXAS INNOVATION CENTER CAMPUS (13.6 YEARS OF REMAINING TERM BEGINING OCTOBER 2016) OWNED BY LEXINGTON REALTY TRUST (20 YEARS OF REMAINING TERM BEGINING OCTOBER 2016) DOW CHEMICAL FREEPORT PLANT TEXAS 288 DOW AMENITIES BUILDING WAREHOUSE [ HFF 4 ]
The Texas Innovation Center & Lake Jackson / Freeport Investment The Dow Administration Building is part of Dow s brand new Texas Innovation Center, and is in very close proximity to The Dow Chemical Company s Freeport plant a few miles to the south. Dow is currently investing approximately $4 billion into the expansion of the plant which is expected to be completed in 2017 and add between 400-500 permanent jobs to the local economy. Additionally, Dow spent over $180 million on the construction and development of the adjacent 664,100 square feet that makes up the rest of the Texas Innovation Center. These facilities will house the Company s primary R&D facility for the region and will seek to enhance future production and drive new innovation for its Texas Operations, making the Company more globally competitive. TEXAS INNOVATION CENTER CAMPUS Wet Chemistry Laboratory Building I 289,188 Wet Chemistry Laboratory Building II 274,912 Amenities Building 60,000 Warehouse 40,000 Dow Administration Building 230,000 Total Texas Innovation Center SF 894,100 DOW TEXAS INNOVATION CENTER CAMPUS (13.6 YEARS OF REMAINING TERM BEGINING OCTOBER 2016) OWNED BY LEXINGTON REALTY TRUST (20 YEARS OF REMAINING TERM BEGINING OCTOBER 2016) WAREHOUSE DOW AMENITIES BUILDING DOW ADMINISTRATION BUILDING [ HFF 5 ]
DOW TEXAS INNOVATION CENTER AERIAL OWNED BY LEXINGTON REALTY TRUST (20 YEARS OF REMAINING TERM BEGINING OCTOBER 2016) WAREHOUSE DOW AMENITIES BUILDING [ HFF 6 ]
DOW TEXAS INNOVATION CENTER CAMPUS BRAZOS MALL LAKE JACKSON COMMONS SHOPPING CENTER (13.6 YEARS OF REMAINING TERM BEGINING OCTOBER 2016) OWNED BY LEXINGTON REALTY TRUST (20 YEARS OF REMAINING TERM BEGINING OCTOBER 2016) TEXAS 288 DOWNTOWN LAKE JACKSON DOW AMENITIES BUILDING DOW ADMINISTRATION BUILDING WAREHOUSE [ HFF 7 ]
CONTACT INFO LOCATION MAPS B ra zo INVESTMENT SALES spo rt B ou lev H. DAN MILLER, CCIM, SIOR a rd N Cypress orth Br Senior Managing Director Oy rc re e k r C re ek T h is W z o s R iv e r C re e k te r ys O lle g a rd et re St Lake Jackson ve r T. (713) 852-3557 o u le v So u th Mammoth Lake Missouri City Rosenberg eb D ri ve O y s t e r C re k D reiv e e D riv O ak Mac Lean Park Sugar Land ek n ay o s Ri az Br C re po ay te r Ya u is W d B ra mwest@hfflp.com Th oa Trinity Bay O ys Co riv e ak D er Pasadena O a k D riv e O y T h is W a Pearland 45 Friendswood Smithers Lake mhogan@hfflp.com Galveston Bay League City Needville JOHN ROGERS Texas City Real Estate Analyst T. (713) 852-33436 35 36 jrogers@hfflp.com Galveston Eagle Nest Lake FOR DEBT INQUIRIES MATT KAFKA Gulf of Mexico Senior Managing Director T. (713) 852-3545 Angleton 60 35 Lake Jackson 71 mkfaka@hfflp.com 36 Freeport Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp a Texas licensed real estate broker (HFF). HFF HOUSTON 2016 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 9 Greenway Plaza, Suite 700 commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF. Houston, Texas 77046 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 T. (713) 852-3500 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 F. (713) 527-8725 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. hfflp.com Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change. [ HFF 8 ] N ort h La k 69 Director s te La k e R o a d Baytown eva rd B ou l Brazosport College O y s te r C re e k Houston T. (214) 265-0880 MARTIN T. HOGAN Oy Cinco Ranch Senior Managing Director spo rt t Katy Head of Net Lease/CTL Group Richwood tre e MARK WEST B razo Br azoria R oa d z odrath aol r N s te ns t ree t N o rt h Ya u p o N o rth Ya up o n S dmiller@hfflp.com o u se v o rt Bp O y ste r C re e k T. (713) 852-3576