RALEIGH-DURHAM NORTH CAROLINA MERIDIAN CORPORATE CENTER MULTI-STORY OFFICE PORTFOLIO
MERIDIAN CORPORATE CENTER MULTI-STORY OFFICE PORTFOLIO INVESTMENT OPPORTUNITY 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 Meridian Corporate Center Multi-Story Office Portfolio (the Property, Meridian or Portfolio ), a 347,268 square foot, institutional-quality office portfolio located in West-RTP s premier business park. Ideally positioned in the center of the flourishing Raleigh-Durham market, the portfolio is 90% leased to an attractive tenant roster anchored by publicly traded, creditworthy STEM tenants representing the Research Triangle s core industries. This value-add investment opportunity features an attractive weighted average lease term of more than five years coupled with immediate upside through additional lease-up, and is positioned for long-term success as the only institutional business park located on the western side of Research Triangle Park. Meridian Corporate Center presents investors with a unique opportunity to acquire significant critical mass at a discount to replacement cost in the nation s fastest growing metropolitan since 2000. MERIDIAN MULTI-STORY PORTFOLIO 2
MERIDIAN MULTI-STORY PORTFOLIO FIVE PREMIER OFFICE ASSETS The Meridian Corporate Center Multi-Story Office Portfolio offers the opportunity to acquire five assets located in one of Raleigh-Durham s premier office parks featuring a center-of-the-market location and a market leading amenity package, within the park. Investors have the opportunity to control critical mass in one of the country s largest innovation markets with unmatched competitive advantages in Meridian Corporate Center driving tenant demand and consistently achieving premium rental rates. Positioned in the heart of the Triangle region, the assets are anchored by global, creditworthy STEM giants from the biotechnology, healthcare, technology, and pharmaceutical industries with significant remaining term offering investors a stabilized cash flowing Portfolio in the flourishing Raleigh-Durham market. PREMIER WEST-RTP BUSINESS PARK CREDIT ANCHORED TENANT ROSTER, BOLSTERED BY GLOBAL STEM GIANTS UNPARALLED PARK AMENITIES FLOURISHING CENTER-OF-THE-MARKET LOCATION DISPOSITION FLEXIBILITY THE GREAT RESURGENCE MERIDIAN MULTI-STORY 3
INVESTMENT SUMMARY ADDRESSES 2500 Meridian Parkway Durham, NC 27713 2505 Meridian Parkway Durham, NC 27713 2510 Meridian Parkway Durham, NC 27713 2520 Meridian Parkway Durham, NC 27713 2525 Meridian Parkway Durham, NC 27713 RENTABLE BUILDING AREA 2500 Meridian 26,680 SF 2505 Meridian 42,705 SF 2510 Meridian 64,266 SF 2520 Meridian 115,283 SF 2525 Meridian 98,334 SF Portfolio 347,268 SF PERCENT OCCUPIED 2500 Meridian 75.8% 2505 Meridian 100% 2510 Meridian 83.5% 2520 Meridian 100.0% 2525 Meridian 80.2% Portfolio 90% NO. OF TENANTS Portfolio 28 WEIGHTED AVERAGE REMAINING LEASE TERM (EXISTING TENANTS) Portfolio 5.75 Years MERIDIAN MULTI-STORY PORTFOLIO 4
PREMIER WEST-RTP BUSINESS PARK FIVE BEST IN CLASS OFFICE ASSETS Meridian Corporate Center is located adjacent to the world-renowned Research Triangle Park (RTP), the largest dedicated scientific research park in the United States, benefitting from unparalleled proximity to the primary economic driver in the Triangle region. Featuring 1,041,702 SF of Class A office space situated within a beautifully landscaped 270-acre mixed-use park, Meridian Corporate Center is considered the only true business park located on the west side of RTP, resulting in a significant competitive advantage for Meridian Corporate Center landlords. With limited competitive product in the West-RTP area, Meridian Corporate Center is the primary office destination for decision making executives residing in Durham and Chapel Hill. As a result, Meridian Corporate Center houses major operations of some of the market s top innovative and STEM companies such as BASF, NVIDIA, PAREXEL International, Chimerix, Frontier Communications and Health Decisions. In addition to attracting a number of publicly traded, investment grade companies, this center of innovation fosters the growth of numerous local entrepreneurial companies. Meridian Corporate Center is designed to meet the needs of the rapidly expanding roster of STEM, healthcare, research organizations, and innovative companies that are highly concentrated in the Triangle area. High-quality construction and a market-leading amenity package supplement the ideal West-RTP location of the park offering extraordinary competitive advantages to investors. Consistently outperforming the surrounding market, Meridian Corporate Center boasts strong historical occupancy with a trailing five year average occupancy of 93.4%, demonstrating the ability to consistently attract new tenants to the assets and retain existing tenants. Moreover, significant leasing momentum, totaling 307,010 SF of executed leases over the past 24 months, illustrates the rare opportunity for investors to capitalize on a five asset portfolio offering situated in West-RTP s premier business park. MERIDIAN MULTI-STORY PORTFOLIO 5
CREDIT ANCHORED TENANT ROSTER, BOLSTERED BY GLOBAL STEM GIANTS Meridian offers 5.75 years of weighted average lease term with an attractive, diversified tenant roster that is anchored by numerous publicly traded, creditworthy tenants many of which are headquartered within the multi-story portfolio. PHARMACEUTICAL BUSINESS SERVICES BIOTECHNOLOGY CHEMICALS/ MANUFACTURING HEALTHCARE TECHNOLOGY OTHER 9% 10% 12% 7% 5% 20% 37% The Property is anchored by some of the world s leading STEM (Science, Technology, Engineering and Mathematics) giants including Parexel (NASDAQ: PRXL), a multinational, life sciences consulting firm; Chimerix (NASDAQ: CMRX), a biopharmaceutical company focused on discovering, developing and commercializing medicines geared towards improving outcomes for immunocompromised patients; and BASF (ETR: BAS; S&P: A-), the second largest producer and marketer of chemicals and related products in North America. Health Decisions, a full service CRO (Contract Research Organization), and Nuventra, a clinical pharmacology consulting firm, are also headquartered in Meridian. Diverse tenancy, long term stability and staggered rollover schedule provide ample security to prospective investors. The multi-story portfolio is currently 90% leased with a staggered rollover schedule and over nine years of remaining term on Parexel s lease, the largest tenant in the Portfolio. Meridian provides investors with the opportunity to invest in a stabilized asset and capitalize on the vacant space in a rising rental rate environment, with occupancy rates at 90% and rental rates over $25.47 per square foot for existing Class A product in the tightening Raleigh- Durham office market. MERIDIAN MULTI-STORY PORTFOLIO 6
UNPARALLELED PARK AMENITIES Meridian Corporate Center, a premier 270-acre mixed use park in the heart of the Research Triangle, offers an unparalled park amenity package including: Recently delivered, 339 apartment units at The Heights at Meridian, featuring: THE HEIGHTS AT MERIDIAN Salt water pool with fountains and sundeck Fitness club Resident lounge Outdoor lounge with kitchen, fireplace and grills DOUBLETREE SUITES Attractive landscaping featuring mature trees, cascading waterfalls, fountains and numerous reflection pools Pedestrian trails, greenways, outdoor picnic tables and scenic views of the seven-acre lake DoubleTree Suites by Hilton Hotel (Raleigh-Durham) located within the park offering a restaurant, pool and fitness center MERIDIAN MULTI-STORY PORTFOLIO 7
SOUTHPOINT MALL (2 MILES) 1.3 MSF, 150+ STORES CHAPEL HILL HOPE VALLEY COUNTRY CLUB ARBORETUM AT SOUTHPOINT APARTMENTS MIDTOWN AT MERIDIAN EMERALD FOREST APARTMENTS THE HEIGHTS AT MERIDIAN (339 UNITS) 2520 MERIDIAN 2525 MERIDIAN 40 DOUBLE TREE SUITES BY HILTON 2510 MERIDIAN DOWNTOWN DURHAM 2505 MERIDIAN 2500 MERIDIAN 55 MERIDIAN CORPORATE CENTER FLOURISHING CENTER-OF-THE-MARKET LOCATION RALEIGH-DURHAM, NORTH CAROLINA Meridian Corporate Center is strategically located at the geographic center of the Raleigh-Durham market, offering immediate access to Interstate 40 and Route 55, two of the area s primary transportation arteries. As a result, this location affords easy commutes from the surrounding executive communities in Durham (5 mi) and Chapel Hill (7 mi) as well as convenient access to the Raleigh-Durham International Airport (7 mi) and the world-renowned Research Triangle Park (1 mi). Meridian Corporate Center is primed for significant long-term success as unprecedented growth in the area has resulted in an increasingly infill location with convenient access to a robust amenity base. The park is within a five mile radius of over 1.4 million square feet of retail amenities including the prominent power retail center at the Streets at Southpoint (2 mi), which offers over 150 retail shops, a range of casual restaurants and fine dining options, and additional amenities. The Streets at Southpoint is Raleigh- Durham s newest and most desirable shopping mall and a significant attraction for tenants. Other notable amenities within a five minute drive of the Property include Starbucks, Chick Fil A, Walgreens, and Harris Teeter. MERIDIAN MULTI-STORY PORTFOLIO 8
DISPOSITION FLEXIBILITY Meridian sits on five separate tax parcels. While these assets have historically been packaged and sold 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. 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 multiple separate offerings, which allows future investors the ability to target a different range of investors Affords the ability to finance the assets separately ASSET PARCEL ID PIN ACRES 2500 Meridian 154341 0738-01-16-4841 4.518 2505 Meridian 154329 0738-01-16-2221 4.507 2510 Meridian 154340 0738-01-06-7870 8.509 2520 Meridian 154342 0738-01-06-1881 7.027 2525 Meridian 154331 0728-01-96-8119 7.456 32.02 MERIDIAN MULTI-STORY PORTFOLIO 9
U.S. EMPLOYMENT SINCE 2009, 15 MILLION JOBS CREATED IN THE U.S. THE GREAT RESURGANCE Urban office appeal has been a prevalent theme in the real estate industry over recent years; however, data suggests employment trends and demographic migration increasingly favor suburban product. The long-term outlook for suburban office is extremely positive as investors are poised to capitalize on the upside potential displayed in the corresponding suburban office trends. Located in one of the country s fastest growing metropolitan area, Meridian Multi-Story Portfolio is primed for long-term success driven by the underlying economic fundamentals of the Raleigh-Durham suburban office market. Source: Bureau of Labor Statistics SHARE OF HOUSEHOLD GROWTH BY DECADE 100% 90% 23% 14% 21% 15% 8% FORECAST 6% AS JOB GROWTH NUMBERS CONTINUE ON AN UPWARD TREND, THE CORRESPONDING PERCENTAGE OF THE WORKFORCE IN THE SUBURBS WILL INEVITABLY INCREASE AS WELL. 64% OF CURRENT WORKFORCE SITS IN THE SUBURBS 80% SHARE OF HOUSEHOLD GROWTH 70% 60% 50% 40% 30% 20% 71% 79% 69% 77% 71% 79% SUBURBS EXPECTED TO GAIN SHARE 2015 2025 64% 36% 10% 0% 21% 15% 6% 7% 10% 8% 1970-1980 1980-1990 1990-2000 2000-2010 2010-2015P 2015P-2025P DECADE TODAY S RURAL TODAY S SUBURBS TODAY S URBAN SUBURBS CBD Source: John Burns Real Estate Consulting, LLC based on US Census data; Moody s Analytics Source: Bureau of Labor Statistics MERIDIAN MULTI-STORY PORTFOLIO 10
THE GREAT RESURGENCE CBD VS. SUBURBAN OFFICE CAP RATES.5% FROM A CAP RATE PERSPECTIVE, THE GAP BETWEEN CBD AND SUBURBAN OFFICE CONTINUES TO NARROW SUBURBAN CBD Source:CoStar Portfolio Strategy PRICE PER SQUARE FOOT INDEX OVER THE PAST FOUR YEARS, SUBURBAN OFFICE HAS REALIZED APPROXIMATELY 5% MORE VALUE GROWTH COMPARED TO THE CBD S SUBURBAN CBD Source:CoStar Portfolio Strategy MERIDIAN MULTI-STORY PORTFOLIO 11
THE GREAT RESURGENCE MILLENNIAL HOME OWNERSHIP BREAKDOWN WILL NOT PURCHASE 16% ALREADY OWN 24% PLAN TO PURCHASE 60% MILLENNIALS LIVING IN CITIES WELL-LOCATED, HIGHLY AMENITIZED SUBURBAN OFFICE PRODUCT is positioned for outsized growth in the coming years, as an aging millennial population is expected to migrate out of urban areas in search of more affordable housing and better schools as they begin to start families. A DEMOGRAPHIC SHIFT IS UNDERWAY. Urban areas realized impressive growth from 2010 2015, largely driven by the inward migration from millennials. However, for the first time since 2010, urban growth is moderating while suburban demand continues to outpace the CBDs. THIS TREND IS ALREADY TAKING PLACE IN RALEIGH-DURHAM, as Cary was recently ranked #4 among cities with the most millennial homeowners (Source: SmartAsset, 2016) and Wake County is projected to be the 8th most active market where millennials are most likely to purchase homes (Source: CoreLogic, 2016) MILLENNIALS LIVING IN SUBURBS IN MANY WAYS, SUBURBAN OFFICE NEVER SLOWED DOWN, as suburbs still account for 79% of the population, 75% of 25-to-35 year olds and 77% of office inventory (Source: ULI Emerging Trends in Real Estate 2017) SURGING DEMAND AND LIMITED NEW SUPPLY IS DRIVING IMPRESSIVE RENT GROWTH. With no buildings currently under construction in the South Durham submarket, rents have risen an impressive 16.2% over the past 36 months and appear poised to exceed that going forward. MERIDIAN MULTI-STORY PORTFOLIO 12
MERIDIAN CORPORATE MULTI-STORY PORTFOLIO RALEIGH-DURHAM INTERNATIONAL AIRPORT DOWNTOWN RALEIGH IBM UNITED THERAPEUTICS CREE SYNGENTA RESEARCH TRIANGLE PARK RTI INTERNATIONAL FIDELITY INVESTMENTS BASF 40 INVESTMENT ADVISORS RYAN CLUTTER Senior Managing Director 704.526.2805 rclutter@hfflp.com SCOT HUMPHREY Senior Director 919.573.4641 shumphrey@hfflp.com DURHAM (5 MILES) 55 2500 MERIDIAN 2510 MERIDIAN 2505 MERIDIAN MERIDIAN CORPORATE CENTER CHRIS LINGERFELT Director 704.526.2808 clingerfelt@hfflp.com 2520 MERIDIAN 2525 MERIDIAN ANALYSTS RYAN EKLUND Associate 704.526.2811 reklund@hfflp.com THE HEIGHTS AT MERIDIAN WILLIAM MORRIS Real Estate Analyst 704.526.2825 wmorris@hfflp.com DEBT + STRUCTURED FINANCE TRAVIS ANDERSON Senior Managing Director 704.526.2806 tanderson@hfflp.com ROGER EDWARDS Senior Director 919.573.4647 redwards@hfflp.com 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.