Offering Memorandum 3655 North Point Parkway, Alpharetta, Georgia 30005
INVESTMENT SUMMARY THE OFFERING Holliday Fenoglio Fowler, L.P. ( HFF ), as exclusive representative for the Owner, is pleased to present this offering for the fee-simple interest in Preston Ridge I ( Building ), a 66.3% leased Class A multitenant office building located in Alpharetta, the heart of Atlanta s thriving and dynamic North Fulton submarket. Boasting some of metro Atlanta s most favorable demographics, abundant executive housing, and some of the region s leading school systems, Alpharetta is the flourishing cultural and commercial center of Atlanta s North Fulton submarket. Situated just east of Georgia 400 via Old Milton Parkway, the Building sits atop one of the highest points in the North Fulton submarket and offers the best views in Alpharetta. Its appeal is evident in recent leasing momentum with high-quality tenants, while the value-add opportunity remains for the next owner to continue creating significant value through additional leasing. The Building is located less than a mile from Avalon, a transformational mixed-use development slightly west of Georgia 400 via Old Milton Parkway, which provides the Building with a world-class, walkable amenity base. This 86-acre sustainably designed development contains premium retail, curated restaurants, a 12-screen theater, single-family residences, and luxury rental homes. The success of the project has led to additional phases of development that include hotel, office, and more retail. Also, North Point Mall, located less than five minutes south of Preston Ridge I, provides the Building s tenants with abundant shopping and restaurant options. Several quaint boutiques and restaurants are also available in downtown Alpharetta. Preston Ridge I is a six story, 150,000 square-foot Class A office building developed in 1997 by one of Atlanta s most reputable developers, Childress Klein. With highly efficient 25,000 squarefoot floorplates, a dramatic circular entrance lobby with marble and wood finishes, as well as an attractive parking ratio, the Building has timeless appeal and functionality for tenants. It has been institutionally owned and maintained since it was developed and has recently undergone extensive upgrades to the common areas, restrooms, and vacancies to further enhance its appeal to tenants and prospective tenants alike. BUILDING SUMMARY Address: 3655 North Point Parkway, Alpharetta, Georgia 30005 Year Built: 1997 Size: ±148,355 RSF Typical Floor Plate: ±25,000 RSF Parking: 592 spaces (4/1,000 RSF) Occupancy: 66.3% Wtd. Avg. Lease Term: 5.0 years 2 INVESTMENT SUMMARY
INVESTMENT SUMMARY DYNAMIC LOCATION/ACCESSIBILITY: Irreplaceable, central location within Atlanta s dynamic North Fulton submarket, which is easily accessible to Georgia 400 via Old Milton Parkway Less than one mile from Avalon, a transformational mixed-use development providing the Building with a world-class, walkable amenity base Direct access to North Point Parkway, a competitive advantage relative to Preston Ridge II-IV, which lack such access INSTITUTIONAL OWNERSHIP: Exceptionally well-maintained asset, thus mitigating capital needs of the buyer Recent upgrades to common areas that enhance the Building s overall appeal, thus improving tenant retention and recruitment of new tenants DIVERSE, HIGH-QUALITY TENANT BASE: 66.3% leased to 10 tenants, with no tenant representing more than 27% of the Building s total square footage Balanced lease rollover with 22,871 RSF of expirations in the next three years High-quality tenancy, with 64% of in-place base rent attributable to credit tenants ROBUST DEMOGRAPHIC ENCLAVE: One of Atlanta s most affluent communities Attractive live/work/play environment Highly educated workforce % HIGH INCOME HOUSEHOLDS ($200K+) 20.2% AVERAGE HOUSEHOLD INCOME $146,947 MEDIAN HOUSEHOLD INCOME $106,516 ALPHARETTA MEDIAN HOME VALUE $327,000 % POPULATION GROWTH 2010-2017 5.3% MEDIAN AGE 35.2 *Statistics reflect the Property s 30005 zip code unless otherwise indicated. INVESTMENT SUMMARY 3
ALPHARETTA: AFFLUENCE, ACCESS, AMENITIES AVALON 75 retailers 15 restaurants 800 residential units 4K+ jobs PRESTON RIDGE IV MORRIS RD PRESTON RIDGE III LIFETIME FITNESS OLD MILTON PKWY NORTHSIDE HOSPITAL PRESTON RIDGE I PRESTON RIDGE II NORTH POINT PKWY BIG CREEK GREENWAY TRAIL ALPHARETTA AFFLUENCE MEDIAN HOME VALUE AVERAGE HH INCOME $327,000 $122,172 PRESTON RIDGE RD
OFFICE MARKET OVERVIEW NORTH FULTON CLASS A OFFICE MARKET OVERVIEW FIVE-YEAR TREND (2Q2012-2Q2017) Rent Grew Occupancy Increased 28.8% 2.3% Net Absorbed 19K RSF INVENTORY AND COMPLETIONS Avalon s 224,000 RSF office building delivered in 2017 and is already 93% leased. RENTS AND OCCUPANCY North Fulton remains poised for positive net absorption in the coming years. Costar projects North Fulton Class A rents will grow 4.2% and 195,000 RSF will be net absorbed in 2017. KEY TAKEAWAYS Rent Growth Projected Rent Growth 11.0% 5.9% Projected Net Absorption 1.9M RSF 2Q2017 YoY 2017-2022 2017-2022 NORTH FULTON CLASS A OFFICE MARKET OVERVIEW (2Q2017) Total RSF 17,292,761 Overall Occupancy 86.5% YTD Deliveries RSF 266,075 Under Construction RSF 453,743 Quoted Rates $25.33 Rents increased for 14 consecutive quarters from 1Q2013 through 1Q2017. Over a five-year period, North Fulton rents have grown 28.8% (5.2% annually) compared to 24.7% for the Atlanta metro (4.5% annually). SUBMARKET HIGHLIGHTS Avalon is one of the most successful suburban mixed-use projects in the US. The availability of superior internet connection speeds (60% faster than national average) within the submarket is a magnet for tech tenants. 5 OFFICE MARKE T OVER VIE W
invesment advisors RALPH SMALLEY Managing Director 404.942.2214 rsmalley@hfflp.com JOHN BARTON Managing Director 404.942.2213 jbarton@hfflp.com financing GREGG SHAPIRO Managing Director 404.942.2208 gshapiro@hfflp.com Atlanta Austin Boston Carolinas Chicago Dallas Denver Houston Indianapolis Los Angeles Miami New Jersey New York Orange County Orlando Philadelphia Phoenix Pittsburgh Portland San Diego San Francisco Tampa Washington London analysts THOMAS NEALON Real Estate Analyst 404.942.2217 tnealon@hfflp.com PETER WALLER Real Estate Analyst 404.942.2220 pwaller@hfflp.com HFF 3424 Peachtree Road NE Suite 1750 Atlanta, Georgia 30326 telephone 404.832.8460 facsimile 404.942.2181 www.hfflp.com Holliday Fenoglio Fowler, L.P. ( HFF ), HFF Securities L.P. and HFF Securities Limited (collectively, HFFS ) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 24 offices and is 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 sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.