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AFGlobal 13302 and 13312 Road | Houston, TX 77039Absolute NNN | Long Term Tenancy | Industrial Corridor

Offering Memorandum

Actual Location

Stan Johnson Company10333 Richmond Avenue | Suite 740Houston, Texas 77042 P: 832.476.3440stanjohnsonco.com

Jim GibsonRegional [email protected] TX License #392926

Todd [email protected]

Marc PeelerAssociate [email protected]

Marshall [email protected]

Neal [email protected]

Offered Exclusively by

Confidentiality and Restricted Use Agreement

This Confidential Offering Memorandum (“COM”) is provided by Stan Johnson Company (“SJC”), solely for your consideration of the opportunity to acquire the commercial property described herein (the “Property”). This COM may be used only as stated herein and shall not be used for any other purpose, or in any other manner, without prior written authorization and consent of SJC.

This COM does not constitute or pertain to an offer of a security or an offer of any investment contract. This COM contains descriptive materials, financial information and other data compiled by SJC for the convenience of parties who may be interested in the Property. Such information is not all inclusive and is not represented to include all information that may be material to an evaluation of the acquisition opportunity presented. SJC has not independently verified any of the information contained herein and makes no representations or warranties of any kind concerning the accuracy or completeness thereof. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. An interested party must conduct its own independent investigation and verification of any information the party deems material to consideration of the opportunity, or otherwise appropriate, without reliance upon SJC.

The Property may be financed or withdrawn from the market without notice, and its owner(s) reserve(s) the right to negotiate with any number of interested parties at any time. The Property is offered and sold by its owner(s) as is, where is, and with all faults, without representation or warranty of any kind except for any customary warranties of title.

BY ACCEPTING THIS COM, YOU AGREE THAT: (1) all information contained herein, and all other information you have received or may hereafter receive from SJC relating to the Property, whether oral, written or in any other form (collectively, the “Information”), is strictly confidential; (2) you will not copy or reproduce, and claim as your own without attribution to SJC, all or any part of this COM or the Information; (3) upon request by SJC at any time, you will return and/or certify your complete destruction of all copies of this COM and the Information; (4) for yourself and all your affiliates, officers, employees, representatives, agents and principals, you hereby release and agree to indemnify and hold harmless SJC all of its affiliates, officers, employees, representatives, agents and principals, from and with respect to any and all claims and liabilities arising from or related to the receipt or use of this COM and/or any other Information concerning the Property; (5) you will not provide this COM or any of the Information to any other party unless you first obtain such party’s acceptance and approval of all terms, conditions, limitations and agreements set forth herein, as being applicable to such party as well as to you; and (6) monetary damages alone will not be an adequate remedy for a violation of these terms and that SJC shall be entitled to equitable relief, including, but not limited to, injunctive relief and specific performance, in connection with such a violation and shall not be required to post a bond when obtaining such relief.

Executive SummarySection One

Actual Location

AFGlobal • Houston, TX 4

Property Summary

Address:13302 and 13312 E Hardy Road Houston, Texas 77039

Land Area (Acres): 5.685 acres

Building Size (SF): +/- 57,559 SF

Ownership Interest: Fee Simple

Encumbrances: None, Delivered Free & Clear

NOI: $475,000

Long Term Tenancy Tenant has a successful thirty (30) year operating history at the Property, and has reaffirmed that commitment by engaging in a newly signed twenty (20) year lease.

Attractive Lease The Property features a lease with eighteen and a half (18.5) years remaining and two (2), five (5) year renewal options.

Absolute NNN Tenant is responsible for all expenses, including roof, structure, taxes, insurance and common area maintenance

Industrial Driven MSAThe Property is located within Houston-The Woodlands-Sugar Land metropolitan area, the fifth largest metropolitan area in the United States with a population of over 6.49 million. Houston’s average industrial vacancy rate was 5.6% in the second quarter of 2017.

Major Industrial Tenants NearbyAveritt Express, Cummins, Enerflow, Gaffney-Kroese, Precision Drilling, IMI Zimmerman & Jansen Inc, Prime Source Building Products, Halliburton Heathrow, Alliance Supply Management, and Special Piping Material Inc, among others.

Strategic LocationProperty is located near in a major industrial corridor with excellent easy access to Housotn’s busiest highways; Beltway 8, Highway 59 and Interstate 45. The Property is also near Bush Intercontinental Airport, the tenth busiest airport in North America.

The Offering

Investment Highlights

Purchase Price: $7,000,000 Cap Rate: 6.78% Stan Johnson Company is pleased to

offer for sale to qualified investors, the opportunity to purchase a fee simple interest in a flex/industrial building 100% leased to AFGlobal, located at 13302 and 13312 East Hardy Road in Houston, Texas. Houston is the largest city in Texas, and the Houston-The Woodlands-Sugar Land metropolitan area is the second largest Metropolitan Statistical Area (MSA) in Texas and the fifth largest in the United States.

The property features a twenty-year (20) Absolute NNN Lease with eighteen and a half (18.5) years remaining with two (2), five (5) year renewal options.

The Property benefits from being in one of Houston’s biggest Industrial districts and is near Bush Intercontinental Airport, the tenth busiest airport in North America. Located in an industrial sector of the city, the Property also benefits from being near large industrial tenants including; Averitt Express, Cummins, Enerflow, Gaffney-Kroese, Precision Drilling, IMI Zimmerman & Jansen Inc, Prime Source Building Products, Halliburton Heathrow, Alliance Supply Management, and Special Piping Material Inc among others.

Actual Location

Property OverviewSection Two

Actual Location


Lease Abstract

Lease Overview

Location: 13302 and 13312 E Hardy Road Houston, Texas 77039

Tenant: AFGlobal and SMI Manufacturing

Guarantor: AFGlobal Corporation

Building Size (SF)

Weld Building SF:

Maintenance Building SF:

Misc Space SF:

Machine Building SF:

SF Total:

+/- 4,000 SF

+/- 6,200 SF

+/- 7,359 SF

+/- 40,000 SF

+/- 57,559 SF

Land Area (Acres): +/- 5.685 Acres

Year Built: 1976 (Additions in 1982, 1995, 2011 and 2012)

Lease Term: Twenty (20) Years

Rent Commencement: March 1, 2016

Rent Expiration: March 1, 2036

Term Remaining: Eighteen and a half (18.5)

Renewal Options: Two (2), Five (5) year options

NOI: $475,000

Expenses:Absolute NNN - Tenant is responsible for all expenses**

Property Summary

Property Type: Flex/Industrial

Construction Type: Metal Building

Cranes:

Front Machine Shop – 2 Ton Bay Area Crane5 Ton General CraneInspection Bay – 5 Ton Bay Area CraneBack Machine Shop – 10 Ton Gaffey Crane 15 Ton Bay Area CraneTool Room Bay – 5 Ton Proserv CraneNew Machine Shop – 25 Tone Proserv CraneWeld Shop – 5 Ton General Crane 20 Ton Proserv Crane

Eave Height:

14’ Sales Building16’ Front Machine Shop 25’ Weld Shop28’ Back Machine Shop42’ New Machine Shop

Parking: Concrete Parking and Outside Storage

Utilities: Water and sewer provided by well and septic; on-site detention

Rent Schedule

Years Annual Rent

Years 1 –20 (Current) $475,000

Years 21-25 (Option 1) FMV

Years 26-30 (Option 2) FMV

**Last 5 Years of lease term Landlord is responsible for Capital expenses to be reimbursed by Tenant over 5 years at Prime +2

Actual Location

MEI Rigging & Crating • Houston, TX • 7

Tenant Overview - AFGlobalLocated at the Property are SMI manufacturing and AFGlobal. SMI Manufacturing, Inc. provides contract manufacturing services for pressure control products to the oil and gas industry. It offers

design, engineering, fabrication, assembly, and testing services for the manufacture of various oil and gas pressure control products ranging from surface wellheads to subsea components. The company

was founded in 1969 and is based in Houston, Texas.

AFGlobal Corporation designs and manufactures various products for various industries in the United States and internationally. It offers custom backyard systems, well completion equipment,

riser systems and buoyancy, subsea systems and insulation products, pressure control equipment, pressure vessels, drilling rig substructure and drilling mast designs, and other oil and gas related products and fully integrated systems to the oil and gas industry, including

the onshore, offshore, subsea, well completion, and refinery/petrochemical sectors. The company also provides power unit components/systems, precision machined parts, aero

engine components/systems, fuel delivery components/systems, nacelle rings, landing gears, and repair and overhaul services to commercial and military aerospace, and

space exploration. In addition, it offers combustion components/systems, hot gas path components/systems, precision manufactured components, large fabricated skids,

forged fabricated rings and casings, flanges and fittings, after-market services, and other sub-components and fully integrated systems to thermal and nuclear power

markets, and renewable. Further, the company provides products for various industrial applications, including industrial machinery, chemical, plastics, food

processing, and others; products for off-highway, rail, and construction/mining machinery applications; drive systems, wheels, and other critical components for the construction and mining industry; industrial machinery components; and products for medical and pharmaceutical equipment industries.

In July of 2017, AFGlobal announced its acquisition of Advanced Measurement Inc. (AMI), a key provider of automation, controls and data management systems. This acquisition enhances the company’s current upstream drilling, completion and production smart technology, providing better answers and efficiencies for its clients.

AFGlobal Corporation was formerly known as Ameriforge Group Inc. and changed its name to AFGlobal Corporation in May 2013. The company was founded in 1985 and is based in Houston, Texas with manufacturing plants in Avon, Massachusetts; Biddeford, Maine; Calgary and Welland, Canada; Greenville, South Carolina; Liverpool, United Kingdom; Macae, Brazil; Santa Ana, California; and Shunde, China. AFGlobal Corporation operates as a subsidiary of FR AFG Holdings, Inc. As of December 31, 2016 AF Global generated over $600 million in revenue.

Market OverviewSection Three

Actual Location


Location Overview Houston, Texas

North Houston has been a pillar of industrial growth in which the second quarter of 2017 had over 1.1 million square feet of industrial space under construction as well as 101.1 million square feet of total industrial rentable building area. North Houston is also home to George Bush Intercontinental Airport, which is an international airport, and under class B airspace. Located about 23 miles north of Downtown Houston, between Interstate 45 and Interstate 69/U.S. Highway 59 with direct access to the Hardy Toll Road expressway, George Bush Intercontinental Airport has scheduled flights to many domestic and international destinations. George Bush Intercontinental Airport served 40,187,442 passengers in 2011 making the airport the tenth busiest for total passengers in North America. In 2006, the airport was named the fastest growing of the top ten airports in the United States by the United States Department of Transportation.

Houston is a city in and the county seat of Harris County in the state of Texas. It is the most populous city in Texas and the fourth most populous city in the United States. As of 2014, the city had a population of 2,239,000, representing a 7.5% increase since 2000 and continuing a trend of population growth in every decade since record-keeping began in 1850. Houston is the main component of the Houston-Woodlands-Sugar Land Metropolitan Statistical Area that stretches across nine counties and includes a population of over six and a half million, making it the fifth most populated MSA in the country.

Relative to other major U.S. markets, Houston continues to display solid fundamentals with projected positive growth that outperforms the nation. The city has one of the strongest economies in the country, derived from the city’s ability to retain its position as the center of the world’s energy industry, maintain conservative construction levels, diversify its economic base and enjoy rising employment and continuous population growth. Offering an

unsurpassed pro-business environment, Houston is one of the least-expensive major cities to conduct business in and features a stable, dynamic economy.Houston’s economy is rooted in a broad industrial base in sectors such as energy, manufacturing, healthcare, aeronautics, and transportation. It is the top U.S. market for exports, recently passing New York City, and in 2012, the Houston-Woodlands-Sugar Land MSA GDP was $449 billion, the fourth largest of any metropolitan area in the United States. In fact, only 26 other countries have a GDP exceeding that of the Houston metro area.

As of 2013, 24 Fortune 500 companies were headquartered in Houston. Only New York City can claim more with over 50. Some of these companies include Phillips 66, ConocoPhillips, Enterprise Products Partners, Sysco, Plains All American Pipeline, Halliburton, Baker Hughes, National Oilwell Varco, Apache, Marathon Oil and Waste Management, among others. Other major employers include Memorial Hermann Healthcare, Continental Airlines, the University of Texas Anderson Cancer Center, ExxonMobil, Shell Oil, Kroger and The Methodist Hospital.

Houston is frequently awarded and recognized as the tremendous city it is. In 2012, the city was ranked #1 for paycheck worth by Forbes. Moreover, in 2013, it was identified as America’s top city for employment creation, as well as designated by the U.S. Bureau of Statistics as the #1 city for job creation as it was not only the first major city to regain all jobs lost during the economic downturn, but after the crash, more than two jobs were added for every one lost.


Market Overview

Total Industral Market Statistics - Houston Mid-Year 2017 Year-End

MarketExisting Inventory Vacancy YTD

AbsorptionQuoted Rates#Blds Total RBA Direct SF Total SF Vac %

CBD-NW Inner Loop In. 533 12,894,163 617,337 674,542 5.2% (133,650) $9.43

Downtown Houston Ind 902 32,697,194 1,768,889 1,777,889 5.4% (119,116) $5.16

East I-10 Outer Loop. 198 13,921,807 103,866 103,866 0.7% (47,856) $7.61

East-Southeast Far I. 2,007 65,196,058 4,272,151 4,299,191 6.6% 2,400,915 $6.42

Hwy 290/Tomball Pky . 601 21,995,419 1,639,264 1,884,583 8.6% 437,790 $7.08

Hwy 59/Hwy 90 (Alt) . 1,016 24,924,902 1,529,639 1,624,755 6.5% 144,818 $7.30

North Fwy/Tomball Pk. 862 24,684,730 2,622,258 2,731,432 11.1% 460,477 $7.88

North Hardy Toll Road. 786 34,591,906 3,503,416 3,791,333 11.0% (137,244) $6.52

North Inner Loop Ind 190 5,267,777 242,669 242,669 4.6% (17,222) $3.62

North Outer Loop Ind 1,036 22,388,609 1,248,849 1,281,060 5.7% (148,424) $7.32

Northeast Hwy 321 In. 90 1,554,851 49,045 49,045 3.2% 7,502 $7.54

Northeast Hwy 90 Ind 594 19,425,978 343,773 343,773 1.8% (47,441) $5.13

Northeast I-10 Ind 169 4,203,492 94,040 94,040 2.2% (24,207) $6.47

Northeast Inner Loop. 189 11,709,100 389,388 412,227 3.5% 215,739 $4.32

Northwest Hwy 6 Ind 336 10,374,443 573,287 573,287 5.5% (213,233) $5.93

Northwest Inner Loop. 1,753 62,962,874 2,501,288 2,679,411 4.3% (337,135) $6.57

Northwest Near Ind 819 19,674,622 564,134 576,134 2.9% 238,290 $7.53

Northwest Outliers I. 521 21,566,260 1,310,721 1,332,515 6.2% 472,778 $7.26

Sugar Land Ind 489 21,872,936 587,428 600,987 2.7% 32,361 $6.44

West Outer Loop Ind 794 26,462,143 1,406,127 1,495,055 5.6% (360,991) $7.36

Woodland/Conroe Ind 991 20,196,430 1,211,547 1,263,293 6.3% (74,296) $8.37

Totals 19,075 586,162,279 31,431,868 32,835,039 5.6% 2,942,663 $6.74

Houston Industral MarketThe property is located in the Houston, Texas Industrial Market and the North Hardy Toll Road Submarket. The table below depicts second quarter 2017 market statistics.

The Houston Industrial Market as a whole ended the second quarter 2017 with a vacancy rate of 5.6%. The vacancy rate was up over the previous quarter, with net absorption totaling positive 718 square feet in the second quarter. Average quoted rental rates ended the second quarter at $6.74 per square foot per year, a decrease from the previous quarter. A total of 49 buildings delivered to the market in the quarter totaling 1,685,074 square feet, with 4,440,619square feet still under construction.


Actual Property Photos


GEORGE BUSH INTERCONTINENTAL

AIRPORT

10TH BUSIEST AIRPORT IN NORTH AMERICA

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FLEXIBLE LIFELINE SYSTEMS

PDQ MACHINE SHOP

MBCI

TRELLEBORG OFFSHORE

HOUSTON PROCESSING

CENTER

CEVA LOGISTICS US

KRATON CORPORATION

AFC TRANSPORTATION

DISTRIBUTION CENTER

US TRESEURY DEPT

ATLAS COPCO SYSTEMS HOUSTON

IER ELECTRICAL OEM

EASTEXPARK & RIDE

HI-TECH TRUCK RIGGING &

EQUIPMENT

PRECISION FLANGE & MACHINE

SAM HOUSTON TOLLWAY (181,092 VPD)

M S INTERNATIONAL

RAM WINCH & HOIST

ELECTRONIC POWER DESIGN

FAROUK SYSTEMS, INC.BASINTEK

KING FABRICATION

PARAGON PIPE & STEEL

NOBLE IRON

ALL TEX PIPE &

SUPPLY

CONSOLIDATED ELECTRICAL

DISTRIBUTIONVOLTA

AKER SOLUTIONS

CRECENT DIRECTIONAL

DRILLING

CLOVER INTERNATIONALKENNEDY GREENS

BUSINESS PARK


Hard

y Toll R

d.

Aldine Mail Rte Rd.

+/- 34,107 VPD

+/- 11,780 VPD

Jet Machiene Works, INC

Rios De Agua Viva

Gallery Auctions, INC

Texmex Auto

Lowrance Machine Shop

Pds Manufacturing

WearSox

Neon Electric Corp

Juven's Auto Parts

RPM Equipment

TS Grantham Middle School 1,049 Students

Raymond Grace Elementary

1,024 Students

Hinojosa Early Childhood

Center

Alternative Education Placement

Trelleborg Offshore

Texas Aggregate &

Base Materials

Hi-Tech Truck Equipment

Texas International Oilfield Tools

Plusco, INC

Fidel Auto Mechanic

Odom Elementry School

912 Students

Alco Tool

Precision Flange & Machine

American Auto Parts

Q Auto Parts

Sefton Steel LP

Demographics13312 E Hardy Rd | Houston, TX 77039 0 - 1 mi. 0 - 3 mi. 0 - 5 mi.

Population

2017 Population 8,235 100,245 274,184

2022 Population 8,801 106,212 293,357

2010-2017 Annual Rate 1.27% 1.03% 1.29%

2017-2022 Annual Rate 1.34% 1.16% 1.36%

Households

2017 Total Households 1,939 26,572 77,993

2022 Total Households 2,058 27,993 82,999

2010-2017 Annual Rate 0.98% 0.81% 1.08%

2017-2022 Annual Rate 1.20% 1.05% 1.25%

Median Household Income

2017 Median Household Income $43,588 $37,855 $35,369

Average Household Income

2017 Average Household Income $55,727 $48,605 $45,941

Per Capita Income

2017 Per Capita Income $13,540 $12,940 $13,268

going beyond

The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notices.

Stan Johnson Company10333 Richmond Ave | Suite 740Houston, TX 77042P: +1 832.476.3440

stanjohnsonco.com

Offered Exclusively by

Jim GibsonRegional [email protected] TX License #392926

Todd [email protected]

Marc PeelerAssociate [email protected]

Marshall Thompson [email protected] Neal Maranuk Analyst [email protected]

11-2-2015

TYPES OF REAL ESTATE LICENSE HOLDERS: A BROKER is responsible for all brokerage activities, including acts performed by sales agents sponsored by the broker. A SALES AGENT must be sponsored by a broker and works with clients on behalf of the broker.

A BROKER’S MINIMUM DUTIES REQUIRED BY LAW (A client is the person or party that the broker represents): Put the interests of the client above all others, including the broker’s own interests; Inform the client of any material information about the property or transaction received by the broker; Answer the client’s questions and present any offer to or counter-offer from the client; and Treat all parties to a real estate transaction honestly and fairly.

A LICENSE HOLDER CAN REPRESENT A PARTY IN A REAL ESTATE TRANSACTION:

AS AGENT FOR OWNER (SELLER/LANDLORD): The broker becomes the property owner's agent through an agreement with the owner, usually in a written listing to sell or property management agreement. An owner's agent must perform the broker’s minimum duties above and must inform the owner of any material information about the property or transaction known by the agent, including information disclosed to the agent or subagent by the buyer or buyer’s agent.

AS AGENT FOR BUYER/TENANT: The broker becomes the buyer/tenant's agent by agreeing to represent the buyer, usually through a written representation agreement. A buyer's agent must perform the broker’s minimum duties above and must inform the buyer of any material information about the property or transaction known by the agent, including information disclosed to the agent by the seller or seller’s agent.

AS AGENT FOR BOTH - INTERMEDIARY: To act as an intermediary between the parties the broker must first obtain the written agreement of each party to the transaction. The written agreement must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker's obligations as an intermediary. A broker who acts as an intermediary: Must treat all parties to the transaction impartially and fairly; May, with the parties' written consent, appoint a different license holder associated with the broker to each party (owner and

buyer) to communicate with, provide opinions and advice to, and carry out the instructions of each party to the transaction. Must not, unless specifically authorized in writing to do so by the party, disclose:

ᴑ that the owner will accept a price less than the written asking price;ᴑ that the buyer/tenant will pay a price greater than the price submitted in a written offer; andᴑ any confidential information or any other information that a party specifically instructs the broker in writing not to

disclose, unless required to do so by law.

AS SUBAGENT: A license holder acts as a subagent when aiding a buyer in a transaction without an agreement to represent the buyer. A subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first.

TO AVOID DISPUTES, ALL AGREEMENTS BETWEEN YOU AND A BROKER SHOULD BE IN WRITING AND CLEARLY ESTABLISH: The broker’s duties and responsibilities to you, and your obligations under the representation agreement. Who will pay the broker for services provided to you, when payment will be made and how the payment will be calculated.

LICENSE HOLDER CONTACT INFORMATION: This notice is being provided for information purposes. It does not create an obligation for you to use the broker’s services. Please acknowledge receipt of this notice below and retain a copy for your records.

Information About Brokerage Services Texas law requires all real estate license holders to give the following information about

brokerage services to prospective buyers, tenants, sellers and landlords.

.

Designated Broker of Firm License No. Email Phone

Licensed Supervisor of Sales Agent/Associate

License No. Email Phone

Licensed Broker /Broker Firm Name or Primary Assumed Business Name

License No. Email Phone

Regulated by the Texas Real Estate Commission Information available at www.trec.texas.gov IABS 1-0

Date Buyer/Tenant/Seller/Landlord Initials

Sales Agent/Associate’s Name License No. Email Phone

SJCO-Holdings, LLC 9003332 918-494-2690

James Gibson 392926 918-494-2690

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