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O F F E R I N G M E M O R A N D U M
S O U T H E A S T • D E N V E R
C L A S S A O F F I C E I N D U S T R I A L
W I T H H I G H C R E D I T T E N A N C Y
0 1 • E X E C U T I V E S U M M A R Y
T A B L E O F C O N T E N T S
© 2019 CBRE, Inc. All Rights Reserved. S A L E A N D L E A S E C O M P S A V A I L A B L E U P O N R E Q U E S T
CONTACT US
Jeremy Ballenger+1 303 264 [email protected]
Jim Bolt +1 720 528 6310 [email protected]
Tyler Carner+1 303 264 [email protected]
Jenny Knowlton+1 303 628 [email protected]
Jessica OstermickDirector of Market Research+1 303 264 [email protected]
DEBT & STRUCTURED FINANCE
Jeff Halsey+1 303 628 [email protected]
Brady O’Donnell+1 303 628 [email protected]
0 1 • E X E C U T I V E S U M M A R Y
E X E C U T I V E S U M M A R Y
T H E O F F E R I N G
CBRE, as exclusive advisor, is pleased to present the outstanding opportunity to acquire the fee simple interest in 345 Inverness Drive South (the “Property”) – a premier, three building Class A office industrial project comprising 175,287 square feet in Southeast Denver. Built in 2001, the Property is 100% leased to eight tenants with a weighted average lease term of 3.59 years. Four of the tenants comprising 69% of the total square footage boast investment grade credit. Exceptionally located in Inverness Business Park, one of the premier mixed-use communities in Southeast Denver, the Property is positioned with easy access to arterial highways and first-class amenities in not only one of the metro area’s top counties, but also a top county in the nation.
345 Inverness Drive South represents an opportunity to combine a best in class project secured by strong credit tenancy with a top tier submarket amidst a dynamic major market – resulting in secure, stable cash flow in a submarket anchored by some of the best demographics in the nation.
C L A S S A B U I L D I N G S S T R O N G C R E D I T T E N A N C Y
S T A B L E C A S H F L O W D Y N A M I C M A R K E TH E A V Y P A R K I N G R A T I O
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ADDRESS 345 Inverness Drive South, Englewood, CO 80112
SQUARE FOOTAGE (SQ. FT.)
Building A: 63,726Building B: 55,015Building C: 56,546
Total: 175,287
TOTAL SITE SIZE (ACRES) 16.48 Acres
YEAR BUILT 2001
PERCENTAGE LEASED 100%
TOTAL NO. OF TENANTS 8
REMAINING LEASE TERM 3.59 Years
WEIGHTED AVERAGE IN-PLACE RENT $14.57 PSF NNN
CLEAR HEIGHT 16’ – 18’ Warehouse; 10’ Finished
LOADINGBuilding A: 4 Drive-InBuilding B: 3 Half-DockBuilding C: 3 Dock-High
PARKING RATIO 6.0/1,000 SF
I N V E S T M E N T S U M M A R Y
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DOWNTOWN DENVER
CHERRY CREEK STATE PARK
CENTENNIAL AIRPORT
PARK MEADOWS MALL
County Line Station(light rail stop)
Dry Creek Station(light rail stop)
CENTENNIAL PROMENADE
GREENWOOD VILLAGE
INVERNESS BUSINESS PARK & GOLF CLUB
CASTLEWOOD
DENVER TECH CENTER
LIBERTY BOULEVARD
INVERNESS DRIVE SOUTH
SOUTH VALLEY HIGHWAY
INVERNESS PARKWAY
229,000 VPD25INTERSTATE
q j
NOT TO SCALE
A B C
44,000 VPD
Ownership: Shea PropertiesZoning: PDU
Ownership: Shea Properties
Zoning: PDU
Arapahoe Business Park - a 309,445 SF seven building light industrial portfolio - is an accretive investment opportunity that
will be available in late May 2019
3 4 5 I N V E R N E S S D R I V E • 7
CLASS A CONSTRUCTION WITH A FLEXIBLE DESIGN
• Institutionally developed, owned and maintained, 345 Inverness Drive South is a best in class office industrial project in Southeast Denver with an above market parking ratio accommodating a diverse tenant base.
• Built in 2001, the Property was constructed with site cast concrete tilt-up panels, a wrap-around window line and the ability accommodate drive-in and dock-high loading around individual building truck courts for flexible building uses.
• The spaces are currently used for office, laboratory/R&D, and warehouse– a mix that appeals to the region’s tenant base.
• The Property can easily accommodate for future tenant configuration.
I N V E S T M E N T H I G H L I G H T S
SUITE TENANT INDUSTRY PROFILE CREDIT RATING RENTABLE SQUARE FEET
% OF ASSET
LEASE EXPIRATION
DATE
A-100 General Atomics Satellite Manufacturer Private 12,742 7.3% 2/28/21
A-110 Insights Center Commercial Test Kitchen & Research Facility Private 8,829 5.0% 9/30/24
A-120, 130; C-300 Comcast Media & Communications A3 (Moody's) 55,250 31.5% 1/31/24
A-140 Option Care Enterprises
Home Infusion Services / Specialty Pharma Private 13,505 7.7% 5/31/21
B-200 Ingredion Food Manufacturing Baa1 (Moody's) 46,054 26.3% 3/31/24
B-240 Honeywell Diversified Industrials A2 (Moody's) 8,961 5.1% 3/31/21
C-310 GEVO Chemicals & Biofuels Not Rated 19,241 11.0% 7/31/21
C-330 Caterpillar Farm & Construction Equipment A3 (Moody's) 10,624 6.1% 4/30/24
* The 81 sq. ft. difference between NRA per existing leases and the reflected building square footage is due to a building re-measurement per BOMA.
(Comcast & Viveve Medical Sublease)
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T E N A N T I N D U S T R I E S B Y S Q U A R E F O O T
THE MEDIAN HOUSEHOLD INCOME IN DOUGLAS COUNTY WAS $109,292 WHICH RANKS 7TH IN THE UNITED STATES FOR THE HIGHEST MEDIAN HOUSEHOLD INCOME AMONG COUNTIES WITH POPULATIONS OF 65,000 OR MORE.
- 2016 AMERICAN COMMUNITY SURVEY
Satellite Manufacturer7%
Commercial Test Kitchen & Research Facility
5%
Media & Communications32%
Home Infusion Services / Specialty Pharma
8%
Food Manufacturing26%
Diversified Industrials5%
Chemicals & Biofuels 11%
Farm & Construction Equipment
6%
Tenant Industries by Sq. Ft.
3 4 5 I N V E R N E S S D R I V E • 9
DIVERSIFIED & ATTRACTIVE TENANT BASE
• The Property is leased to eight (8) tenants - all of which represent a different business industry.
• 69% of the Property is leased to investment grade tenants providing surety for future cash flow. Top tenants include: Comcast, Ingredion, Honeywell, and Caterpillar.
• With an average tenant size of 21,901 square feet, no single tenant comprises more than 32% of the Property thereby minimizing overall risk exposure.
• Tenants are attracted to the high image, Southeast setting. 4 of the 8 tenants, representing 40% of the total square footage, have occupied the property over 6 years.
• The property has been 95% - 100% leased for 6 out of the last 10 years and has outperformed the sub-market average occupancy over the last 10 years based on its flexible and attractive attributes.
PREMIER, AMENITY RICH LOCATION
• The Property is located in the southeast quadrant of Inverness Business Park – a premier commercial and residential community in the Southeast.
• Located on the east side of I-25, the Property offers great accessibility to nearby amenities including the Park Meadows Mall, Centennial Airport, southeast commuter rail, and Inverness Hotel & Golf Course.
• The Property is surrounded by a robust transportation network with easy access to Denver’s major thoroughfares, the southeast commuter rail, and Centennial Airport.
• The Property is well positioned to appeal to tenant demand and the surrounding and growing employee base.
STABLE CASH FLOW
• The Property is 100% leased with a weighted average lease term of 3.59 years (as of Oct-2019) providing durable income with triple net leases and 2.8% average contractual lease escalations.
• Persistently strong tenant demand as supported by strong market fundamentals, contractual rent increases, and high credit tenancy will afford substantial security for stable, long-term cash flow.
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Overall Construction Cost Index (January 2009 = 100) Denver Construction Employment (Year-Over-Year Growth)(an indicator of future wage and activity trends)
Construction employment in the Denver region remained robust through the first quarter of 2019, showing 6% growth compared to a year ago. We expect construction employment will hold steady throughout the year.
Denver
National
1st Quarter 2019Mortenson Construction Cost Index – Denver, CO
Advice for Building Owners
About this report: The Mortenson Construction cost index is calculated quarterly by pricing a representative non-residential construction project in Denver and other geographies throughout the country. Local employment figures are from the Bureau of Labor Statistics.
For a more specific update or questions regarding this report, please contact:
Brian HollandDirector of Business [email protected]
Dan MickelberryChief [email protected]
Both our Denver and national construction cost indexes continued to track upwards through the first quarter of 2018. The index increased 6% in Denver and 5.4% nationally compared to the same period a year ago.
Growth among index building categories was largely flat to moderate, although five components experienced growth of 4% or more in the latest quarter. Steel and concrete materials, in particular, saw large increases.
The Denver construction cost index indicates costs continuing to increase at a pace above historic averages, closely mirroring our national index. Although we continue to monitor trade negotiations with China, volatility due to tariffs has seemingly eased over the past few months and prices have stabilized. Construction employment in Denver remains stable, and the Architecture Billings Index (an early predictor of construction activity) is holding steady. We recommend owners plan on a 4% to 5% increase for the remainder of the year.
Denver Building Component Trends (Q1 2019 vs. Q4 2018)
Highest Growth
• Susp. Acoust. Ceilings (10.5%)• Reinforcing Steel (8.1%)• Steel Doors/Frames (8.0%)
• Unit Masonry (5.4%)• Cast-in-Place Concrete (4.0%)
Moderate Growth
• Painting/Wall Covering (2.9%)• Gypsum Board Systems (2.6%)
• Electric Traction Elevators (1.6%)• Finish Carpentry/Millwork (1.3%)
Flat
• Earthwork• Deck Formwork• Electrical Systems• Plumbing Systems• HVAC Systems
• Fire Protection• Alum. Entrances & Storefronts• Steel Framing & Stair Erection• Resilient Flooring & Carpeting• Struct. Steel & Metal Decking
Note: All other components (14% of the index) increased 3.2%
Source: Mortenson Construction Cost Index, Q1 2019
O V E R A L L C O N S T R U C T I O N C O S T I N D E X ( J A N U A R Y 2 0 0 9 = 1 0 0 )
DYNAMIC SOUTHEAST MARKET
• Denver’s Southeast submarket boasts one of the nation’s strongest demographic profiles. Population growth in the Southeast is projected to increase 6.7% by 2023 and surpass the 1.0 million point by 2019.
• Colorado’s top employers and multiple Fortune 500 companies base their operations in Southeast Denver including Arrow Electronics, Charles Schwab, Dish Network, and CH2M, among others.
• Denver’s Southeast office and industrial submarkets are healthy with increasing lease rates and strong leasing activity. The Southeast office market, at a 36 million sq. ft., exceeds Denver’s Downtown market at 28 million sq. ft. The Southeast industrial submarket is Denver’s 3rd largest submarket behind only the airport and central submarkets.
DISCOUNT TO REPLACEMENT COST • The Denver construction cost index increased 7.1% from Q4 2017 to
Q4 2018. The Property will trade at a discount to replacement cost – a competitive advantage compared to new assets in the market.
• Estimated construction costs for 345 Inverness are $265 PSF.
3 4 5 I N V E R N E S S D R I V E • 1 1
AFFILIATED BUSINESS DISCLOSURE
CBRE, Inc. operates within a global family of companies with many subsidiaries and related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates, including CBRE Global Investors, Inc. or Trammell Crow Company, may have or represent clients who have competing interests in the same transaction. For example, Affiliates or their clients may have or express an interest in the property described in this Memorandum (the “Property”), and may be the successful bidder for the Property. Your receipt of this Memorandum constitutes your acknowledgement of that possibility and your agreement that neither CBRE, Inc. nor any Affiliate has an obligation to disclose to you such Affiliates’ interest or involvement in the sale or purchase of the Property. In all instances, however, CBRE, Inc. and its Affiliates will act in the best interest of their respective client(s), at arms’ length, not in concert, or in a manner detrimental to any third party. CBRE, Inc. and its Affiliates will conduct their respective businesses in a manner consistent with the law and all fiduciary duties owed to their respective client(s).
CONFIDENTIALITY AGREEMENT
Your receipt of this Memorandum constitutes your acknowledgement that (i) it is a confidential Memorandum solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property, (ii) you will hold it in the strictest confidence, (iii) you will not disclose it or its contents to any third party without the prior written authorization of the owner of the Property (“Owner”) or CBRE, Inc., and (iv) you will not use any part of this Memorandum in any manner detrimental to the Owner or CBRE, Inc.
If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return it to CBRE, Inc.
DISCLAIMER
This Memorandum contains select information pertaining to the Property and the Owner, and does not purport to be all-inclusive or contain all or part of the information which prospective investors may require to evaluate a purchase of the Property. The information contained in this Memorandum has been obtained from sources believed to be reliable, but has not been verified for accuracy, completeness, or fitness for any particular purpose. All information is presented “as is” without representation or warranty of any kind. Such information includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and other factors which are subject to uncertainty and may not represent the current or future performance of the Property. All references to acreages, square footages, and other measurements are approximations. This Memorandum describes certain documents, including leases and other materials, in summary form. These summaries may not be complete nor accurate descriptions of the full agreements referenced. Additional information and an opportunity to inspect the Property may be made available to qualified prospective purchasers. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and financial advisors, and carefully investigate the economics of this transaction and Property’s suitability for your needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK.
The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall have any legal commitment or obligation except as set forth in a fully executed, definitive purchase and sale agreement delivered by the Owner. PMStudio_May2019
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3 4 5 I N V E R N E S S D R I V E • 1 3
CONTACT US
Jeremy Ballenger+1 303 264 [email protected]
Jim Bolt +1 720 528 6310 [email protected]
Tyler Carner+1 303 264 [email protected]
Jenny Knowlton+1 303 628 [email protected]
Jessica OstermickDirector of Market Research+1 303 264 [email protected]
DEBT & STRUCTURED FINANCE
Jeff Halsey+1 303 628 [email protected]
Brady O’Donnell+1 303 628 [email protected]