interchange office portfolio - dra advisors · pdf filestaggered lease expirations, a history...

I NTE RCHANG EOFF ICE PORTFOLIO

Investment Summary

SU B U R BAN PH I LADE LPH IA

CAPITAL MAR KETS | I NSTITUTIONAL PROPE RTI ES

1.6 MILLION SF VALUE ADD INVESTMENT OPPORTUNITY

501 Office Center Drive | Fort WashingtonB

LEHIGH VALLEY TRANCHE

FORT WASHINGTON TRANCHEHORSHAM TRANCHE

BUCKS COUNTY TRANCHE

PORTFOLIO SIZE 1,611,961 SF

CURRENT OCCUPANCY 86% leased

SUBMARKETS Four

SALE PROCESS One or More Tranches

DEBT Free and Clear


1 7535 Windsor Drive

2 7350 Tilghman Street


4 7010 Snowdrift Road



7 6990 Snowdrift Road (A)

8 6990 Snowdrift Road (B)

9 6575 Snowdrift Road



668,631 SF - 42% of Portfolio

FORT WASHINGTON TRANCHE

12 500 Office Center Drive

13 501 Office Center Drive

14 321 Norristown Road

15 323 Norristown Road

16 220 Commerce Drive

17 520 Virginia Drive


HORSHAM TRANCHE

18 655 Business Center Drive





23 630 Dresher Road

24 650 Dresher Road

25 300 Welsh Road - Bldg I

26 300 Welsh Road - Bldg II



27 One Greenwood Square

28 Two Greenwood Square

29 Three Greenwood Square


EXECUTIVE SU M MARY

1

Two Greenwood Square | Bucks County2

TH E OPPORTU N ITYCBRE has been retained as the exclusive agent of The

Owner to arrange the disposition of a portfolio of

29 Class A office buildings located in the suburban

Philadelphia marketplace (“The Portfolio”).

The Portfolio consists of a series of Class A suburban

office buildings totaling 1.6 million square feet

that are located in four major submarkets along

or adjacent to interchanges of the Pennsylvania

Turnpike, (I-276), I-95 or the Northeast Extension

of the Pennsylvania Turnpike (I-476): Lehigh Valley,

Fort Washington, Horsham, and Bucks County.

The Portfolio is 86% leased and offers an

investor/operator the opportunity to have an

immediate strong cash-on-cash return, with

significant upside potential by increasing occupancy

and rolling leases in improving markets.

In summary, the Portfolio presents an opportunity

for a sophisticated investor to capture a dominant

presence in four of Philadelphia’s premier

office submarkets; a synergistic investment

that offers the rare combination of prime

locations, unmatched access and visibility,

staggered lease expirations, a history

of institutional ownership, first–class

construction and finishes, and credit-

oriented tenants supporting a secure

and growing income stream.

TH E PORTFOLIO PR ESE NTS AN OPPORTU N ITY

FOR A SOPH ISTICATE D I NVESTOR TO

CAPTU R E A DOM I NANT AN D SYN E RG ISTIC

PR ESE NCE I N FOU R OF PH I LADE LPH IA’S

PR E M I E R OFF ICE SU B MAR KETS

800 Office Center Drive | Horsham

3

MAJOR TENANTS

The following 16 largest tenants provide the Portfolio

with an extraordinary blend of Investment Grade Credit

and other market leading national and regional firms.

TENANT SF

1 Hartford Fire Insurance 98,670

2 ADP, Inc. 68,206

3 Berkadia Commercial Mortgage 59,603

4 Research Pharmaceutical 56,454

5 Quest Diagnostics, Inc. 51,236

6 Infinera 43,600

7 PA Manufacturers Insurance 30,398

8 Music Choice 30,071

9 PRA International 28,894

10 Weisermazars 27,580

11 HQ Global Workplaces 27,030

12 Gwynedd-Mercy College 25,000

13 Andesa Services 24,550

14 Sykes Enterprises, Inc. 21,115

15 AVO Photonics 20,250

16 Premier Research Group 20,011

Total 632,668% of Portfolio 39%Average Remaining Lease Term 5.5 years

I NVESTM E NT H IG H LIG HTS

TRANCHE SQ. FT. % of Portfolio SF

% LEASED

Lehigh Valley 668,631 42% 85%

Fort Washington 457,913 28% 89%

Horsham 318,137 20% 87%

Bucks County 167,280 10% 80%

TOTAL 1,611,961 86%

The Portfolio is comprised of four tranches that are each the dominant set of buildings within their respective submarkets.

300 Welsh Road | Horsham

4

DOMINANT SUBMARKETS

The Portfolio is comprised of four tranches that are

located in separate and distinct submarkets along three

of the region’s primary highways: I-95; The Pennsylvania

Turnpike (I-276) and I-476. These submarkets, located

20-50 minutes from Center City Philadelphia, are

among the largest and strongest in the entire MSA.

DIVERSE AND HIGH QUALITY TENANT BASE

The Portfolio is 86% leased to a cross-section of

high quality, creditworthy tenants with a diverse lease

expiration schedule. None of the tenants exceed

5% of the total square footage of the Portfolio. This

diversification affords an investor the security of not

having significant exposure to any individual tenant,

industry or rollover year. Major tenants, above 20,000

square feet, are all credit worthy, account for almost

40% of the net rentable area of the Portfolio and have

an average remaining lease term of about 5.5 years.

CRITICAL MASS/OPERATING PLATFORM

The Portfolio size provides the investor with a dominant

regional operating platform, as well as premier landlord

positions in the major submarkets in which the assets

are situated. The management fees derived from the

Portfolio are estimated to exceed $1 million annually.

EXCEPTIONAL INVESTMENT VALUE

The Portfolio affords the opportunity to acquire 29 Class

A office buildings at a discount to replacement value.

OUTSTANDING INTERCHANGE LOCATIONS

The Portfolio offers highly visible multi-

directional metro-wide access along the

region’s primary interstate highways.

TENANT AMENITIES

The Portfolio is comprised of assets that benefit from

a Class A office park environment which provide

above average parking and numerous amenities,

including fitness centers, restaurants, deli and other

food services, overnight courier drop-boxes, nearby

hotels, eateries, and abundant retail shopping.

GREATER PHILADELPHIA/LEHIGH

VALLEY METROPOLITAN AREA

possesses one of the most diverse economies in the

Nation, with heavy concentration in the financial services,

healthcare, insurance, pharmaceutical, communication

and biotechnology sectors. The MSAs are home to

many Fortune 500 firms including Sunoco, Comcast,

GlaxoSmithKline, DuPont, Vanguard, Campbell Soup, Air

Products, Olympus US Headquarters and many more.

INSTITUTIONAL QUALITY

The properties are in excellent condition and

have benefited from the long term ownership

and management of institutional owners with

a consistent reinvestment of capital.

MULTIPLE EXIT STRATEGIES

The Portfolio includes both single-story and multi-story

buildings that can accommodate both single user and

multi-tenanted use. Buildings within the Portfolio have

historically been very attractive for users and tenants

desiring their own building looking to benefit from

identity and exposure opportunities, and the efficiency

and enhanced security of leasing an entire building. This

creates the opportunity for an owner to optimize their exit

strategy, by either selling single buildings to users on a

select basis, or taking advantage of the strong demand

for single tenant net leased properties by selling such

buildings on a one-off basis.

5


PROPERTY SF12/1/14

OCC

7535 Windsor Drive 132,385 94%

7350 Tilghman Street 107,224 86%


7010 Snowdrift Road 33,029 100%



6990 Snowdrift Road - A 44,200 100%

6990 Snowdrift Road - B 27,900 100%

6575 Snowdrift Road 47,091 100%



TOTALS 668,631 85%

FORT WASHINGTON TRANCHE

PROPERTY SF12/1/14

OCC

500 Office Center Drive 104,303 88%

501 Office Center Drive 114,795 84%

321 Norristown Road 59,994 75%

323 Norristown Road 76,287 100%

220 Commerce Drive 46,080 87%

520 Virginia Drive 56,454 100%

TOTALS 457,913 89%

HORSHAM TRANCHE

PROPERTY SF12/1/14

OCC

655 Business Center Drive 29,933 96%





630 Dresher Road 28,894 100%

650 Dresher Road 30,071 100%

300 Welsh Road - # 1 40,042 57%

300 Welsh Road - # 2 17,750 65%

TOTALS 318,137 87%


PROPERTY SF12/1/14

OCC

One Greenwood Square 60,705 76%

Two Greenwood Square 81,575 77%

Three Greenwood Square 25,000 100%

TOTALS 167,280 80%

TOTALS/AVERAGES 1,611,961 86%

In addition to these exciting and unique opportunities, the key attributes of the Suburban Philadelphia Interchange Portfolio include:

• Quality rent roll; significant remaining lease term and credit quality

• Quality, diversified, and dynamic product type in the Philadelphia MSA, which is demonstrating increasing levels of absorption and benefiting from increasing rental rates.

• Opportunity to create a stabilized operating platform which is estimated to exceed $1 million of management fees per year (excluding construction management fees and potential leasing commissions).

• “Best in Class” on-site amenities including restaurants, deli’s, conference centers, water features, and walking trails

• Centrally located in Philadelphia’s largest submarkets

• Quality, visible assets attractive to image conscious and public relations savvy firms seeking signage and/or curb appeal for clients and customers

• Centralized location; ease of access located along three of the regions primary highways: I-95; The Pennsylvania Turnpike, I-476 and various other primary and secondary roads

• Campus-like settings on sites filled with dense foliage, rolling hills, water features, and beautiful landscaping

• Institutionally owned, developed, and managed assets ensure quality and minimize long-term capital exposure

• Efficiency and affordability attractive to a wide range of tenants

PORTFOLIO OCCU PANCY

6

LE H IG H VALLEY

7535 Windsor Drive 7450 Tilghman Street 7350 Tilghman Street 7360 Windsor Drive

7310 Tilghman Street 7248 Tilghman Street 7150 Windsor Drive

6575 Snowdrift Road6990 Snowdrift Road

Building A6990 Snowdrift Road

Building B 7010 Snowdrift Road

Tilghm

an S

treet

Tilghman Stre

et

Mill Road

Snowdrift Road

7

ADDRESS7535 Windsor DriveAllentown, PA 18106

TOTAL RSF 132,385

SITE ACREAGE 13.4

MAJOR TENANTSADP, ParenteBeard, Liberty Engineering

OCCUPANCY 94%

ADDRESS7350 Tilghman StreetAllentown, PA 18106

TOTAL RSF 107,224

SITE ACREAGE 13.0

MAJOR TENANTS Hartford Fire Insurance

OCCUPANCY 86%

ADDRESS7450 Tilghman StreetAllentown, PA 18106

TOTAL RSF 100,000

SITE ACREAGE 13.4

MAJOR TENANTS Hartford Fire Insurance

OCCUPANCY 51%

7535 WI N DSOR DR IVE 7350 T I LG H MAN STR E ET 7450 T I LG H MAN STR E ET

LE H IG H VALLEY

8

ADDRESS7010 Snowdrift RoadAllentown, PA 18106

TOTAL RSF 33,029

SITE ACREAGE 3.9

MAJOR TENANTSHeartland Pharmacy, Zayo Bandwidth

OCCUPANCY 100%

7010 SNOWDR I FT ROAD 7150 WI N DSOR DR IVE

LE H IG H VALLEY

7360 WI N DSOR DR IVE

ADDRESS 7150 Windsor DriveAllentown, PA 18106

TOTAL RSF 49,420

SITE ACREAGE 6.1

MAJOR TENANTS Sykes Enterprises, Earthlink, Verizon

OCCUPANCY 89%

ADDRESS 7360 Windsor DriveAllentown, PA 18106

TOTAL RSF 43,600

SITE ACREAGE 6.2

MAJOR TENANTS Infinera

OCCUPANCY 100%

9

ADDRESS6575 Snowdrift Road Allentown, PA 18106

TOTAL RSF 47,091

SITE ACREAGE 5.8

MAJOR TENANTS Andesa Services, Kia Motors

OCCUPANCY 100%

ADDRESS7248 and 7310 Tilghman StreetAllentown, PA 18106

TOTAL RSF7248 - 43,7827310 - 40,000Total - 83,782

SITE ACREAGE7248 - 4.27310 - 5.2

MAJOR TENANTSHighmark, Integra,Mack Defense, Johnson Controls

OCCUPANCY7248 - 86%7310 - 58%

6575 SNOWDR I FT ROAD 7248 AN D 7310 T I LG H MAN STR E ET

LE H IG H VALLEY

ADDRESS6990 Building A & B Snowdrift Road Allentown, PA 18106

TOTAL RSF6990A - 44,2006990B - 27,900Total - 72,100

SITE ACREAGE 8.4

MAJOR TENANTS PA Manufacturer’s Assoc.,Airgas, NeighborCare Pharmacy

OCCUPANCY Building A - 100%Building B - 100%

6990 B U I LD I NG A & B SNOWDR I FT ROAD

10

323 Norristown RoadAmbler, PA

321 Norristown RoadAmbler, PA

Norristo

wn Road

Norristo

wn Road

500 Office Center Drive

PA Turnpike Interchange

501 Office Center Drive

Office Center Drive

Virginia Drive

520 Virginia Drive

220 Commerce Drive

276

FORT WASH I NGTON

11

ADDRESS500 Office Center DriveFort Washington, PA 19034

TOTAL RSF 104,303

SITE ACREAGE 6.3

MAJOR TENANTSHQ Global, Access Services, PSI Pharma, US Health

OCCUPANCY 88%

ADDRESS501 Office Center Drive Fort Washington, PA 19034

TOTAL RSF 114,795

SITE ACREAGE 6.4

MAJOR TENANTS Weisermazars, M3 USA, GSA

OCCUPANCY 84%

ADDRESSSpringhouse Corporate Center I 321 Norristown RoadAmbler, PA 19002

TOTAL RSF 59,994

SITE ACREAGE 11.1

MAJOR TENANTS L Discovery, Pentavision

OCCUPANCY 75%

500 OFF ICE CE NTE R DR IVE 501 OFF ICE CE NTE R DR IVE SPR I NG HOUSE COR PORATE CE NTE R I

FORT WASH I NGTON

12

ADDRESSSpringhouse Corporate Center II 323 Norristown RoadAmbler, PA 19002

TOTAL RSF 76,287

SITE ACREAGE 14.2

MAJOR TENANTSBerkadia Commercial Mortgage, Gable, Peritz, Mishkin LLP

OCCUPANCY 100%

ADDRESS220 Commerce DriveFort Washington, PA 19034

TOTAL RSF 46,080

SITE ACREAGE 4.3

MAJOR TENANTSSoutheastern Abstract, Veeva Systems

OCCUPANCY 87%

ADDRESS520 Virginia DriveFort Washington, PA 19034

TOTAL RSF 56,454

SITE ACREAGE 7.1

MAJOR TENANTS Research Pharmaceutical Services

OCCUPANCY 100%

SPR I NG HOUSE COR PORATE CE NTE R I I 220 COM M E RCE DR IVE 520 V I RG I N IA DR IVE

FORT WASH I NGTON

13

655 Business Center Drive





630 Dresher Road

650 Dresher Road

300 Welsh Road, Bldg I

300 Welsh Road, Bldg II

HORSHAM

Horsham Gate Shopping Center

14

ADDRESS655 Business Center DriveHorsham, PA 19044

TOTAL RSF 29,933

SITE ACREAGE 3.0

MAJOR TENANTSElement Financial Corp., Prism Engineering

OCCUPANCY 96%


TOTAL RSF 38,050

SITE ACREAGE 3.8

MAJOR TENANTS Premier Research Group

OCCUPANCY 86%


TOTAL RSF 51,388

SITE ACREAGE 3.8

MAJOR TENANTSTube City IMS, Advanced Dicing Technologies

OCCUPANCY 78%

655 B US I N ESS CE NTE R DR IVE 755 B US I N ESS CE NTE R DR IVE 1155 B US I N ESS CE NTE R DR IVE

HORSHAM

15


TOTAL RSF 30,773

SITE ACREAGE 5.0

MAJOR TENANTSAVO Photonics, Plymouth Rock Mgmt

OCCUPANCY 100%


TOTAL RSF 51,236

SITE ACREAGE 8.3

MAJOR TENANTS Quest Diagnostics

OCCUPANCY 100%

ADDRESS630 Dresher RoadHorsham, PA 19044

TOTAL RSF 28,894

SITE ACREAGE 5.1

MAJOR TENANTS PRA International

OCCUPANCY 100%

700 B US I N ESS CE NTE R DR IVE 800 B US I N ESS CE NTE R DR IVE 630 DR ESH E R ROAD

HORSHAM

16

ADDRESSBuilding II300 Welsh RoadHorsham, PA 19044

TOTAL RSF 17,750

SITE ACREAGE 1.8

MAJOR TENANTS Abington Memorial Hospital

OCCUPANCY 65%

ADDRESSBuilding I 300 Welsh RoadHorsham, PA 19044

TOTAL RSF 40,042

SITE ACREAGE 3.9

MAJOR TENANTS Verilogue, LRA Worldwide

OCCUPANCY 57%

300 WE LSH ROAD B U I LD I NG I I

HORSHAM

650 DR ESH E R ROAD

ADDRESS 650 Dresher RoadHorsham, PA 19044

TOTAL RSF 30,071

SITE ACREAGE 4.2

MAJOR TENANTS Music Choice

OCCUPANCY 100%

300 WE LSH ROAD B U I LD I NG I

17

B UCKS COU NTY

Three Greenwood SquareOne Greenwood Square

Two Greenwood Square

Street Road

Richlieu Road

Street Road

Street Road

18

ADDRESSOne Greenwood Square 3333 Street RoadBensalem, 19020

TOTAL RSF 60,705

SITE ACREAGE 4.5

MAJOR TENANTSOrleans Homebuilders, Nextel, Corporate Claims Services

OCCUPANCY 76%

ADDRESSTwo Greenwood Square 3331 Street RoadBensalem, 19020

TOTAL RSF 81,575

SITE ACREAGE 3.4

MAJOR TENANTSKuljian Corporation, Xybion Corporation

OCCUPANCY 77%

ADDRESSThree Greenwood Square 3329 Street RoadBensalem, 19020

TOTAL RSF 25,000

SITE ACREAGE 1.5

MAJOR TENANTS Gwynedd-Mercy University

OCCUPANCY 100%

ON E G R E E NWOOD SQUAR E TWO G R E E NWOOD SQUAR E TH R E E G R E E NWOOD SQUAR E

B UCKS COU NTY

19

7535 Windsor Drive | Lehigh Valley

20

OVERVIEW

Greater Philadelphia, the nation’s fifth largest

metropolitan area and fifth largest city, is situated

in the heart of the Northeast Corridor and is the

keystone of major north-south, east-west highway

and rail networks. More than 100 million people are

within a one-day drive of Philadelphia. The Greater

Philadelphia market area spans thirteen counties

in Southeastern Pennsylvania, Southern New

Jersey, Lehigh Valley and Northern Delaware.

ECONOMIC DIVERSITY

Greater Philadelphia has one of the most diverse

economies in the nation. The region is headquarters

to more than thirty companies ranked in the Fortune

1000. Long established corporations, including Dow

Chemical Company, Comcast, Sunoco, Campbell

Soup, E.I du Pont de Nemours and Company,

ACE USA, CIGNA, GlaxoSmithKline and Aetna/US

Healthcare, Inc. have made a significant contribution

to the broad economic base that provides a stable

regional economy and positive business climate.

LEHIGH VALLEY

Comprised of the cities of Allentown, Bethlehem, and

Easton, the Lehigh Valley is well-positioned adjacent

to the extended suburbs of Philadelphia with central

access to Philadelphia and New York. There are more

than 1.3 million people within a 30-mile radius.

Allentown is the third largest city in

Pennsylvania and its growth rate was nearly

five times that of the state itself in 2012.

Major corporations in Allentown include Air Products

& Chemicals World Headquarters, Kraft Foods, PPL

Corporation, Daytimers, Olympus American U.S.

Headquarters, Rodale Press, Wachovia Bank’s Regional

Headquarters, Coca Cola, and Nestle. The Lehigh Valley

is a dynamic and growing market, as is evidenced by the

region’s newest development project, The Waterfront,

a $300 Million, 38-acre mixed use brownfields

redevelopment project on Allentown’s waterfront.

REGIONAL OFFICE MARKET OVERVIEW

The Greater Philadelphia area contains 145 million

square feet of commercial office space in 1,788

buildings. The market reported 20% vacancy for the

2nd Quarter 2014, down from 21.5% reported a year

ago. The Class ‘A’ average asking lease of $26.35 for the

second quarter 2014, reflects an impressive 6% annual

increase over 1st quarter 2006 report of $22.23.

There are five primary office markets in

the metropolitan area: Philadelphia CBD,

Suburban Philadelphia, Southern New Jersey,

Lehigh Valley and Northern Delaware.

SUPPLY/DEMAND TRENDS

The Greater Philadelphia office market started 2014

with great momentum, positive net absorption figures,

lower vacancy rates, increased construction activity and

higher Class A rental rates. Aggressive leasing activity

in the Philadelphia Suburban and Downtown markets as

well as the Southern New Jersey office market produced

an aggregate of 484,200 square feet of positive net

absorption. It is anticipated that vacancy rates in these

markets will continue to decline, specifically Class A

space, given the new lease signings and expected

occupancies throughout 2014. The strength of the

current market bodes well for landlords and investors

alike. As predicted, steady demand and increasing

leasing activity throughout the Philadelphia MSA office

markets have resulted in an increase in Class A average

asking lease rates from $26.17 (Q1 2013) to $26.35

(Q1 2014), an impressive 1.4% annual increase.

G R EATE R PH I LADE LPH IA MSA

21

• US’s fifth largest market• 145 Million SF of Office• $26.35 average Class A asking rental rate

21

EXCLUSIVE MARKETING ADVISORS

ROBERT J. FAHEY

Executive Vice President

+1 610 251 5184

[email protected]

FRANCIS COYNE

Associate

+1 610 251 5144

[email protected]

JEROME KRANZEL

Senior Vice President

+1 610 251 5889

[email protected]

CBRE, INC.

1200 Liberty Ridge Drive

Suite 320

Wayne, PA 19087

T +1 610 251 0820

F +1 610 251 5105

CAP ITAL MAR KETS | I NSTITUTIONAL G ROU P

© 2014 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. PMC0006048

I NTE RCHANG EOFF ICE PORTFOLIO

Investment Summary

SU B U R BAN PH I LADE LPH IA

DEBT & STRUCTURED FINANCE

JAMES GUNNING

Executive Vice President

T +1 201 712 5855

[email protected]

DONNA FALZARANO

Vice President

T +1 201 712 5858

[email protected]

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