The Gwendolyn (The “Property”) a 4-Story, 109,000 Square Foot Office Building, Located in Chapel Hill, NC
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TABLE OF CONTENTS 03 Executive summary 16 Property overview 22 Market overview 35 Financial overview 41 Sponsorship overview PENDING ExecutiveGRAPHICS Summary THE BUILDING Exclusively, on behalf of Grubb Properties (the “Sponsor” or “Grubb”), JLL is pleased to present an outstanding ownership opportunity for The Gwendolyn (the “Property”) a 4-story, 109,000 square foot office building, located in Chapel Hill, NC. Part of the first phase of the 70-acre Glen Lennox redevelopment, The Gwendolyn is a Class A office project that will be woven into a true mixed-use setting encompassing residential, retail and additional new office developments. It will serve as the perfect connection point, attracting talent and technology to grow Chapel Hill's innovation ecosystem. Glen Lennox was founded in 1950 by William Muirhead, a visionary entrepreneur and developer who believed in the power of modern design to impact and improve society. 70 years later, Grubb Properties is restoring and evolving this historic community with unrivaled residential, retail and office settings in the heart of one of the most exciting areas in the nation, Chapel Hill, North Carolina. The plan, created in close collaboration with Chapel Hill residents and the Chapel Hill Town Council, contemplates a 20-year revitalization that preserves the integrity and history of Glen Lennox, while allowing it to expand the opportunities available to the community. In July 2019, the Town Council authorized a performance grant for the Sponsor, which was executed in the form of an Economic Development Incentive Agreement , totaling ~$2.23 million. Located between the University of North Carolina, a Tier-1 research university, and the NC Highway 54 “Capital Corridor,” named for its concentration of investment and private equity shops, Glen Lennox is uniquely positioned to be a central innovation node in Chapel Hill. The Property will have convenient access to the region’s major demand drivers, including Downtown Chapel Hill (1 mile), Research Triangle Park (12 miles), Downtown Durham (13 miles), the Raleigh- Durham International Airport (17 miles) and Downtown Raleigh (30 miles). Surrounded by a highly educated and affluent population, there are over 62,000 people living within 3 miles of the Property, with 73% of people ages 25 years and older who have obtained at least a Bachelor’s degree. In addition, the area boasts a 1.7% unemployment rate as well as an average income of $116,000 per household. Loan Summary LOAN AMOUNT $21 MM TOTAL DEVELOPMENT COST $41.75 MM TERM 48 Months LTC 50% INTEREST ONLY 4 Years INTEREST RATE L + 4.00%; floor rate 4.85% RATE TYPE Floating The Gwendolyn | 4 INVESTMENT HIGHLIGHTS Experienced Sponsorship Grubb Properties, Inc. (“Grubb”) is a multi-generational firm founded by Robert Grubb in 1963 with a strong commitment to integrity, diligent research, innovative investments, a long-term outlook, and to the communities in which the firm operates. Since its founding, Grubb has become one of the premier real estate firms in the Southeast and has an extensive investment and operating experience in North Carolina, South Carolina, Georgia, Virginia, and Mississippi. Grubb is owned by its employees and board members and is led by a senior management team with a combined 200+ years of industry experience that brings a wide range of expertise in property management, development and construction. BB&M Architecture (BB+M) is a Charlotte-based firm that offers international comprehensive planning and architectural design services. BB+M Architecture’s projects are quite diverse with a focus on Office, Retail, Institutional, Multifamily, and Mixed-Use developments ranging from $1- 100MM in value. They also opened an interior design practice in 2011 and now provide turnkey interiors offerings to their clients. EVENT - TIMING Start Month Date Highly Educated Work Force Due to Strong Academic Presence Development Begins 0 Sep-19 Loan Closes 5 Feb-20 The Triangle area is home to twelve colleges and universities that enroll more than 180,000 students. Development Ends 17 Jan-21 More notably, the Triangle is home to Duke University, UNC-Chapel Hill, and North Carolina State University, which are the area’s prominent Tier 1 research universities that continually rank among Expenses Begin 18 Feb-21 the nation’s top universities. These educational institutions are heavily intertwined in the regional LEASE - UP SCHEDULE Start Month End Month economy, working in congruence with local businesses and contributing to ongoing public-private Construction Prior to Leasing Month 0 Months 17 collaborative efforts that help the regional economy attract over $2 billion of federal R&D funding Lease-Up Month 7 Month 36 every year. Stabilization Month 18 Month 48 Post-Stabilization Month 49 Month 72 Irreplaceable Location Within the Glen Lennox Community The Gwendolyn is ideally located within the Glen Lennox development. The Property will be surrounded by a wide variety of retail and entertainment locations and is in proximity so some of the Triangle’s largest economic drivers. Downtown Chapel Hill– The Gwendolyn is 1 mile from downtown Chapel Hill and the University of North Carolina (UNC). Due to its central location in the region, the Chapel Hill market has an abundance of cultural amenities such as the Dean Smith Center (UNC-Chapel Hill’s basketball stadium), the Ackland Art Museum, the Morehead Planetarium & Science Center, the Wilson Library, and the Midway Community Kitchen. Research Triangle Park (RTP) – 12 miles from the Property is Research Triangle Park (RTP). RTP is one of the state’s largest economic drivers with over 200 companies employing over 50,000 workers and 10,000 contractors, including the second largest IBM operation in the world, which employees approximately 14,000 employees. Raleigh -Durham International Airport (RDU) – The Gwendolyn is 17 miles from the Raleigh-Durham International Airport (RDU), North Carolina’s busiest airport. RDU offers more than 400 daily non-stop flights, 50 non-stop destinations, and, in 2017, serviced more than 1.2 million passengers. The Gwendolyn | 5 Cross Creek | Raleigh, North Carolina Stellar Office Market The Triangle’s Class A office market has garnered nearly 8.0 million square feet of Kenan Memorial Stadium positive net absorption in the past 5 years, with more than 1.35 million square feet of net absorption occurring in 2019. This sustained absorption has pushed market-wide Class A rents to $29.67 per square foot, a 16.5% increase in 3 years. Gross rents for brand new construction have an average rate between $34.00- $37.00 per square foot. High Barriers To Entry The Town of Chapel Hill is known for its stringent and lengthy development approval process that utilizes an inefficient zoning ordinance, 19 separate development advisory boards, and includes several in-lieu-of fees to support Town initiatives. As a result, developers often spend upwards of 7 years trying to obtain approval, creating an extremely high barrier to entry for new projects. Despite the perpetual demand that is fueled by Chapel Hill’s highly-acclaimed quality of life, the esteemed University of North Carolina, and a top tier public Dean E. Smith Center school system, new developments are often stymied by this burdensome approval process and the anti-growth sentiment that the city’s officials place on the college town. While this creates challenges for developers, this environment is ideal for landlords as it restricts over-supply and promotes strong rent growth. This is evidenced by the Chapel Hill submarket’s rents - typically the highest rents in the market. Morehead Planetarium The Gwendolyn | 6 Outstanding Location & Connectivity Crisscrossed by two regional highway corridors, connected by a free bus system and woven with bike paths, The Gwendolyn is easy to get to, and given its blend of traditional Southern hospitality and proven capacity for innovation, even easier to like. The Property is ideally located near some of the Triangle’s most sought after economic drivers, including the University of North Carolina at Chapel Hill/Downtown Chapel Hill (1 mile), Research Triangle Park (12 miles), Downtown Durham (13 miles), the Raleigh Durham International Airport (17 miles), and Downtown Raleigh (30 miles).ck doors, LED lighting, and stripe & seal coat parking lot. Highly Amenitized Location Live, work, play corridor surrounded by retailers, dining and entertainment within 2miles of the Property RESTAURANTS SHOPS RECREATION & 1. Bartaco Tacos & Tequila 18. ABC Store ENTERTAINMENT 2. Bin 54 19. Blue Sky Oil & Vinegar 34. Battle Park & Battle Branch Trail 3. Brenz Pizza Company 20. Chapel Hill Farmers Market 35. Berkley Road Park 4. Brixx Pizza 21. Citrinen Salo 36. Carolina Performing Arts 5. Bruegger’s Bagels 22. CVS Pharmacy 37. Community Park 6. Café Carolina 23. Elegance Dry Cleaners 38. Finley Golf Club 7. Chipotle 24. Great Outdoor Provision Company 39. Forest Theater 8. CHOPT 25. Palette & Parlor 40. Kidzu Children’s Museum 9. City Kitchen 26. Phydeaux 41. Meadowmont Trail 10. Coco Bean Coffee Shop 27. UPS Store 42. O2 Fitness 11. Elements 28. Walgreens 43. Playmakers Repertory Company 12. Jujube 44. Rainbow Soccer 45. Silverspot Luxury Cinema 13. Monterey Mexican GROCERY 14. Starbucks 29. Food Lion 15. Subway BANKS 30. Fresh Market 16. Squid’s Seafood Restaurant 46. Bank of America 31. Harris Teeter 17. Thai Palace 47. NC SECU 32. Trader Joes 48. PNC Bank 33. Whole Foods 49. Wells Fargo The Gwendolyn | 8 18 22 5 13 24 8 7 32 33 29 19