Fedex Ground Distribution Building OFFERING MEMORANDUM Lafayette, Indiana

FedEx Ground Distribution Building OFFERING MEMORANDUM Lafayette, Indiana

In association with:

Douglas Longyear Andrew Bogardus Christopher Sheldon Bryan Poynter 415-677-0458 415-677-0421 415-677-0441 317-670-4171 [email protected] [email protected] [email protected] [email protected] Lic #00829911 Lic #00913825 Lic #01806345 IN Lic # AB 297 00326 Aerial

Location The property is located at the northwest corner of Geary Blvd and 19th Ave in the Richmond District, a neighborhood in the northwest corner of San Francisco. Geary Blvd is the City’s primary east-west from downtown to the Richmond District.

Y IGHWA RIAL H S MEMO VETERAN Investment Highlights

The Offering

• A new 54,881 sq. ft. FedEx Ground distribution building to be completed in May 2014

• $4,795,000 Price – 6.65% Cap Rate

Lease / Tenant

• New 10 year net lease

• FedEx Ground’s parent, FedEx Corporation, has an S&P bond rating of “BBB”

• FedEx Ground pays for the package handling system

• The property’s rent is low compared with similar FedEx distribution facilities

Real Estate

• Site has convenient access to the Veterans Memorial Parkway and U.S. 52

• Large site area

• Low price per sq. ft. for a FedEx Ground facility

Area Strengths

• Purdue University, one of the nation’s premier engineering and research universities, is located in West Lafayette.

• Lafayette has advanced manufacturers such as Subaru of Indiana Automotive Inc., Caterpillar, Wabash National and Alcoa.

• Lafayette is part of the Indiana Technology Corridor, a nine county region in central Indiana that is attracting and promoting advanced manufacturing, value-added agriculture, bio-medical research, and renewable energy.

• Atlantic Magazine ranked Lafayette No. 2 on its list of America’s Brainiest Cities.

FedExSKF USA, Ground Inc. 2 i FedEx Ground Distribution Building Table of Contents

Aerial i

Investment Highlights ii

Investment Offering Overview 1

Possible Financing 2

Area Map 3

Local Map 4

Site Plan 5

Floor Plan 6

FedEx Ground 8

Lafayette 9 Higher Education / Purdue 10 Other Major Employers 12 Indiana Technology Corridor 12

Demographics 14

Disclaimer 15

In association with:

Location Annual Rent 3815 David Howarth Drive, Lafayette, Tippecanoe County, Indiana Years Annual Rent Return 1 – 10 $318,876 6.65% Lot Size 11 – 15 (Option 1) $350,763 7.32% Approximately 12.6 acres – 548,856+/– square feet 16 – 20 (Option 2) $368,301 7.68%

Improvements To be completed May 1, 2014 a new 54,881+/– sq. ft FEDEX GROUND Price: $4,795,000 – 6.65% Cap Rate distribution building. The construction type is steel frame with a metal seam roof and metal exterior. The building has eight dock-high and seventeen double drive-in truck doors. The building is fully sprinklered. Price Per Sq. Ft Lease $86.71 Leased to FEDEX GROUND PACKAGE SYSTEM, INC., for 10 years from May 2014 until May 2024 at the annual net rent of $318,876. FedEx Ground is a Rent Per Sq. Ft. subsidiary of FEDEX CORPORATION (NYSE: FDX), which does not guarantee $5.81 per year; $0.48 per month the lease. The tenant is responsible for all property real estate taxes, property insurance, tenant’s liability insurance, and maintenance of the yard, parking, drive and hard surfaced areas. The landlord is responsible for maintenance of the structural portions of the building including the foundation, roof, exterior walls and floor slabs. There are two five year renewal options; the first with a 10% rental increase and the second with a 5% rental increase.

FedEx Ground 1 Possible Financing

BANK LOAN TERMS CAPITALIZATION CASH FLOW 5 YEAR TERM Amortization (Yrs) 30 Price $4,795,000 Rent $318,876 30 YEAR AMORTIZATION LTV 60% Loan <2,877,000> Debt Service <164,823> 60% LTV Interest 4.00% Equity $1,918,000 Cash Flow $154,053 Constant 5.73% Cash on Cash 8.03%

BANK LOAN TERMS CAPITALIZATION CASH FLOW 5 YEAR TERM Amortization (Yrs) 25 Price $4,795,000 Rent $318,876 25 YEAR AMORTIZATION LTV 75% Loan <3,596,250> Debt Service <233,787> 75% LTV Interest 4.25% Equity $1,198,750 Cash Flow $ 85,089 Constant 6.50% Cash on Cash 7.10%

BANK LOAN TERMS CAPITALIZATION CASH FLOW 7 YEAR TERM Amortization (Yrs) 25 Price $4,795,000 Rent $318,876 25 YEAR AMORTIZATION LTV 60% Loan <2,877,000> Debt Service <191,896> 60% LTV Interest 4.50% Equity $1,918,000 Cash Flow $126,980 Constant 6.67% Cash on Cash 6.62%

BANK LOAN TERMS CAPITALIZATION CASH FLOW 10 YEAR TERM Amortization (Yrs) 25 Price $4,795,000 Rent $318,876 25 YEAR AMORTIZATION LTV 60% Loan <2,877,000> Debt Service <196,827> 60% LTV Interest 4.75% Equity $1,918,000 Cash Flow $122,049 Constant 6.84% Cash on Cash 6.36%

FedEx Ground 2 Location 65 The property is located in Park 350, which 25 situated231 approximately four miles southeast of downtown52 Lafayette in an industrial area. The property has good access to U.S. 52 and 43 Interstate 65. I-65 connects Lafayette with Indianapolis, 58 miles to the southeast and Chicago, 131 miles to the north, after connecting with I-90. Other noteworthy companies located231 within a two mile radius of the property include Subaru (only U.S. manufacturing plant), TRW, 26 52 Nanshan America, Heartland Automotive and Wabash. 25 The closest major airport is Indianapolis26 International, which is located 65 miles to the Purdue 65 southeast. University

WEST LAFAYETTE 26 26 26

Caterpillar, LAFAYETTE Inc.

Alcoa, Inc. 231 65 52 Caterpillar, Inc.

38 Subaru of Indiana 25 25 Automotive, Inc.

38 WabashWabashWabash 52

TRWTRWTRW Heartland Nanshan Automotive America 25 65

231

52 FedEx Ground 3 SEQUOYA DR

CATERPILLAR

E 200 S E 200 S COM Local Map R VETERANS MEMORIAL PARKWAY E 65 T D

MAPLE POIN M

A 25 N IVY C TECH H

E Location

R SUBARU L BRADY LN OF INDIANA SAGAMORE PKWY S 38 AUTOMOTIVE INC. CONCORD RD 25

38 25

52 WABASH NATIONAL

VETERANS MEMORIAL PARKWAY S SAGAMORE PKWYTRW S NANSHAN AMERICA S 250 E HEARTLAND AUTOMOTIVE

DAVID HOWARTH DR S 450 E

E 450 S

52 E 450 S

FedEx Ground 4 Site Plan

Location

FedEx Ground 5 Floor Plan

Location FedEx Ground pays for the fully automated package sort and handling conveyer system. FedEx Ground

• FedEx Ground and its subsidiary FedEx SmartPost shipped an average of FEDEX CORPORATION (NYSE: FDX), the tenant’s parent, provides customers and 6,280,000 packages per day in fiscal year 2013. businesses worldwide with the broadest portfolio of transportation, logistics and e-commerce services. FedEx Corporation does not guarantee the tenant’s lease FEDEX GROUND PACKAGE SYSTEM, INC., the Property’s tenant, is one of North obligations. America’s two largest providers of business-to-business and busines-to-consumer ground small-package delivery service and FedEx Corporation’s second-largest busi- For the fiscal year ended May 31, 2013, FedEx reported record revenue of $44.28 ness segment. FedEx Ground is FedEx Corporation’s most profitable division. FedEx billion, net income of $1.56 billion and total stockholder’s equity of $17.39 billion. Ground has a network of more than 500 distribution hubs and local pickup-and- delivery terminals located throughout the United States and Canada. As of this offering’s publication, FedEx Corporation had an investment grade S&P bond rating of “BBB.” The FedEx 2013 annual report indicates that the FedEx Ground segment had revenues Website: www.fedex.com over $10.57 billion and operating income of $1.78 billion.

For the second quarter, the FedEx Ground segment reported: • Revenue of $2.73 billion, up 11% from last year’s $2.46 billion • Operating income of $468 million, up 5% from $445 million a year ago • Operating margin of 17.1%

FedEx Ground average daily volume grew 11% in the first quarter due to continued growth in both FedEx Home Delivery and commercial business services. Revenue per package increased 1% due to increased rates and higher residential surcharge revenue, partially offset by lower fuel surcharges. FedEx SmartPost average daily volume increased 26% primarily due to growth in e-commerce.

FedEx Ground 9 Lafayette

• Fortune Magazine ranked Lafayette No. 1 in Indiana and No. 8 nationally on its list of “Best Places for Small Business,” based on cost of business, job growth, and educational achievements.

• New Geography ranked Lafayette No. 17 on its list of the “200 Best Cities for Manufacturing.”

• USA Today included Indiana in its list of the Top 100 metropolitan areas, for its 45% increase in percent of population and number of people with bachelor’s degrees from 2006 to 2011.

• The Atlantic Magazine ranked Lafayette No. 2 on its list of “America’s Brainiest Cities, “based on number of college graduates, percent working in knowledge and creative work and other performance data.

• Indiana was ranked the best place to do business in the Midwest and the fifth best nationwide in a survey of more than 500 chief executives by Chief Executive Magazine. The magazine’s ninth annual “Best & Worst States” survey asks CEOs to evaluate states based on business tax policies, regulation, workforce quality and livability factors. Indiana’s ranking in the survey has moved up eleven places since 2010.

Lafayette is the county seat of Tippecanoe County in central Indiana. Lafayette is located 63 miles northwest of Indianapolis and 108 miles southeast of Chicago. Lafayette’s neighboring community, West Lafayette, is situated on the opposite side of the Wabash River and is home to Purdue University, one of the nation’s premier research institutions. Together, Lafayette and West Lafayette form the core of the Lafayette, Indiana Metropolitan Statistical Area, which has a population of approximately 235,000.

Purdue University Office Building FedExFedEx Ground Ground 89 Lafayette (continued)

Higher Education Lafayette and West Lafayette are well educated communities that serve as homes for Purdue Purdue Alumni have achieved recognition in a range of areas, particularly in the science University and Ivy Tech Community College. and engineering industries. The university’s alumni pool collectively holds over 15,000 United States patents. Purdue has produced 23 astronauts, including Gus Grissom, the first vertically launched person to return to space, Neil Armstrong, the first to walk on the moon, Purdue University and Eugene Cernan, the most recent astronaut to do so. Over one third of all of NASA’s The West Lafayette campus of Purdue University is the flagship University of the six-campus manned space missions have had at least one Purdue graduate as a crew member. Purdue University system. The West Lafayette campus offers more than 200 majors for undergraduates, over 70 masters and doctoral programs, and professional degrees in The University enrolls approximately 38,000 students, including 8,000 international pharmacy and veterinary medicine. In addition, Purdue has 18 intercollegiate sports teams students, and employs nearly 15,000 workers, including about 1,900 tenured faculty and more than 850 student organizations. Today, Purdue is a member of the Big Ten members. The University and its associated businesses employ the largest portion of the Conference, and is a well-known world-class research institution. Purdue enrolls the second Lafayette workforce, and the University’s economic impact in the state is estimated to largest student body of any university in Indiana as well as the fourth largest international exceed $4.2 billion annually. student population of any university in the United States.

The University faculty and more than 400 research laboratories place Purdue University Ivy Tech College among the leading research institutions. Purdue’s researchers provide insight, knowledge, Ivy Tech Community College is the state’s largest public postsecondary institution and assistance, and solutions in many crucial areas including: agriculture; business and the nation’s largest singly accredited statewide community college system serving nearly economy; education; engineering; environment; healthcare; manufacturing; science; 200,000 students annually. More than 8,600 students are currently enrolled in the Ivy technology; and veterinary medicine. Purdue University generated a record $438 million Tech Community College Lafayette Region, with another 3,000 from other regions taking in sponsored research funding during the 2009–10 fiscal year with participation from distance education courses that originate in Lafayette. The college offers courses in more National Science Foundation, National Aeronautics and Space Administration, and the than 80 programs of study and awards associate degrees and technical certificates. Study U.S. departments of Agriculture, Defense, Energy, Health and Human Services and public areas include biotechnology, advanced manufacturing, alternative fuels technology and companies, foundations and individaul donors. computer information technology.

Purdue University routinely ranks high in accredited national and world university rankings like the US News and World Report Best Colleges and the QS World University Rankings for their distinguished academic programs. Academic Ranking of World Universities has ranked Purdue’s engineering program No. 10 internationally in engineering/technology and computer sciences rankings.

FedEx Ground 10 Purdue Stadium, Big 10 Conference Football Lafayette (continued)

Other Major Employers Indiana Technology Corridor Approximately 75 manufacturing and industrial firms operate in Tippecanoe County, About 125 high-tech and life science businesses operate in Lafayette-West Lafayette, employing about 13 percent of the county’s workforce. ranging from small technology start-ups employing less than five employees to large biotechnology firms. Nine counties in central Indiana, including Tippecanoe, have joined Subaru of Indiana Automotive – Lafayette has the only Subaru auto assembly plant in the together to highlight and promote the area’s expertise in advanced manufacturing, value- United States in Lafayette. Subaru manufactures approximately 170,000 Subaru vehicles added agriculture, bio-medical research, and renewable energy. The region is driven by: per year, including its Outback, Legacy, and Tribeca lines and 100,000 Camrys for Toyota on a contract basis. Subaru is planning to add production of its Impreza line to the Lafayette • Leading-edge research from Purdue University and Indiana University plant and increase its Subaru vehicle production to 300,000 per year by 2016. Some of this growth would come at the expense of its Toyota manufacturing capacity. • Well-educated, well-trained workers

Wabash National – Wabash is one of the world’s leading diversified manufacturers of semi- • Abundant natural resources truck trailers. • Business-friendly incentives Caterpillar – Caterpillar is an international leading manufacturer of construction and • Proximity to major metropolitan hubs mining equipment, diesel and natural gas engines, industrial turbines and diesel-electric locomotives. • Easy accessy by road, air and rail Oerlikon Fairfield Drive Systems – A manufacturer of engineered gear and drive solutions; products sold worldwide to leading off-highway vehicle and industrial equipment Recent News manufacturers. Purdue’s Emerging Innovations Fund invests $250,000 in two life sicences companies Alcoa – A leading producer of primary aluminum and fabricated aluminum; invented the Two life sciences companies that are commercializing Purdue University innovations modern-day aluminum industry. received $250,000 in investments from the Emerging Innovations Fund, an evergreen fund created to accelerate the commercialization of early-stage discoveries. Medtric Bio- Evonik Degussa Corporation – A multinational specialty chemical manufacturer serving the tech LLC received $100,000 and Microfluidic Innovations LLC received $75,000 with a automotive, plastics, and pharmaceutical industries. potential to receive an additional $75,000 if certain performance milestones are met.

TRW – A global leader in automotive safety. Joint Venture Plans 100 Indiana Jobs Magnetation, LLC, which recycles iron waste to produce valuable iron ore concentrate, announced plans to invest up to $350 million to build a new iron ore pellet plant in Reynolds, IN, creating approximately 100 new jobs by 2015. The new facility will produce high-quality iron ore pellets, a critical raw material in the steelmaking process.

FedEx Ground 12 Birmingham (continued)

Subaru of Indiana Automotive Inc. FedEx Ground 13 Demographics

Census 2010 Summary 10 miles 20 miles 30 miles

Population 160,608 222,979 324,204 Households 61,084 84,241 124,134 Families 33,603 50,494 78,246 Average Household Size 2.39 2.46 2.47 Owner Occupied Housing Units 32,385 49,958 79,605 Renter Occupied Housing Units 28,699 34,283 44,529 Median Age 27.4 29.7 32.9 2012 Summary

Population 163,773 226,626 328,111 Households 62,398 85,731 125,685 Families 34,095 51,032 78,667 Average Household Size 2.39 2.46 2.47 Owner Occupied Housing Units 32,694 50,301 79,813 Renter Occupied Housing Units 29,704 35,430 45,872 Median Age 27.6 30.0 33.1 Median Household Income $40,889 $42,098 $43,540 Average Household Income $54,414 $55,016 $55,741

2017 Summary

Population 172,880 236,640 338,938 Households 66,290 89,951 130,461 Families 35,989 53,098 80,942 Average Household Size 2.39 2.46 2.47 Owner Occupied Housing Units 34,886 52,802 82,795 Renter Occupied Housing Units 31,404 37,149 47,666 Median Age 28.4 30.7 33.8 Median Household Income $50,429 $51,155 $51,798 Average Household Income $60,886 $61,383 $61,836

Trends: 2012-2017 Annual Rate

Population 1.09% 0.87% 0.65% Households 1.22% 0.97% 0.75% Families 1.09% 0.80% 0.57% Owner Households 1.31% 0.98% 0.74% Median Household Income 4.28% 3.97% 3.53% FedExFedEx GroundGround 1415 Disclaimer

The information contained in this marketing brochure (“Materials”) is proprietary The information contained in the Materials has been obtained by Agent from sources and confidential. It is intended to be reviewed only by the person or entity receiving believed to be reliable; however, no representation or warranty is made regarding the the Materials from Cassidy Turley Northern California (“Agent”). The Materials are accuracy or completeness of the Materials. Agent makes no representation or warranty intended to be used for the sole purpose of preliminary evaluation of the subject regarding the Property, including but not limited to income, expenses, or financial property/properties (“Property”) for potential purchase. performance (past, present, or future); size, square footage, condition, or quality of the land and improvements; presence or absence of contaminating substances The Materials have been prepared to provide unverified summary financial, property, (PCB’s, asbestos, mold, etc.); compliance with laws and regulations (local, state, and and market information to a prospective purchaser to enable it to establish a preliminary federal); or, financial condition or business prospects of any tenant (tenants’ intentions level of interest in potential purchase of the Property. The Materials are not to be regarding continued occupancy, payment of rent, etc). A prospective purchaser must considered fact. The information contained in the Materials is not a substitute for independently investigate and verify all of the information set forth in the Materials. A thorough investigation of the financial, physical, and market conditions relating to the prospective purchaser is solely responsible for any and all costs and expenses incurred Property. in reviewing the Materials and/or investigating and evaluating the Property.

Photographs: The aerials in this offering memorandum show the actual property that is By receiving the Materials you are agreeing to the Confidentiality and Disclaimer set being offered for sale. Since the subject property is under construction, we are using forth herein. photographs of other FedEx Ground distribution facilities to provide an indication of how the subject property will appear upon completion. These photographs are not intended to show an exact replica of the subject property.

FedEx Ground 15 Cassidy Turley www.ctbtnnn.com

For more information please contact: In association with: