Confidential Executive Summary 1 Executive Summary
EXECUTIVE SUMMARY
CONFIDENTIAL EXECUTIVE SUMMARY 1 EXECUTIVE SUMMARY
Two-Story Lobby
INVESTMENT HIGHLIGHTS
91% Leased/Under LOI; 15 Tenants; 5.0 Years WALT
One Of Four LEED® Certified, Class B Buildings Offering Metrorail Access & Full On-Site Amenities
Strong Class B Fundamentals Will Lead To Outsized Rent Growth Over The Hold Period Walkable To Four Metrorail Stations
Golden Triangle Offers Washington, DC’s Premier Live-Work-Play Environment
Additional Density Provides Long-Term Optionality
Adjacent To New Trophy 1900 N Street Development
Holliday Fenoglio Fowler, L.P. (“HFF”), as exclusive representative, is pleased to present this opportunity to purchase The Lion Building (the “Property”), a 154,384 square foot Class B office building located in the heart of the Central Business District (“CBD”) of Washington, DC. The Property is currently 91% leased/under LOI to 15 tenants with a weighted average remaining lease term of 5.0 years, and has remained 93% leased on average over the past 10 years. The Property is also adjacent to JBG Smith’s 1900 N Street, a 270,000 SF trophy office building anchored by law firm Goodwin Procter and anticipated to deliver in mid-2019.
The Property is one of only four LEED® certified, Class B buildings in downtown Washington, DC that offer a fitness center, immediate Metrorail access, and a parking ratio of at least 1.0 spaces per 1,000 SF. Downtown Class B office vacancy currently stands at just 5.0%, and has been 470 basis points lower than Class A assets on average since 2007. With new construction and renovations rapidly diminishing the supply of Class B office space downtown, the Property is perfectly positioned to capture the increased demand from tenants seeking highly accessible and amenitized office space at a discount to Class A product. EXECUTIVE SUMMARY
2 The Property is situated in the CBD’s Golden Triangle – downtown Washington DC’s Adjacent To 1900 N Street – Trophy Office Delivering Mid-2019 most vibrant and sought-after office location. In total, this amenity-rich subsection of the CBD encompasses 43 blocks, housing 3,000 businesses, over 550 retail shops and restaurants, and 8 luxury hotels with over 1,800 rooms. In addition to an outstanding amenity base, the Property is easily accessible by car and within walking distance of the Dupont Circle (Red Line), Farragut North (Red Line), Farragut West (Orange, Blue, and Silver Lines), and Foggy Bottom (Orange, Blue, and Silver Lines) Metrorail stations, providing tenants with unparalleled accessibility in and around the District.
The Lion Building also affords investors long-term optionality, with unlimited FAR potential as achievable by a permitted height of 130’ and the use of Density Credits. The potential options for realizing this density include adding additional floors to the existing structure and re-skinning the Property, or redeveloping the site. This rare opportunity gives investors the optionality of executing two excellent value-creation strategies – fully repositioning the asset, or continuing to operate it “as-is” and taking advantage of favorable Class B market fundamentals classified by increasing demand and diminishing supply.
Accordingly, The Lion Building represents a highly coveted opportunity for investors to acquire an institutional quality asset in an amenity-rich location at an attractive basis relative to replacement cost. The Property’s stable in-place cash flow and advantages over its diminishing Class B competitors, combined with the optionality to achieve additional density long-term, make The Lion Building a compelling risk-adjusted investment opportunity.
Additional Density Provides Long-Term Optionality EXECUTIVE SUMMARY
3 EXECUTIVE SUMMARY
PROPERTY SUMMARY TOP 5 TENANTS th Address 1233 20 Street NW 1. Interface Media Group, Inc. Washington, DC 20036 2. Bonner Kiernan Trebach & Crociata, LLP Property Type Class B Office Building Submarket CBD 3. The Embassy of the Socialist Republic of Vietnam Year Built/Renovated 1984/2003 Stories 8 (+1 Lower Level) 4. Michael Best & Friedrich LLP Rentable Area 154,384 RSF 5. Shinjyu Global IP Counselors, LLP 156,989 BOMA RSF Floorplates ±18,000 RSF Land Area 20,012 SF (0.46 acres) Interface Media Group, Inc. Zoning D-5 (Downtown Zone) Existing FAR 7.33 Potential FAR Unlimited FAR potential as achievable by a permitted height of 130’ and the use of Density Credits Current Occupancy 91% 10-Year Average Occupancy 93% Weighted Average Remaining Lease Term 5.0 Years Parking 152 spaces (1.0 spaces per 1,000 RSF) LEED® Rating Silver (Existing Buildings)
Energy Star Rating 85 (2016), 89 (2017) Interface Media Group, Inc.
91% LEASED/UNDER LOI; DIVERSE RENT ROLL OF 15 TENANTS
• Institutionally owned and maintained by JBG Smith • 91% leased/under LOI to 15 tenants • Weighted average remaining lease term of 5.0 years • 52% of tenants have occupied the Property for 15 years or more
• 10-year average occupancy of 93% Interface Media Group, Inc. • Over $2.7 million of recent capital improvements including a first-class fitness center
A WELL-LOCATED, HIGHLY AMENITIZED CLASS B OFFICE ASSET
• One of only four LEED® certified Class B buildings offering a fitness center, immediate Metrorail access, and an above-market parking ratio (1.0 spaces per 1,000 SF)
• At ±18,000 SF, The Lion Building’s floorplates are the smallest in this subset and are
EXECUTIVE SUMMARY ideally suited to cater to the small and mid-sized tenants that have fueled Washington, DC’s leasing market in recent years 4 First-Class Fitness Center
History Factory
CLASS B OFFICE OUTPERFORMS; WALKABLE TO FOUR METRORAIL STATIONS; POISED FOR OUTSIZED GROWTH MULTI-MODAL ACCESSIBILITY
• Downtown Class B vacancy currently stands at just 5.0% • Walking distance from four Metrorail stations – Dupont Circle
• Class B vacancy in the CBD has been 470 basis points lower (Red Line), Farragut North (Red Line), Farragut West (Orange, than Class A assets on average since 2007 Blue, and Silver Lines), and Foggy Bottom (Orange, Blue, and Silver Lines) • Class A inventory in the CBD currently exceeds Class B inventory th th by 1.5 million SF, an all-time high. Class A inventory will increase • Direct vehicular access via 20 Street, 19 Street, and M Street even further due to over 2 million SF currently under construction to major commuter thoroughfares such as K Street, Massachusetts Avenue, Connecticut Avenue, I-66, the Whitehurst Freeway, and or renovation that will deliver in the next 24 months EXECUTIVE SUMMARY George Washington Parkway, providing tenants ease of access • Competition among tenants for the decreasing supply of Class B both in and around the District and the broader DC Metropolitan space will drive outsized rent growth at preferred assets such as Region The Lion Building • Two Capital Bikeshare docking stations within one block of the Property
5 EXECUTIVE SUMMARY
GOLDEN TRIANGLE LOCATION OFFERS Dupont Circle WASHINGTON, DC’S PREMIER LIVE-WORK-PLAY ENVIRONMENT
• With over 550 retail shops and restaurants and 8 luxury hotels, the Golden Triangle is the most amenitized and sought-after location in Washington, DC
• Easily walkable to downtown Washington DC’s most popular residential neighborhoods: Dupont Circle, Logan Circle, West End, and Georgetown
• Minutes from the renowned dining, shopping, and entertainment amenities of Dupont Circle, Restaurant Row, Connecticut Avenue, and Farragut Square
SIGNIFICANT ADDITIONAL DENSITY Farragut Square PROVIDES LONG-TERM OPTIONALITY
• Unlimited potential FAR as achievable by a permitted height of 130’ and the use of Density Credits
• Potential repositioning strategies include adding additional floors and re- skinning the Property, or redeveloping the site long-term
• This optionality gives investors multiple value-maximization strategies and the flexibility to respond to a variety of future market conditions
U T THE GOLDENT MAS TRIANGLE: CIRC E CIRC E AN UNPARALLELED LIVE-WORK-PLAY ENVIRONMENT
ASSA HUSETTS A ENUE N
U T CIRC E SC TT CIRC E RHODE ISLAND A ENUE N N STREET N ONNE TI UT A ENUE N 300+ 8 3000+ 200+
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STREET N ARRA UT RT 20TH STREET N 1 TH STREET N MC ERS ARRA UT
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EXECUTIVE E ARTME T ENNS L ANIA A ENUE N ICE UI I TREASURY ITE USE EXECUTIVE SUMMARY
6 Long-Term Optionality History Factory
Interface Media Group, Inc.
Shinjyu Global IP Counselors, LLP EXECUTIVE SUMMARY
7 Investment Sales: Stephen C. Conley James A. Meisel Andrew M. Weir Matthew T. Nicholson Holliday Fenoglio Fowler, L.P. Holliday Fenoglio Fowler, L.P. Holliday Fenoglio Fowler, L.P. Holliday Fenoglio Fowler, L.P. Executive Managing Director Senior Managing Director Senior Managing Director Director 202.533.2533 202.533.2505 202.533.2504 202.533.2502 [email protected] [email protected] [email protected] [email protected]
Financing: Cary P. Abod Robert C. Carey Holliday Fenoglio Fowler, L.P. Holliday Fenoglio Fowler, L.P. Managing Director Director 202.533.2513 202.533.2531 1775 Pennsylvania Ave NW | 5th Floor [email protected] [email protected] Washington, DC 20006
Holliday Fenoglio Fowler, L.P. (“HFF”) a District of Columbia licensed real estate broker. HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.