Southwest Freeway

12603 SOUTHWEST FREEWAY

HOUSTON, TEXAS | EXECUTIVE SUMMARY HFF is pleased to offer for sale a fee simple interest in 12603 Southwest Freeway (the “Property”), a well maintained six story office building located on a 5.0 acre site at the southwest corner of Interstate Highway 69 and South Kirkwood Road. The building’s prominent location along Interstate 69 provides outstanding visibility to more than 224,000 cars daily and immediate access to Houston’s extensive transportation network via Sam Houston Parkway just to the north and Highway 90 and Highway 6 to the south. The Property is proximate to numerous existing and future amenities including the Fountains Shopping Center, several nearby restaurants, hotels, master-planned neighborhoods and an under constriction, multi-phased, mixed-use development on the 192-acre former Texas Indstruments campus located across Kirkwood enabling the Property to be the most walkable asset in the submarket.

12603 Southwest Freeway is currently 86.4% leased to a diversified rent roll of Education and Healthcare (25% of NRA), Manufacturing and Construction (20%), Insurance (12%), Technology (10%) and Finance (9%) companies. Mark-to-market opportunities exist with in- place rents approximately 11% below market and 64% of the rent roll expiring over the next five years. 12603 Southwest Freeway presents investors a favorable balance of stable cash flow from a diversified tenant base coupled with income growth upside from marking below-market rents to market and through the lease-up of vacant space.

PROPERTY SUMMARY

Property Address 12603 Southwest Freeway Houston, TX 77477

Building Size 143,211

Number of Stories Six Floors

Year Built/Renovated 1981/ 2014

Site Area 5.04 Acres (220,000 SF)

Parking 526 spaces (3.6/1,000 RSF)

% Leased 86.4%

In-Place NOI $ 1,456,000 HFF 12603 SOUTHWEST FREEWAY

INVESTMENT HIGHLIGHTS

LANDMARK ASSET AT THE GATEWAY TO FORT BEND COUNTY ROBUST LEASING ACTIVITY 12603 Southwest Freeway is positioned in a prime location at the southwest corner of Interstate 69 and Kirkwood The owner purchased the asset in June 2012 when it was approximately 54% occupied. Since acquisition, ownership Road. The Property’s location provides excellent regional access via Sam Houston Parkway to the north and Highway experienced tremendous leasing success and steadily increased the occupancy rate to 86.4% today. Over the past 90 and Highway 6 to the south as well as outstanding visibility from Interstate 69; a thoroughfare that experiences three years, a total 103,000 square feet of leases were executed including 53,000 square feet of new activity and over 224,000 cars daily. The Property is easily accessible from the Kirkwood Road exit from Interstate 69 with ingress 50,000 square feet of renewal transactions. Strong leasing momentum continued in 2015 with 30,000 square feet and egress available along Kirkwood Road and Interstate 69 Frontage Road. of lease transactions completed, including new leases executed with Wells Fargo, Vulcan Construction Material, and Triton Aquatics. The Property’s visibility to Interstate 69 coupled with its strategic location appeals to tenants in Stafford as well as the Year New Activity Renewal Total affluent residential neighborhoods in Fort Bend such as First Colony, Greatwood, Telfair, New Territory, Riverstone, 2013 6,000 SF 17,000 SF 23,000 SF and Avalon. 2014 28,000 SF 22,000 SF 50,000 SF 2015 22,000 SF 13,000 SF 35,000 SF TOTAL 56000 SF 52,000 SF 108,000 SF AMENITY RICH ENVIRONMENT The building is directly across Kirkwood Road from a multi-phased, mixed-use development currently under construction. The former Texas Instruments’ 192-acre site on the southeast corner of Interstate 69 and Kirkwood Road will be built-out over four phases. Upon completion, the project will include 2,400 high-end multi family units, 18+ nationally recognized retailers and restaurant pads, a 350,000 square foot distribution center, and a life style center featuring hotels and entertainment venues.

In addition to the redevelopment of the former Texas Instruments site, 12603 Southwest Freeway is positioned in an amenity rich environment. Within a one-mile radius there are approximately 26 restaurants and bars, 16 hotels, an AMC theater, and several national retailers such as Sam’s Club, Walmart, Old Navy, Bed, Bath and Beyond, Hobby Lobby, Stein Mart, and OfficeMax. The abundance of existing nearby amenities and location across the street from CONSTRUCTED AND MAINTAINED TO THE HIGHEST STANDARDS one of the region’s most exciting, future mixed-use developments will provide 12603 Southwest Freeway the ability The six story office building has a steel-framed structure with poured concrete floors and a flat modified bitumen to attract and retain tenants as well as continue to increase rental rates in the submarket’s most walkable asset. roof system replaced in 2011. Additionally, the Property has glazed exterior curtain-wall and horizontal accent bands around the perimeter of the building. There are 526 (3.6/1,000 PSF parking ratio) parking spaces available in an adjacent 2-level garage and a surface parking lot. The garage is connected to the building via a covered walkway.

Over the past three years, during the current owner’s tenure, ownership invested over $1.5 million into the Property. The roof was replaced in 2011, the cooling tower was installed in 2009, chillers were installed in 2005 and a full $375,000 elevator modernization was completed at year-end 2015. The base building upgrades have solidified 12603 Southwest Freeway as a highly modernized office building and will significantly reduce the need for future capital outlays. Please see the online data-room for a detailed report on historical capex. 03 HFF 12603 SOUTHWEST FREEWAY

INVESTMENT HIGHLIGHTS

UNMATCHED BUILDING FEATURES AND AMENITIES DIVERSIFIED RENT ROLL 12603 Southwest Freeway benefits tremendously from several amenities Fort Bend benefits from a diversified mix of companies located within its located in and around the Property. The building’s unique features and boundaries spanning the full spectrum of healthcare/education (13% of amenities include: County employment), government (14%), trade & utilities (20%), advanced • Ample parking in a covered, two-story parking garage with 526 spaces manufacturing (10%), information technology (6%), and professional and business service firms (11%). Additionally, there have been several nationally (3.6/1,000 parking ratio) recognized companies that have expanded within or relocated to Fort Bend • Card key access system County including: NALCO Champion (400 jobs), United Healthcare (800 jobs), • Exciting 192-acre potential mixed-use development located directly First Data (600 jobs) and Texas Instruments (375 jobs). Please see pages 5 and across the street 36 for additional examples and detail regarding major corporate relocations • Visible to over 224,000 cars daily on Interstate 69 and expansions within Fort Bend County. • Immediate access to Interstate 69 and Sam Houston Parkway provides easy accessibility to Houston’s premier residential neighborhoods TENANT DIVERSITY PIE CHART HIGHEST QUALITY ASSET IN STAFFORD • City Property Tax Exemption – the city of Stafford eliminated its Property Technology Business There are four office buildings in Stafford that were all built between 1979 Tax in 1995 for residents and businesses 10% Services 6% and 1982. The buildings range in size from 75,000 to 200,000 SF and • $1.5M in Capex completed over the past 3 years including updated lobby, Manufacturing/ Education/ are on average 93.3% occupied. 12603 Southwest Freeway is the highest Construction covered walkway between the building and the garage, and a full elevator Healthcare 20% 26% quality and best located asset as evidenced by the significant recent capital modernization. upgrades, visibility from Interstate 69, and ease of accessibility to Houston’s Legal • Historically well maintained - roof replaced in 2011, new central plant Energy 8% 9% freeway system. installed in 2009, and chillers replaced in 2005 Insurance Finance 12% 9% DISCOUNT TO REPLACEMENT COST 12603 Southwest Freeway offers the rare opportunity to acquire high quality office product at a significant discount to replacement cost, which is estimated Similar to Fort Bend County, 12603 Southwest Freeway benefits from a diverse to be $250 - $275 per square foot. Even the exit pricing for this asset is well and balanced tenant mix. The primary sectors in-place at the Property are below replacement cost. Additionally, with the recent completion of the owner- Education/Healthcare (26% of net rentable area), Manufacturing/Construction occupied Texas Instruments facility in Telfair, there is no new construction (20%), Insurance (12%), and Technology (10%). Fort Bend’s history of attracting currently underway or scheduled with the exception of three build to suit premier companies coupled with the Property’s proven track record of proposals on the former Imperial Sugar site. Limited supply growth in the attracting firms from a wide-array of business sectors bodes well for the near-term coupled with demand from a strong corporate base in Fort Bend future of the asset. should allow rental rates to escalate at a healthy rate.

04 HFF 12603 SOUTHWEST FREEWAY

FORT BEND MAJOR POPULATION BASE AND RECENT CORPORATE ACTIVITY

Aliana $300k - $800k Home Value 12603 Southwest Freeway Schlumberger 517 Jobs (HQ Relocation) $200 Million investment Petronash (Expansion) Servomex (Expansion)

OptumRX NALCO Champion 400 Jobs (Relocation) Noble Energy

United Healthcare - 800 New Jobs (Relocation) Money Management - 400 Jobs (Relocation) First Data - 600 Jobs (Relocation)

Cosentino - 100 Jobs (Relocation) CVR Energy - 120 Jobs (Expansion) New Territory Telfair $285k - $740k Home Value $370k - $1.6M Home Value

Texas Instruments 375 Jobs (Relocation) First Colony $480k - $2.5M Home Value

Avalon 69 $375k - $1M Home Value Greatwood $325k - $1.1M Home Value

Riverstone $630k - $2.5M Home Value HFF 12603 SOUTHWEST FREEWAY CBD THE GALLERIA GREENWAY PLAZA THE TEXAS MEDICAL CENTER THE PROPERTY IS CONVENIENTLY POSITIONED DIRECTLY ACROSS THE STREET FROM A PROPOSED MULTI-PHASED, MIXED-USE DEVELOPMENT.

WEST SAM HOUSTON PARKWAY SOUTH

IH 69 | SOUTHWEST FREEWAY CROW HOLDINGS 352,000 SF

WEST AIRPORT BOULEVARD

NATIONAL MULTI-FAMILY NATIONAL MIXED-USE 1,650 MULTI-FAMILY UNITS 166 ACRES RETAIL/RESTAURANTS/ENTERTAINMENT/HOTELS/OTHER

FUTURE 192-ACRE MIXED USE “LIVE, WORK, PLAY” DEVELOPMENT (PHASE I 2016)

SOUTH KIRKWOOD ROAD uction (ETA 2016) HFF Pkwy12603 Under Constr 69 LIBERTY rand G Lake COUNTY The Woodlands SOUTHWEST FREEWAYHouston MONTGOMERY State Park ExxonMobil COUNTY Corporate Headquarters

Eastex Frwy PROPERTY DESCRIPTION

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COMPETITIVE PROPERTIES

HIGHWAY 90 10701 Corporate Drive

10707 Corporate Drive 4800 Sugar Grove Blvd IH 69 | SOUTHWEST FREEWAY

12603 Southwest Freeway

Address 12603 Southwest Freeway 10707 Corporate Drive 10701 Corporate Drive 4800 Sugar Grove Blvd Class B+ B B B Year Built (Renovated) 1981 (‘13-’15) 1979 1981 1982 Square Footage 143,211 75,490 110,394 123,570 Occupancy 86.4% 98.2% 96.5% 100.0% # of Floors 6 Floors 2 Floors 3 Floors 6 Floors Asking Rents $23.00/SF $19.50/SF $19.50/SF $22.00/SF 08 INVESTMENT SALES

H. DAN MILLER, CCIM, SIOR SOUTHWEST FACING AERIAL Senior Managing Director Tel (713) 852-3576 [email protected]

FIRST COLONY MALL MARTIN T. HOGAN FIRST COLONY SUGAR LAND MUNIPAL Director HIGHWAY 6 AIRPORT SUGAR LAND TOWN SQUARE PARADISE POINT Tel (713) 852-3557 [email protected] SUGAR CREEK JOHN INDELLI Senior Real Estate Analyst Tel (713) 852-3407 [email protected] US 90 SUGAR LAND BUSINESS PARK

FOR FINANCING INQUIRIES

CAMERON CURETON IH 69 | SOUTHWEST FREEWAY Director Tel (713) 852-3531 [email protected] THE FOUNTAINS SHOPPING CENTER

SOUTH KIRKWOOD ROAD 69

FUTURE 192-ACRE MIXED USE “LIVE, WORK, PLAY” DEVELOPMENT (PHASE I 2016)

9 Greenway Plaza, Suite 700 Houston, Texas 77046 Tel (713) 852-3500 Fax (713) 527-8725 hfflp.com

Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp a Texas licensed real estate broker (“HFF”).

©2015 HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 22 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.

HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties] described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references 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 buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.