glen 346-UNIT GARDEN COMMUNITY DURHAM, NC

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1 glen SOUTHPOINT 346-UNIT GARDEN COMMUNITY DURHAM, NC

2 2 EXECUTIVE SUMMARY

glen SOUTHPOINT ATTRACTIVE GARDEN COMMUNITY WITH SIGNIFICANT UPSIDE NEAR MAJOR EMPLOYMENT DRIVERS IN DURHAM, NC Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp.

3 glen SOUTHPOINT ATTRACTIVE GARDEN COMMUNITY WITH SIGNIFICANT UPSIDE NEAR MAJOR EMPLOYMENT DRIVERS IN DURHAM, NC Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp., a North Carolina licensed real estate broker ( HFF ), has been retained as the exclusive sales representative for Southpoint Glen in Durham, North Carolina. Southpoint Glen (or the Property ) is a 346-unit suburban garden apartment community with exciting opportunity for further renovations after proven premiums.renovation programs already completed at the Property include stainless steel appliances, new granite-like countertops, new fixtures, lighting, and plank flooring on the ground floor. The population in the Property s zip code has grown 64.8% since This growth is well sustained by major employment centers at Research Triangle Park (home to more than 260 companies and 50,000 employees), Duke University Health System (with nearly 18,000 employees), and UNC Chapel Hill (with more than 8,000 employees). Southpoint Glen is also near a variety of lifestyle amenities including The Streets at Southpoint Mall s 1.3 million square feet of retail space, the American Tobacco Trail s 22+ miles of greenway, and Downtown Durham s vibrant urban environment. SOUTHPOINT GLEN 3

SOUTHPOINT GLEN INVESTMENT SUMMARY Address 5800

2 Average Unit Size 885 Total Square Feet 306,188

4 SOUTHPOINT GLEN INVESTMENT SUMMARY Address 5800 Tattersall Drive Durham, NC Year Built 1988 Number of Units 346 Acreage Density (Units/Acre) 12.2 Average Unit Size 885 Total Square Feet 306,188 CURRENT OPERATIONS (AS OF 06/04/2018) Market rent $940 Market rent PSF $ EXECUTIVE SUMMARY

COMPELLING UPSIDE POTENTIAL THROUGH FURTHER RENOVATIONS Current ownership s additional upgrades to previously renovated units have demonstrated Southpoint Glen s rental upside.

This demonstrates the room for further improvements at Southpoint Glen.

lighting throughout to modernize the space. These test units are generating a $90 premium at a very moderate scope. Additional remaining investments include adding granite countertops, and 2 blinds.

5 COMPELLING UPSIDE POTENTIAL THROUGH FURTHER RENOVATIONS Current ownership s additional upgrades to previously renovated units have demonstrated Southpoint Glen s rental upside. Newer communities within the Southpoint area, such as Arboretum at Southpoint and Southpoint Crossing are achieving rents at $1.14 PSF and $1.13 PSF, respectively. This demonstrates the room for further improvements at Southpoint Glen. Current management recently updated 9 test units by lowering the two-tiered countertops in the kitchens to dramatically open the living space; adding tile backsplash in the kitchen and installing new lighting throughout to modernize the space. These test units are generating a $90 premium at a very moderate scope. Additional remaining investments include adding granite countertops, and 2 blinds. Moreover, there is significant runway for amenity improvements, including installing an outdoor fitness area, adding package concierge service, repurposing the sand volleyball court, and expanding the pool. PROXIMATE TO REGION S LARGEST ECONOMIC DRIVER Southpoint Glen is within a 12-minute drive from world-renowned Research Triangle Park (RTP). The RTP is home to nearly 300 of the world s most innovative technology, health, and engineering companies, including IBM, Cisco Systems, and GlaxoSmithKline. Moreover, the RTP employs more than 50,000 people whose combined annual salaries exceed $2.7 billion. This proves the RTP is a significant contributor to the region s economic health. SUPERB APARTMENT FUNDAMENTALS FOR PRODUCT VINTAGE Apartment vacancies for market-rate apartments in Durham more than 16 years old average 3.5%. Healthy and stable apartment markets trend near 5% vacancy rates. The 3.5% vacancy rate reveals large demand for the product type in the market, enabling strong rent growth. Rents for the same product type have increased by 5.32% and 4.06% in 2017 and 2018, respectively. Future ownership will undoubtedly continue to witness similar rent growth due to sustainable population growth and unmatched demand for 1980s vintage product in Durham. SOUTHPOINT GLEN 5

DURHAM POPULATION GROWTH DRIVEN BY STEM EMPLOYMENT Since 2000, Durham County s population increased 38%

employ more than 23,000 Durham residents.

Moreover, the RTP s educated workforce and state-of-the-art facilities continue to attract investors and

6 DURHAM POPULATION GROWTH DRIVEN BY STEM EMPLOYMENT Since 2000, Durham County s population increased 38% driven in large part by the expansion of the Life Sciences and Technology industries which collectively employ more than 23,000 Durham residents. Duke University Medical Center employs more than 11,000 people alone. Moreover, the RTP s educated workforce and state-of-the-art facilities continue to attract investors and entrepreneurs increasingly wary of Silicon Valley s prohibitive costs. Since 2008, Durham has attracted more than $2.28 billion in economic development growth, creating more than 6,000 new jobs. 6 EXECUTIVE SUMMARY

7 DUKE UNIVERSITY & DUKE MEDICAL CENTER DOWNTOWN DURHAM SOUTHPOINT GLEN THE RESEARCH TRIANGLE PARK IMPERIAL CENTER RESIDENTIAL DENSITY OF PROFESSIONAL, SCIENTIFIC, AND TECHNICAL INDUSTRY WORKERS < >35 Source: US Census Bureau SOUTHPOINT GLEN 7

8 Parkwood Elementary School Southpoint Glen-zoned school Rated 8/10 on Student Progress SuperTarget 175,000 sq.ft. Owner: Target Corp. The Streets at Southpoint 1.3M sq.ft. retail space Owner: General Growth Properties Renaissance Center at Southpoint 200,000+ sq.ft. retail Owner: InvenTrust Properties Woodlake Trail approximately 2 miles of walking trails Piney Wood Park Sprawling public park with: athletic field baseball field dog park 2 playgrounds tennis courts 130,000 VPD American Tobacco Trail Rails-to-trail greenway, spanning 22+miles SOUTHPOINT GLEN Fayetteville St 25,000 VPD Homestead Market 164,000 sq.ft. retail space Owner: Ram Realty Services Southpoint Crossing 100,000+ sq.ft. retail space Owner: Regency Centers Woodlake s Lake Sutton Station 50,000 sq.ft. retail space 160,000 sq.ft. office space Owner: Ticon Properties EXCELLENT ACCESSIBILITY TO MAIN THOROUGHFARES Southpoint Glen is located just off I-40, known familiarly as the Jobs Corridor, with 174,000 vehicles per day (VPD). This highway links Raleigh, Durham, and Chapel Hill, and touches several significant job centers, including the RTP (13-minute drive time), Perimeter Park (18-minute drive time), and Imperial Center (13-minute drive time). I-40 flows directly through 14 million square feet of office space with more than 63,000 combined employees. PROXIMITY TO VIBRANT INSTITUTIONAL RETAIL Residents at Southpoint Glen enjoy the proximity (5-minute drive time) to The Streets at Southpoint, a thriving 1.33 million square foot regional mall featuring tenants such as Nordstrom, Belk, Williams-Sonoma, the Apple Store, Pottery Barn, and a plethora of dining and entertainment options. The mall, owned by General Growth Properties (NYSE: GGP), has more than 180 shops and restaurants, as well as an IMAX theater. Other nearby institutional owners include Regency Centers, InvenTrust Properties, and Ram Realty Services. 8 EXECUTIVE SUMMARY

9 SOUTHPOINT GLEN 9

COMMUNITY PRICED WELL BELOW REPLACEMENT COST Replacement cost is calculated at nearly $180,000 per unit.

Southpoint Glen presents an excellent opportunity to purchase a wellperforming asset priced significantly below replacement costs.

Those trails are the American Tobacco Trail, Woodcroft Trail, and Woodlake Trail, and lead to nearly 30 miles of greenway.

10 COMMUNITY PRICED WELL BELOW REPLACEMENT COST Replacement cost is calculated at nearly $180,000 per unit. To achieve this value, management at Southpoint Glen would have to increase rents 63% to justify replacement, with current construction costs. Southpoint Glen presents an excellent opportunity to purchase a wellperforming asset priced significantly below replacement costs. WALKABLE TO MIXED-USE COMMERCIAL SPACE AND GREENWAYS Residents at Southpoint Glen enjoy walking access to restaurants and office space at Sutton Station, and three greenways. Those trails are the American Tobacco Trail, Woodcroft Trail, and Woodlake Trail, and lead to nearly 30 miles of greenway. Sutton Station, across the street from Southpoint Glen, has 50,000 square feet of retail space and nearly 160,000 square feet of office space. Owned by Durham-based Ticon Properties, tenants include restaurants such as Bocci Trattoria & Pizzeria, Nantucket Grill, and Dulce Café & Gelato. Office tenants include medical practices (many Duke-affiliated branches), dentists, physical therapists, and other professional services. DURHAM S COOL FACTOR IN ITS FOODIE CULTURE Vogue Magazine dubbed Durham, North Carolina s hippest city, in 2017, largely in part to its repurposed cotton and tobacco factories and thriving foodie scene. In 2015 alone, Durham had three chefs nominated at James Beard Award Semifinalists. Southern Living went on to call Durham, The South s Tastiest Town, due to its scene of artisans devoted the craft of humble foods. Moreover, more than 50 of the city s restaurants have been recognized by regional or national media. 10 EXECUTIVE SUMMARY

American Tobacco Trail 22+ miles of greenway running through 3 counties in Triangle area Duke Fertility Center Dolce Cafe & Gelato Nantucket Grill Inside Out Body Therapies Duke Urgent Care South

11 American Tobacco Trail 22+ miles of greenway running through 3 counties in Triangle area Duke Fertility Center Dolce Cafe & Gelato Nantucket Grill Inside Out Body Therapies Duke Urgent Care South SunTrust Bank Woodlake Trail approximately 2 miles of walking trails Woodlake s Lake Carolina Pain & Performance Elite Performance Chiropractic Property access point SOUTHPOINT GLEN Mitchell & Associate Law Firm The Wine Cellar Sutton Station 50,000 sq.ft. retail space 160,000 sq.ft. office space Bocci Trattoria & Pizzeria Fayetteville St 25,000 VPD Property access point SOUTHPOINT GLEN 11

4242 SIX FORKS ROAD SUITE 876 RALEIGH, NORTH CAROLINA 27609 201 NORTH TRYON STREET SUITE 1400 CHARLOTTE, NORTH CAROLINA 28202 investment advisors JUSTIN GOOD Managing Director 919.573.

12 4242 SIX FORKS ROAD SUITE 876 RALEIGH, NORTH CAROLINA NORTH TRYON STREET SUITE 1400 CHARLOTTE, NORTH CAROLINA investment advisors JUSTIN GOOD Managing Director JEFF GLENN Managing Director ALLAN LYNCH Senior Director CAYLOR MARK Director analysts GEORGE SCHUBERT Real Estate Analyst SARA CARTA WAGMAN Real Estate Analyst MICHELLE ASHLIN Real Estate Analyst debt advisor TRAVIS ANDERSON Senior Managing Director ROGER EDWARDS Senior Director ATLANTA AUSTIN BOSTON CAROLINAS CHICAGO DALLAS DENVER HOUSTON INDIANAPOLIS LAS VEGAS LOS ANGELES MIAMI NEW JERSEY NEW YORK ORANGE COUNTY ORLANDO PHILADELPHIA PHOENIX PITTSBURGH PORTLAND SAN DIEGO SAN FRANCISCO SEATTLE TAMPA WASHINGTON, DC LONDON

FOUNTAIN ARMS A 14 UNIT VALUE-ADD INVESTMENT OPPORTUNITY LOCATED IN EAST HOLLYWOOD (LOS ANGELES), CALIFORNIA. hfflp.com

hfflp.com FOUNTAIN ARMS A 14 UNIT VALUE-ADD INVESTMENT OPPORTUNITY LOCATED IN EAST HOLLYWOOD (LOS ANGELES), CALIFORNIA Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp., a real estate