Value-Add Suburban Office Investment Opportunity Fairfax, Virginia
Executive Summary Investment Highlights Four-Building, 88% Leased, 468,458 SF Suburban Office Portfolio Headquarters Location (40% of Portfolio RBA) for General Dynamics Mission Systems, Inc. (Moody s Rating: A2) and 17 of the Portfolio's 27 Tenants, Comprising 68% of RBA Major Fairfax County Thoroughfares I-66, Fairfax County Parkway, Fair Lakes Parkway, and Route 50 Provide Broader Connectivity to Northern Virginia and the Greater Washington, DC Metropolitan Region The Shops at Fair Lakes, East Market at Fair Lakes, Fair Lakes Center, Fair Lakes Promenade, Fairfax Towne Center, Fair Oaks Mall, and Fairfax Corner, Offering a Host of Major Retailers and Grocery Stores, Are Just a Short Drive from the Properties Holliday Fenoglio Fowler, L.P. ( HFF ), as exclusive representative for the Owner, is pleased to present this offering for the sale of Fair Lakes I, II, III, and IV (the Portfolio or "Properties"), a four-building, 468,458 SF office portfolio located in Fairfax, Virginia. Collectively 88% leased to 27 tenants with approximately 5 years of weighted average remaining lease term, the Portfolio is anchored by General Dynamics Mission Systems, Inc. (40% of RBA; Moody s Rating: A2), and has served as its headquarters since 1991. The Portfolio provides investors surety of cash flow with more than 50% of Portfolio RBA leased through 2025. The Portfolio is part of the broader 650-acre Fair Lakes mixed-use master planned community featuring 1.3 MM SF of office, 2.0 MM SF of retail, over 2,000 residential units, and the 338-room Hyatt Regency Fairfax. Located in the heart of Fairfax County, the third wealthiest in the United States and home to Northern Virginia s largest defense and intelligence community demand drivers, the Portfolio possesses tremendous accessibility to major commuter thoroughfares such as I-66, the Fairfax County Parkway, and Route 50, while offering tenants an amenity-rich experience thanks to the numerous eateries and shops within a short walk or drive. Situated in the Heart of Northern Virginia s Defense & Intelligence Community Home to over $37.4 Billion in Federal Procurement Spending (FY 2017) Proximity to Downtown Washington (30 minutes), Arlington (20 minutes), Dulles International Airport (20 minutes), and Ronald Reagan Washington National Airport (30 minutes) Value-Add Offering Priced at a Compelling Discount to Replacement Cost Free & Clear of Existing Debt Accordingly, the Portfolio represents an exceptional opportunity to acquire institutional quality office below replacement cost and achieve value-add returns through the lease up and stabilization of the Properties near-term. 2
Fair Lakes IV 66 East Market at Fair Lakes Fair Lakes Center E Fair Lakes II Fair Lakes I T CL Y UN R CI R PA AY W K FA FAIR X CO FAIR LA KE S Fair Lakes III Fair Lakes I Fair Lakes II Fair Lakes III Fair Lakes IV 12500 Fair Lakes Circle 12450 Fair Lakes Circle 12600 Fair Lakes Circle 12700 Fair Lakes Circle Fairfax, VA 22033 Fairfax, VA 22033 Fairfax, VA 22033 Fairfax, VA 22033 131,379 RSF 185,581 RSF 75,976 RSF 75,522 RSF 92% 100% 70% 69% 13 1 5 8 The Peterson Companies (28% of RBA) General Dynamics (100% of RBA) Rummel, Klepper, & Kahl (21% of RBA) Sandy Spring Bank (20% of RBA) WALT 4.3 Years 6.2 Years 2.3 Years 3.7 Years BUILT 1985 1987 1988 1989 4 8 3 4 ±32,800 SF ±23,200 SF ±25,300 SF ±18,900 SF 472 Spaces 3.6 / 1,000 SF 642 Spaces* 3.5 / 1,000 SF 227 Spaces 3.0 / 1,000 SF 270 Spaces 3.6 / 1,000 SF 13.79 Acres (600,549 SF) 5.50 Acres (239,380 SF) 5.74 Acres (250,089 SF) 5.05 Acres (219,881 SF) RENTABLE BUILDING AREA % LEASED # OF TENANTS MAJOR TENANTS STORIES TYPICAL FLOOR PLATE PARKING SPACES PARKING RATIO SITE AREA *Parking space count includes adjacent surface lot that is not included in the Offering. 3
Executive Summary Institutional Quality Office Portfolio Four-building portfolio that is collectively 88% leased to 27 tenants with a weighted average remaining lease term of approximately 5 years Originally constructed from 1985-1989, the Properties have been institutionally maintained as Class A office buildings since inception Situated in a private campus-like setting with fitness and conference center amenities in addition to running trails and walking paths that connect the Portfolio to the broader 650-acre Fair Lakes mixed-use development Global HQ of General Dynamics Mission Systems, Inc. (Credit Rating: Moody s A2) Fair Lakes II has served as the headquarters location for General Dynamics Mission Systems, Inc. (40% of RBA) since 1991. The Portfolio also serves as the headquarters location for 17 of the Portfolio's 27 tenants, comprising 68% of RBA. General Dynamics has recently extended their term an additional 6.0 years through April 2025, reflecting their long-term commitment to Fair Lakes II and its missioncritical proximity to Northern Virginia s major defense and intelligence community demand drivers FIRST-CLASS FITNESS CENTER - FAIR LAKES I FAIR LAKES I FAIR LAKES III FAIR LAKES IV 4
RUMMER, KLEPPER, & KAHL - FAIR LAKES III NATIONAL ASSOCIATION OF LANDSCAPE PROFESSIONALS - FAIR LAKES I ALLAN MYERS - FAIR LAKES I MATTHEWS, CARTER & BOYCE - FAIR LAKES I 5
Executive Summary FAIRFAX CORNER Outstanding Regional Connectivity The Portfolio is visible from I-66, Fairfax County Parkway (Route 286), and Fair Lakes Parkway, which presents prospective tenants with superb signage opportunities to each of these high-traffic arterials that combine to host over 215,000 vehicles per day Situated at the confluence of I-66, Fairfax County Parkway (Route 286), Fair Lakes Parkway, and Route 50, the Portfolio offers outstanding regional connectivity The Capital Beltway (I-495) is located only 12 minutes from the Property while Downtown Washington, DC, Washington Dulles International Airport, and Ronald Reagan Washington National Airport are all within a 30-minute drive Diverse Fairfax Amenity Base in Close Proximity Amenity-rich micro-market with nearly 2.0 MM SF of retail space within one mile of the Property, featuring The Shops at Fair Lakes, Fair Lakes Center, Fair Lakes Promenade, Fairfax Towne Center, Fair Oaks Mall, and Fairfax Corner FAIR OAKS MALL The Portfolio is walkable to East Market at Fair Lakes in under 5 minutes, featuring a 42,000+ SF Whole Foods Market among several other retailers including Starbucks, Kohl s, Dick s Sporting Goods and The UPS Store Fair Oaks Mall is anchored by Macy s, Lord & Taylor, JC Penney, and Dave & Buster s and includes 24 eateries amongst its 170 total retailers Whole Foods, Harris Teeter, Costco, Wal-Mart, Wegmans, and Safeway are all accessible from the Property in less than 10 minutes, providing tenants outstanding optionality and convenience for their daily necessities Additional retailers from Best Buy and Target to Home Depot and T.J. Maxx are just a sample of the options drivable in less than 10 minutes, ensuring tenants never have to travel far to fulfill even their most diverse shopping needs Four hotels the Hyatt Regency, Residence Inn, Hilton Garden Inn, and Extended Stay are all within a 7-minute drive of the Property As a testament to its ongoing vibrancy, the subset of retail properties within a one mile radius of the Portfolio currently boasts a vacancy rate of just 2.3% and has averaged 98.8% occupancy over the past 5 years 6
FAIRFAX COUNTY GOVERNMENT CENTER FAIR LA KES P ARK WAY To Washi ngton, D.C. AX FAIRF 66 To Norther PARKWAY COUNTY n Virginia 286 Proximity to Nearby Demand Drivers; Superior Surrounding Demographics Free and Clear Transaction The Portfolio is just over one mile from the growing Fairfax County Government Center and Inova Fair Oaks Hospital, providing outstanding nearby demand drivers The Portfolio also boasts a convenient location with ready access to Northern Virginia s largest Department of Defense and Intelligence community demand drivers as the submarket is the preferred location of many defense contractors The surrounding trade area is one of the most well-educated and wealthy in the The Portfolio will be sold free and clear of debt, providing investors the opportunity to take advantage of historically-low interest rates country, boasting an average household income of $144,881 7
INVESTMENT ADVISORY FINANCING MATT NICHOLSON Director mnicholson@hfflp.com 202.533.2502 JIM MEISEL Senior Managing Director jmeisel@hfflp.com 202.533.2505 DAN MCINTYRE Senior Director dmcintyre@hfflp.com 202.533.2506 ANDREW WEIR Senior Managing Director aweir@hfflp.com 202.533.2504 DAVE BAKER Director dbaker@hfflp.com 202.777.2301