SUGAR CREEK ON THE LAKE - LoopNetimages2.loopnet.com/d2/Qlhs6kGaLpQX4ICzOFYBs4IoC… · · 2017-06-22radius of Sugar Creek on the Lake are 3.8 million square feet of ... Sheldon

Sugar Creek on the Lake // HFF // 1

SUGAR CREEK ON THE LAKEE X E C U T I V E S U M M A R Y | S U G A R L A N D , T X

2 // HFF // Sugar Creek on the Lake

Sugar Creek on the Lake // HFF // 1Sugar Creek on the Lake // HFF // 1

HFF, as exclusive advisor, is pleased to present the opportunity to acquire the 100% fee simple interest in Sugar Creek on

The Lake (the “Property”), a suburban, 515,152 square foot, headquarters quality office building in one of the fastest growing

micro-economies in the country. Developed in 1982 and later renovated in 2008 and substantially renovated in 2014, Sugar

Creek on The Lake represents one of the premier office addresses in Sugar Land, Texas, due to its location at the epicenter

of the Sugar Land office market with highway frontage and exceptional visibility on U.S. Highway 59. Currently 88.9% leased

with a weighted average remaining term of 6.7 years, Sugar Creek on The Lake serves as the corporate headquarters for

Money Management International and Wholesome Sweeteners, as well as the location of a significant corporate presence

for United HealthCare, First Data Corporation and ABM. The Property offers current cash flow along with a full-floor vacancy

on the top floor providing near-term upside as there is only one other full floor currently available on a direct basis in

the submarket.

88.9% Leased with 6.7 Years Average Remaining Lease Term - In-Place Rents 4.5% Below Market

Foundation of Contractual Income Growth

Significant Mark-to-Market Upside

Excellent Remaining Vacancy - Fully Renovated Top Floor

Discount to Replacement Cost, Limited New Construction

Headquarters Quality Asset

Exceptional Physical Condition & Limited Future CapEx Exposure

Sugar Land: A Growing Corporate Hub

The OpportunityInvestment Highlights

Property Summary

Address: 14141 Southwest Freeway, Sugar Land, TX 77478

Distance from Houston CBD: 19.6 Miles

Net Rentable Area: 515,152

Number of Stories: 10

Year Built : 1982

Years Renovated: 2008 / 2014

Parking Ratio: 4.83 per 1,000 SF

Occupancy: 88.9%

Avg. Remaining Lease Term: 6.7 Years

Site Area: 8.9820 acres (Bldg. & Attached Garage)14.7233 acres (Surface Parking & Detached Garage)23.7053 acres (Total)


Investment Highlights

Foundation of Contractual Income GrowthSugar Creek on The Lake benefits from in-place leases that provide long-term, escalating contractual income growth exceeding $1.1 million over the term of the existing leases. A significant portion of this contractual income growth (88%) can be attributed to the long-term leases including United HealthCare Services (50%), First Data (26%) and ABM (12%). The United HealthCare lease, which has $0.50 annual rent steps, provides an excellent hedge against inflation with an effective annual rate increase of 2.9% over the lease term. Excluding escalation income from the United HealthCare lease, all other in-place leases will generate contractual escalation income in excess of $580,000 over the 6.7 years of average remaining term.

Significant Mark-to-Market UpsideSignificant embedded upside exists as in-place rental rates are below market. The average in-place NNN rent for the Property is 4.5% below rental rates currently being achieved among similar Class A office properties in the E. Fort Bend County / Sugar Land submarket and are projected to be 11.7% below market on average at lease expiration. With an average remaining lease term of 6.7 years, the Property offers a stable, in-place cash flow stream that allows investors to pursue additional value enhancement over a long-term hold until they can capture value by rolling rents to market prior to their exit.

Excellent Remaining Vacancy – Fully Renovated Top FloorThe Property’s 37,410 square feet of vacancy is an extremely valuable commodity in a submarket where Class A office space is 90.6% leased as of Q1 2017. 54% of the remaining vacancy, or 20,082 square feet, is located on the top floor of the building. The full-floor vacancy features outstanding views and is in excellent physical condition and move-in ready.

Discount to Replacement Cost, Limited New ConstructionWith the increase in construction costs over the last few years, Sugar Creek on The Lake offers the rare opportunity to acquire Class A office product at a discount to current replacement cost, which is estimated to be $275-$325 per square foot. With the recent completion of the owner-occupied Texas Instruments facility in Telfair, there is no new construction currently underway. Limited supply growth over the next couple of years should allow rental rates to continue to increase at a healthy rate.



Headquarters Quality Asset

Sugar Creek on The Lake, originally a build-to-suit project for Kaneb Services in the early 1980s, has continually served as a corporate or regional headquarters location for its tenants until the present day. Following Kaneb Services, the Property served as the regional headquarters for Unocal Corp. for more than 20 years before the company was acquired by Chevron in 2005. When Chevron relocated its employees to downtown, Fluor occupied several floors in the building before moving to its current headquarters in May of 2010. In October of 2010, Money Management International took residence, and since then several other firms have selected Sugar Creek on The Lake as the site of their corporate headquarters, including Wholesome Sweeteners, while United HealthCare Services and ABM leased 194,000 and 63,000 square feet, respectively.

Since 2012, the building has undergone substantial renovations, further cementing this Property’s status as an institutional quality asset. With a full floor available, Sugar Creek on The Lake presents investors with a compelling opportunity to add an additional tenant looking to establish its headquarters in the area’s premier office environments with an excellent location, unrivaled amenities and floor to ceiling glass on every floor.

Exceptional Physical Condition & Limited Future CapEx ExposureSince 2012, current ownership has invested over $15.8 million of non-leasing capital into the Property. The recent extensive upgrades to the building systems coupled with full code compliance mitigate a buyer’s exposure to future capital outlays, and allows a new owner to focus on the execution of its leasing strategy and business plan. In addition to the capital outlays noted below, previous ownership invested over $4.0 million improving the front entrance, lobby and common areas, restrooms and elevators. Recent updates over the last couple years are summarized in the adjacent chart.

Sugar Land: A Growing Corporate HubLong recognized as a great place to live, the City of Sugar Land has also gained well-deserved reputation as one of the top locales in the United States for business relocation and expansion, in part because of its workforce talent, aggressive incentive program, and one of the lowest city property tax rates in Texas. Within a 5 mile radius of Sugar Creek on the Lake are 3.8 million square feet of Class A office space and 16.7 million square feet of retail space, placing the Property at the commercial epicenter of the region’s commercial trade.


S U G A R C R E E K O N T H E L A K E

C O N F E R E N C E FA C I L I T Y


HIGHWAY 90HIGHWAY 90

US 59 | SO

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WEST FREEW

AYU

S 59 | SOU

THW

EST FREEWAY

WEST SAM HOUSTON TOLLWAYWEST SAM HOUSTON TOLLWAY

THE GALLERIATHE GALLERIA GREENWAYPLAZA

GREENWAYPLAZA

CBDCBD TEXAS MEDICAL CENTER

TEXAS MEDICAL CENTER

SOUTH DAIRY ASHFORDSOUTH DAIRY ASHFORD

CENTRAL DRIVECENTRAL DRIVE

Sugar Creek on the LakeSugar Creek on the Lake


LakeHouston

San Jacinto

Bay

SheldonReservoir

GalvestonBay

BayportTerminal

Barbour’s CutTerminal

SmithersLake

ClearLake

George BushPark

LakeHouston

State Park

ArmandBayouPark

WilliamP. HobbyAirport

George BushIntercontinentalAirport

HARRISCOUNTY

LIBERTYCOUNTY

FORT BENDCOUNTY

MONTGOMERYCOUNTY

BRAZORIACOUNTY

GALVESTONCOUNTY

Downtown

EnergyCorridor

The Galleria

The Woodlands

TexasMedical Center

69

69

69

Westpark Tollway

Katy Frwy

Southwest F

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Northwest Frwy

North Frwy

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NorthLoop

LoopSouth

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East

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Sam Houston Tollway

Sam Houston Pkwy

ExxonMobilCorporate Headquarters

Pasadena Frwy

Baytown East Frwy

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Gulf Frwy

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Proposed Grand Pkwy

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Beaumont Hwy

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Grand Pkwy Under ConstructionLocation Maps


HIGHWAY 90HIGHWAY 90

US 59 | SO

UTH

WEST FREEW

AYU

S 59 | SOU

THW

EST FREEWAY

WEST SAM HOUSTON TOLLWAYWEST SAM HOUSTON TOLLWAY

THE GALLERIATHE GALLERIA GREENWAYPLAZA

GREENWAYPLAZA

CBDCBD TEXAS MEDICAL CENTER

TEXAS MEDICAL CENTER

SOUTH DAIRY ASHFORDSOUTH DAIRY ASHFORD

CENTRAL DRIVECENTRAL DRIVE



H I G H W A Y 6H I G H W A Y 6

U S 5 9 | S O U T H W E S T F R E E W AY


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PARADISE POINTPARADISE POINT

SUGAR LAND TOWN SQUARESUGAR LAND TOWN SQUARE

FIRST COLONY MALLFIRST COLONY MALLTELFAIRTELFAIR

NEW TERRITORYNEW TERRITORY

GREATWOODGREATWOOD

FIRST COLONYFIRST COLONY

S U G A R C R E E K C E N T E R B LV D

S U G A R C R E E K C E N T E R B LV DSugar Creek on the LakeSugar Creek on the Lake


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SUGAR CREEKON THE LAKE

59

Site Plan

H I G H W A Y 6H I G H W A Y 6



6

PARADISE POINTPARADISE POINT

SUGAR LAND TOWN SQUARESUGAR LAND TOWN SQUARE

FIRST COLONY MALLFIRST COLONY MALLTELFAIRTELFAIR

NEW TERRITORYNEW TERRITORY

GREATWOODGREATWOOD

FIRST COLONYFIRST COLONY

S U G A R C R E E K C E N T E R B LV D

S U G A R C R E E K C E N T E R B LV DSugar Creek on the LakeSugar Creek on the Lake


HOUSTON9 Greenway Plaza, Suite 700

Houston, Texas 77046

Phone (713) 852-3500

Fax (713) 524-7334

hfflp.com

CAPITAL MARKETS INQUIRIES CAN BE DIRECTED TO SUSAN HILL

Senior Managing Director

Phone (713) 852-3564

[email protected]

H. DAN MILLER, CCIM, SIOR

Senior Managing Director

Phone (713) 852-3576

[email protected]

TRENT AGNEW

Director

Phone (713) 852-3431

[email protected]

MARTIN T. HOGAN

Director

Phone (713) 852-3557

[email protected]

DANE PETERSEN

Real Estate Analyst

Phone (713) 852-3436

[email protected]

This Offering Memorandum has been prepared by HFF for use by a limited number of parties and has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it, and make no guarantee, warranty or representation about it. It is your responsibility to confirm, independently, its accuracy and completeness. All projections have been developed by HFF, Owner and designated sources, are based upon assumptions relating to the general economy, competition, and other factors beyond the control of Owner, and therefore are subject to variation. No representation is made by HFF or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied on as a promise or representation as to the future performance of the property. Although the information contained herein is believed to be correct, Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, HFF, Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from, the Offering Memorandum or any other written or oral communication transmitted or made available to the recipient.

The Offering Memorandum does not constitute a representation that there has been no change in the business or affairs of the property or Owner since the date of preparation of the Offering Memorandum. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser.

Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified prospective investors.

Owner and HFF each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations to any entity reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel, and any obligations set by Owner thereunder have been satisfied or waived.

This Offering Memorandum and the contents, except such information, which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting this Offering Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not photocopy or duplicate it, that you will not disclose this Offering Memorandum or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Owner or HFF and that you will use the information in this Offering Memorandum for the sole purpose of evaluating your interest in the property and you will not use the Offering Memorandum or any of the contents in any fashion or manner detrimental to the nterest of Owner or HFF If you have no interest in the property, please return the Offering Memorandum forthwith. 2/15

Documents

SUGAR CREEK ON THE LAKE - LoopNetimages2.loopnet.com/d2/Qlhs6kGaLpQX4ICzOFYBs4IoC… · · 2017-06-22radius of Sugar Creek on the Lake are 3.8 million square feet of ... Sheldon