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LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL GRAND PRAIRIE, TEXAS
HIGH TECH INDUSTRIAL BUILDING
PREFERRED EQUITY OPPORTUNITY Minimum $1,000,000/Maximum $1,500,000 Minimum Investment $25,000
Jemm Texas, LLC
3636 Nobel Drive, #350
San Diego, CA 92122
NO OFFERING IS MADE OR INTENDED BY THIS DOCUMENT. ANY OFFERING WILL BE MADE ONLY IN COMPLIANCE WITH FEDERAL AND STATE
SECURITIES LAWS. THIS DOCUMENT INCLUDES CONFIDENTIAL AND PROPRIETARY INFORMATION OF AND REGARDING JEMM TEXAS, LLC. THIS DOCUMENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
2 | P a g e Jemm Texas LLC
PREFERRED EQUITY INVESTMENT
TABLE OF CONTENTS
Offering Summary 3
Transaction Summary 4 Preferred Equity Option 4 Sources and Uses 5
Property Summary 6 Property Description 8
Aerial View 9 Location Map 10
Lease Description 11 Preferred Return Cash Flow Analysis 12
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
3 | P a g e Jemm Texas LLC
Offering Summary
Tenant: Lockheed Martin Corporation. Long term Government
Contractor for guided missile technology, has occupied
100% of the facility for over 25 years.
Security: Priority, Preferred Equity rights to income and liquidation
Minimum Term: 3 Years
Maximum Term: 5 Years
LTV: 72.4% - 77.9%
Investor Return: 10.0% interest, paid monthly
Lease Type: NNN. All expenses passed thru to tenant
Cap Rate: 8.5%
Lease Expiration: March 31, 2017 with option to renew.
Investment Min: $25,000
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
4 | P a g e Jemm Texas LLC
Transaction Summary
Jemm Texas, LLC, a Delaware limited liability company, (the “Owner”) acquired
2400 West Marshall (the “Property”) located in Grand Prairie, Texas, in March,
2012. Jemm Texas, LLC, is a single purpose entity formed to acquire the Property.
The Property is a 111,471 square foot office/flex building that is fully leased to and
occupied by Lockheed Martin (NYSE: LMT). The lease is a triple net lease less
building insurance, all other expenses passed through to the tenant. Annual Net
Operating Income is $780,297 and is available for debt service and reserves
through March, 2017. Assuming lease renewal by Lockheed Martin, annual Net
Operating Income will be equal to $891,768 and available for debt service and
reserves commencing with Year 5 of the loan term. The Owner acquired the
Property in March, 2012, using a Bridge Loan of $6,000,000. The Bridge Loan does
not mature until March 2014, but the Owner can refinance the loan now with no
pre-payment penalty and desires to obtain lower cost, long-term debt on the
Property. The amount necessary to refinance the Bridge Loan, inclusive of accrued
(but not delinquent) interest, exit fees and closing costs is described on Page 4.
The Owner is in the process of obtaining non-recourse CMBS senior debt financing
in the amount of $5,650,000. Proposed material terms of that loan are described
on Page 10. Additional capital in the form of preferred equity financing will be
required to complete the re-financing of the Bridge Loan.
Preferred Equity
Preferred Equity Amount: Minimum $1,000,000/Maximum $1,500,000
Preferred Return Rate: 10.0% interest, paid monthly
Security: Preferred Equity rights as to income and liquidation
Governance: Owner to be controlled by Phil Jemmett; holders of
Preferred Equity will not have Voting Rights.
Call Rights: Owner may purchase all or a portion of Preferred Equity
at Par after 3 years
Put Rights Holders of Preferred Equity may cause Owner to purchase
Preferred Equity after 5 years
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
5 | P a g e Jemm Texas LLC
Sources and Uses
Valuation Summary
Imputed Valuation $9,179,965
RSF 111,471
Value PSF $82.35
In-Place NOI $780,297
Cap Rate 8.50%
Sources of Financing
Minimum Maximum
First Mortgage Loan (61.55% LTV) $5,650,000 $5,650,000
Preferred Equity (10.89%/16.34% LTV) $1,000,000 $1,500,000
Total Sources $6,650,000 $7,150,000
Uses of Financing*
Minimum Maximum
Pay-off Existing Debt** Principal/Accrued Carry $6,190,201 $6,190,201
Loan Exit Fee* 2.0% of Principal Balance $123,804 $123,804
Lender Expenses Expenses, Legal Fees $60,000 $60,000
Third Party Reports Appraisal, ESA, PCA $15,000 $15,000
Legal Costs Outside/Local Counsel $40,000 $40,000
Closing Costs Title Insurance/Escrow $20,000 $20,000
Loan Origination 1.0% of Loan $56,500 $56,500
Capital Advances*** Repayment $144,495 $644,495
Total Uses $6,650,000 $7,150,000
* Estimated
** Assume Loan Closing of June 5, 2013 ***As Preferred Equity is raised between the minimum and maximum amounts,
the line item “Capital Advances” will be adjusted accordingly.
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
6 | P a g e Jemm Texas LLC
Preferred Return Cash Flow
Please See Page 10 — Preferred Return Cash Flow Analysis
Property Summary
The Property is a 111,471 square foot office/flex building that is fully leased to and
occupied by Lockheed Martin (NYSE: LMT). The present lease with Lockheed Martin extends through March 31, 2017, at a NNN rental rate of $7.00 PSF, and is subject to one, five (5) year renewal option through March 31, 2022, at a NNN rental rate of
$8.00 PSF. Lockheed Martin has a one-time option to terminate the lease on March 31, 2020. Lockheed Martin has leased the space for over 25 years and has substantial Top Secret tenant improvements and equipment in the building.
The Property is located in the Great Southwest Arlington submarket approximately halfway between Dallas and Fort Worth. The Property is approximately 20 minutes
away from DFW International Airport. The Great Southwest Arlington submarket is the third largest industrial submarket in the DFW Metroplex and contains approximately 74,000,000 SF of space. According to CBRE, the Great Southwest Arlington industrial
submarket posted the largest amount of absorption in the first half of 2012 in the DFW market, at 2,800,000 SF, and lease rates are beginning to increase as a result of shrinking availability of space. The market provides access to a relatively inexpensive,
non-union labor pool. Lockheed Martin is an investment grade tenant with a Moody’s Baa1 rating, ranked 58th
on the Fortune 500 list, and a 100 year legacy in aerospace pioneering and innovation. Lockheed has an extensive presence in the DFW Metroplex. This facility represents one of ten Lockheed Martin facilities in the immediate area, including its Missiles and Fire
Control Division headquarters, located nearby. Lockheed Martin is a global security company that is principally engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and
products. The Missiles and Fire Control Division (MFC), which is housed in the Property, develops
and produces land-based, air, and theater missile-defense systems, tactical battlefield missiles, electro-optical systems, fire-control and sensor systems, and precision-guided weapons and munitions. The primary function of Lockheed Martin’s Missiles and Fire
Control operations in this facility is research and development as opposed to manufacturing or logistical support. This is a high security facility and interior photos
are not permitted. MFC pursues business in more than 50 countries with more than 50 product service lines.
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
7 | P a g e Jemm Texas LLC
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
8 | P a g e Jemm Texas LLC
Property Description
Address: 2400 West Marshall Drive, Grand Prairie, Texas 75051
Rentable Area: 111,471 Rentable SF
Year Developed: 1976, Renovated in 2004
Zoning: Light Industrial
Parking: Approximately 545 surface spaces for a parking ratio of
6.37/1,000 SF—parking lot was resurfaced in 2012
Floor Construction: Foundation consists of 5” reinforced concrete slab with
12” Grid of ¼” steel rebar
Exterior Finish: Concrete Tilt Wall Aggregate Finish
Roof: Roof membranes are new built-up tar and gravel—the
roof membrane was replaced in 2004
HVAC: Trane Gas and Electric Heat with cooling capacity utilizing
R-22 refrigerant
Electricity: Electrical service is 480/277 Volt, 3-Phase, 4-wire service
and is rated at 2,500 amps total—electrical service enters
the building below ground from a pad-mounted
transformer with a single meter
Fire/Life/Safety: The Property is protected by an automatic fire sprinkler
system and all areas of the Property are wet pipe fire
sprinklered
Security: The Property is connected to Lockheed Martin
Corporation’s remote central security panel
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
9 | P a g e Jemm Texas LLC
Property Aerial View
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
10 | P a g e Jemm Texas LLC
Location Map
LOCKHEED MARTIN BUILDING
2400 WEST MARSHALL
GRAND PRAIRIE, TEXAS
11 | P a g e Jemm Texas LLC
Lease Description
Tenant: Lockheed Martin is a global security company that is principally engaged in the research, design, development, manufacture, integration, and sustainment of advanced
technology systems and products. The Missiles and Fire Control Division, which is housed in the Property, develops and produces land-based, air, and theater missile-defense
systems, tactical battlefield missiles, electro-optical systems, fire-control and sensor systems, and precision-guided weapons and munitions.
Occupancy: 100%
Lease Term April 1, 2007 to March 31, 2017
Renewal Option One five (5) year renewal option with $8.00 PSF rental rate
Termination Option One time tenant option to terminate as of March 31, 2020
Rentable Square Feet 111,471 SF
Expense Type Net/Net/Net, less Building Insurance
Lease Rate $7.00 PSF
Monthly Gross Base Rent $65,024.75
Annual Gross Base Rent $780,297.00
Security Deposit None
Renewal Probability In the Owner’s opinion, there is a higher likelihood of
renewal, based upon proximity to the Lockheed Martin
headquarters, length of historical tenancy and substantial
direct tenant investment in the Property—Lockheed Martin
has leased the space for over 25 years and has made
substantial direct investment in tenant improvements and
equipment in the Property over that period. Further, the
Lockheed Martin Missile Program continues to expand and
Lockheed Martin is reportedly “out-of-space” at its
Headquarters.
THE RISKS EXIST THAT (A) LOCKHEED MARTIN MAY NOT EXERCISE ITS
RENEWAL OPTION IN 2017; (B) ONCE RENEWED, LOCKHEED MARTIN MAY
EXERCISE ITS RIGHT TO TERMINATE IN 2020; AND/OR (C) LOCKHEED MARTIN
MAY NOT RENEW THE LEASE IN 2022
2400 WEST MARSHALL – GRAND PRAIRIE, TEXAS – FLEX OFFICE BUILDING
PREFERRED RETURN CASH FLOW ANALYSIS
*Assume that Lease Year End and Loan Year End are the same--timing of cash flows will be different and will be updated based upon actual loan closing date ** To the extent Preferred Equity raised is between the minimum and the maximum amounts, the Preferred Return amount will be adjusted accordingly ***No Increase in Rent is included for Year 10, which would be the first year of new lease period
Debt Assumptions Capital Structure
Borrower Jemm-Texas, LLC Property Value $9,179,965
Loan $5,650,000 Senior Debt $5,650,000
Rate 4.60% Minimum Maximum
Amortization-Years 30 Preferred Equity $1,000,000 $1,500,000
Loan Term-Years 10 Common Equity $2,529,965 $2,029,965
Square Footage 111,471
Monthly Payment $28,964.41 10 Year Totals--Assuming LM Renews in 2017 and 2022
Annual Reserves $2.34 PSF Cash Flow $8,471,796
Initial Lease Term Expire 3/31/2017 Debt Service $3,475,729
Lease Termination Option 3/31/2020 Capital Reserves $167,207
Lease Extension Expire 3/31/2022 Principal Reduction $1,110,551 (Assume Reserves used/distributed to Borrower)
Principal Balance at Maturity $4,539,449 (Assume Reserves used/distributed to Borrower)
Lease Year Ending* 3/31/2014 3/31/2015 3/30/2016 3/31/2017 3/31/2018 3/31/2019 3/30/2020 3/31/2021 3/31/2022 3/31/2023
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10***
NOI $780,297 $780,297 $780,297 $780,297 $891,768 $891,768 $891,768 $891,768 $891,768 $891,768
$347,573 $347,573 $347,573 $347,573 $347,573 $347,573 $347,573 $347,573 $347,573 $347,573
Net Cash Flow after Debt Service $432,724 $432,724 $432,724 $432,724 $544,195 $544,195 $544,195 $544,195 $544,195 $544,195
Capital Reserves (psf) $0.15 $16,721 $16,721 $16,721 $16,721 $16,721 $16,721 $16,721 $16,721 $16,721 $16,721
TI/LC Reserves (psf) $1.00 $111,471 $111,471 $111,471 $111,471 $111,471 $111,471 $111,471 $111,471 $111,471 $111,471
Special LM Reserves (psf) $1.19 $132,650 $132,650 $132,650 $132,650 $132,650 $132,650 $132,650 $132,650 $132,650 $132,650
Net Cash Flow After Reserves $171,882 $171,882 $171,882 $171,882 $283,353 $283,353 $283,353 $283,353 $283,353 $283,353
Minimum Preferred Equity** $1,000,000
Less Preferred Return 10.00% $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Cash Flow to Common Equity $71,882 $71,882 $71,882 $71,882 $183,353 $183,353 $183,353 $183,353 $183,353 $183,353
MaximumPreferred Equity** $1,500,000
Less Preferred Return 10.00% $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000
Cash Flow to Common Equity $21,882 $21,882 $21,882 $21,882 $133,353 $133,353 $133,353 $133,353 $133,353 $133,353
Debt Service
Recommended