LOCKHEED MARTIN BUILDINGbreakwaterequitypartners.com/wp-content/uploads/2013/05/... · 2013. 7. 2. · LOCKHEED MARTIN BUILDING 2400 WEST MARSHALL GRAND PRAIRIE, TEXAS 5 | P a g e

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.


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


2400 WEST MARSHALL



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


2400 WEST MARSHALL



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


2400 WEST MARSHALL



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.


2400 WEST MARSHALL



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.


2400 WEST MARSHALL




2400 WEST MARSHALL



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


2400 WEST MARSHALL



Property Aerial View


2400 WEST MARSHALL



Location Map


2400 WEST MARSHALL



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

Documents

LOCKHEED MARTIN BUILDINGbreakwaterequitypartners.com/wp-content/uploads/2013/05/... · 2013. 7. 2. · LOCKHEED MARTIN BUILDING 2400 WEST MARSHALL GRAND PRAIRIE, TEXAS 5 | P a g e