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The Homestead Professional Center3 Village Road, Horsham, PA
Confidential Offering Memorandum
3 Village Road, Horsham, PA Offering Memorandum
EXECUTIVE SUMMARYTHE OFFERINGAvison Young is pleased to offer to interested investors the opportunity to acquire The Homestead Professional Center, a 16,363 square foot office building in the Horsham/Willow Grove submarket of Philadelphia. Renovated in 2009, the multi-tenant property offers a charming balance between its modernized functionality and rustic, aesthetic appeal.
As a proud recipient of BOMA’s Outstanding Building of the Year Award in 2010, MRA Group redeveloped an outdated farm building, with origins to the 19th century, into a thriving office building while maintaining parts of the original fieldstone structure that gives the property its unique character. Some of the key features of MRA’s development plan included the modernization of the building’s electrical system, the installation of a new, energy-efficient HVAC and lighting systems and the addition of state-of-the-art IT infrastructure.
The building is available for sale at a price of $3.4 million and could be delivered 100% vacant upon sale, or alternatively as a lease arrangement with existing tenants. The opportunity is to own an irreplaceable asset in an ultra-desirable Philadelphia submarket. Additionally, the property comes with the opportunity to develop an additional 20,000 SF of office capacity.
Property Details
Gross Square Feet 16,363 SF
Rentable Square Feet / Common Size Area 14,956 / 1,407
Property Type Corporate Office or Medical Office
Property Submarket Horsham / Willow Grove, PA
Metro Area Philadelphia, PA
Lot Size 4.40 acres
Year Built 1800’s / Renovated 2009
Number of Suites 4
Zoning Business Campus District, allowing for corporate office or medical office uses
Elevators 1
Parking / Ratio 142 space / 8.16 per 1,000 SF
Expansion Capability 20,000 SF
Suite RentableSF
CurrentTenant
MarketRent
Use AvailableUpon Sale
1 3,373 Abington Endocrinology $23.00 Medical Negotiable
100 5,266 Suburban Urological PC $23.00 Medical Yes
101 1,563 Vacant $23.00 Office Yes
200 6,161 MRA Group $19.00 Office Yes
SUITE LAYOUT
INVESTMENT HIGHLIGHTSThe Homestead Professional Center currently houses three tenants, with a total gross leasable area of 16,363 SF located on a picturesque setting of 4.4 acres. The building was meticulously rehabilitated in 2009 and represents a best-in-class asset.
FLEXIBLE FLOOR PLANSThe property lends itself especially to established and growing office and medical users in the
Horsham Market. The property is already occupied by medical and office tenants at suite sizes ranging from 1,563 SF – 6,161 SF. The pristine condition of the suites creates an opportunity for a future owner to re-tenant the suites at low turnover costs relative to comparable medical office product.
SIGNAGE & VISIBILITYThe property has dual signage along Dresher and Welsh Roads resulting in supreme exposure and
access for the tenants’ customers.
THE “IT” FACTORThe Homestead Professional Center’s charm equates to a value that cannot be quantified. A new
owner will find an elevated perception of their business from their customer’s perspective as well as increased productivity from employees that enjoy its character on a daily basis.
STRONG MARKET DEMAND FOR MEDICAL OFFICEThe Horsham / Willow Grove market hosts one of the strongest medical office environments in
the Philadelphia metro area with consistently high occupancy levels and a credible base of office users. The Homestead Professional Center includes three separate units that are currently fit out for medical use and can be acutely transformed to fit a variety of health care services.
LOCATED PROXIMATE TO A GROWING RESIDENTIAL AND RETAIL MARKETThe property is located within walking distance to the Promenade at Upper Dublin which is currently
under construction at a cost of over $120 million. Upon completion in 2020, the 25 acre development will have over 400 high-end apartment units and 120,000 SF of retail space.
3 Village Road, Horsham, PA Offering Memorandum
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2011 2012 2013 2014 2015 2016 2017 2018 YTD
MARKET CHARACTERISTICS
The Homestead Professional Center sits within the Horsham / Willow Grove submarket of Philadelphia. The strong commercial real estate metrics within a 3-mile radius of the property further support the migration of health care service providers into the market. The latest metrics for medical office properties within the area represent a vacancy rate of approximately 8.4% as well as market rental rates that have grown consistently over the past decade up to $24.10 PSF.
The demographic statistics within the same 3-mile radius of the property demonstrate a population that is growing both in volume and in age. Experiencing just under 10% population growth over the past decade, the local market surrounding the property has a median age of 42.3 years and a median household income of around $82,057. Both metrics are above that of the Philadelphia Metropolitan Area, with 2019 demographics reporting a median age of 38.7 years and a median household income of approximately $68,572. By comparison, the Horsham market’s aging population and high-income base create strong support for continued medical office demand.
MEDICAL OFFICE MARKET DEMOGRAPHICS
MEDICAL/OFFICE VACANCY
MEDICAL/OFFICE MARKET RENT GROWTH
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
$17.00
$18.00
$19.00
$20.00
$21.00
$22.00
$23.00
2011 2012 2013 2014 2015 2016 2017 2018 YTD
Rent PSF Rent Growth YOY
POPULATION BY AGE
0
5,000
10,000
15,000
20,000
25,000
0-9 10-19 20-29 30-39 40-49 50-59 60+
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
<$25,000
$25,000 - $50,000
$50,000 - $75,000
$75,000 - $100,000
$100,000 - $125,000
$125,000 - $150,000
$150,000 - $200,000
$200,000+
HOUSEHOLD INCOME BRACKETS
MARKET AMENITIES
Mixed-use community designed for luxury living with lifestyle retail components. The 2.7-acre park will feature over 400 high end apartments along with a Sprouts grocery store, an REI outdoor retailer, full-service restaurant options and boutique fitness and personal care options. Additional park aspects will include green roofs, bike sharing stations and alternative energy sources.
THE PROMENADE AT UPPER DUBLIN
Regency at Upper Dublin is an upscale, active adult community in Dresher, Pennsylvania developed by Toll Brothers in 2016. This 55+ complex sits on a 25-acre tract and hosts 105 luxurious single-family homes. Seniors living within the facility have access to a range of amenities not limited to a swimming pool, an outdoor patio, a bocce ball court, exercise rooms and a 6,200 square-foot clubhouse that plays host to weekly recreational activities. Regency is conveniently located down the street from a large shopping center and less than a mile from The Homestead Professional Center.
REGENCY AT UPPER DUBLIN
The Fresh Market is a gourmet supermarket that connects the community to locally based produce cultivators. Located on Welsh road, only a short walk from the Homestead Professional Center, the Fresh Market is one of many premier amenities that has catalyzed an influx of residents to the Horsham market.
THE FRESH MARKET
• MaGerks Pub• Miller’s Ale House • Brick House Tavern • Corner Bakery, MOD Pizza, QDOBA Mexican Eats
LOCAL RESTAURANTS
BET Investments is currently in the midst of their development at the intersection of Witmer Road and Dresher Road. The project, which was an existing office/flex building, is under construction and set to have a new 300+ unit apartment complex.
100 WITMER ROAD
3 Village Road, Horsham, PA Offering Memorandum
AREA AMENITIES
REGENCY AT UPPER DUBLIN
� Candlewood Suites Willow Grove � Courtyard by Marriott Willow Grove � Days Inn Horsham � Extended Stay America Dresher Rd. � Extended Stay America Welsh Rd. � Fairfield Inn & Suites Willow Grove � Hampton Inn Willow Grove � Homewood Suites Willow Grove � Residence Inn Willow Grove � SpringHill Suites Willow Grove � TownePlace Suites Horsham
MAPLE GLENSHOPPING CENTER
Finance: � Wells Fargo Bank
Fitness, Health & Beauty: � Dublin Cleaners
Restaurants & Bars: � Gio’s Pizza Rustica
Shopping: � Giant � Wine & Spirits
Finance: � Bank of America
Fitness, Health & Beauty: � European Wax Center � Floris NailS � Great Clips � Ulta Beauty
Restaurants & Bars: � Anthony’s Coal Fired Pizza � Corner Bakery Cafe � Qdoba Mexican Grill
Shopping: � The Fresh Market
HORSHAMGATE
Finance: � Citizens Bank
Fitness, Health & Beauty: � European Wax Center � Floris Nail � Great Clips � Ulta Beauty
Restaurants & Bars: � Cold Stone Creamery � Elevation Burger � Jamba Juice � MOD Pizza � The Sweet Taco � Qdoba Mexican Grill
Shopping: � Lowe’s � Pet Smart � Sam’s Club � T-Mobile � Walmart
WILLOW GROVEPOINT
LODGING
Residential: � 403 Luxury Apartments
Restaurants & Bars: � Redstone Grill
Shopping: � REI
Overview: � 128,000 SF of Retail � 25 Acre Site
PROMENADE ATUPPER DUBLIN
Residential: � 55+ Community � 105 Single Family Homes
Fitness, Health & Beauty: � Bocce Ball Courts � Clubhouse � Exercise Rooms
REGENCY ATUPPER DUBLIN
Fitness, Health & Beauty: � Remix Fitness � Sola Salon Studios
Shopping: � AT&T
WESTGATE
Fitness, Health & Beauty: � Commonwealth National Golf Club � LA Fitness � Lifetime Fitness � Old York Road Country Club
Restaurants & Bars: � Bonefish Grill � Brick House Tavern & Tap � Carrabba’s Italian Grill � Mad Mex � MaGerks Pub & Grill � Miller’s Ale House � Ooka Sushi Hibachi Steakhouse � P.J. Whelihans Pub (Opening Soon)
Shopping: � The Home Depot � Verizon Wireless
NON-ANCHOREDAMENITIES
Welsh Road
63
3 VILLAGE ROAD
HORSHAM GATE
PROMENADE AT UPPER DUBLIN
WILLOW GROVE POINTE
WEST GATE
276
EXIT 343
611
611
Blair
Mill
Road
Dresh
er R
oad
Witmer Road
611
HOME DEPOT
MILLER’S ALE HOUSE
BRICK HOUSE TAVERN
COURTYARD BY MARRIOTT
SPRINGHILL SUITES CARRABBA’S
HAMPTON INN
OOKA SUSHI HIBACHI
RESIDENCE INN
EXTENDED STAY AMERICA
EXTENDED STAY AMERICA
P.J. WHELIHAN’S PUB
CANDLEWOOD SUITES
FAIRFIELD INN & SUITES
WILLOW POINTE APARTMENTS
JEFFERSON-ABINGTON MEDICAL CAMPUS
WILLOW POINTE APARTMENTS
100 WITMER RD DEVELOPMENT
3 Village Road, Horsham, PA Offering Memorandum
SALE COMPSThe following six regional commercial office properties sold at a price range between $185 - $254 PSF. Each of these properties contained a similar square footage footprint to that of 3 Village and were sold to owner/user investors who still hold tenancy within the respective buildings. 3 Village is positioned to generate a price at the high end of this range due to its comparable market presence with the expansion capability to develop an additional 20,000 SF.
Address
Sale DateSellerBuyer Sale Price Size (SF) Price Per SF Notes
146 Montgomery Avenue Bala Cynwyd, PA 19004
� 10/10/2017 � JPH Realty � Hms Associates
$3,300,000 16,188 $203.85 � Sold to corporate owner/user � Office/Medical Tenants
401 E Elm Street Conshohocken, PA 19428
� 8/15/2018 � Shaffer Builders � Urbane Partners
$2,400,000 13,000 $184.62 � 33% occupied at sale � Sold to owner/user
9432 Roosevelt Boulevard Philadelphia, PA 19115
� 1/23/2019 � Mehdi Nikparvar � Law Enforcement
Health Benefits Inc.
$3,000,000 15,014 $199.81 � 0% occupied at sale � Sold to owner/user
1030 Continental Drive King of Prussia, PA 19406
� 9/24/2018 � Irwin & Leighton � BlackTree Healthcare
Consulting
$4,325,000 21,339 $202.68 � Sold to corporate owner/user
166 E Levering Mill Road - WWDB Bldg Bala Cynwyd, PA 19004
� 9/15/2016 � Belmont Dev Ltd � 166 Levering Mill, LLC
$4,000,000 19,190 $208.44 � Sold to owner/user
1036 Easton Road - Frenius Med. Group Willow Grove, PA 19090
� 2/1/2016 � StbWell, LLC � TriStar Drexel Hill LP
$2,700,000 10,631 $254.00 � Leased to Frenius Medical Group
LEASE COMPSThe following lease comparables represent office properties located around the Horsham and Fort Washington market who are currently charging between $18 - $35 PSF to a mixed tenant group of both office and medical occupants. The Homestead Professional Center will be able to execute leases at a rental rate of approximately $19.00 PSF within the office suite and $23.00 PSF NNN within the medical office suites. The premium rate within the medical office units is attributable to the spaces already being fit out for medical use.
AddressSize (SF)Avg. Rent Per SF
ExpenseRecoveries
Number ofTenants
YearBuilt
ParkingRatio
1021-1031 Old York Road Abington, PA 19001
� 14,000 � $19.00
Net5
� Robert Carber Dentist (3,000 sf) � Limberakis Family Dentistry (3,000 sf)
2007 2.93/1,000 SF
1055 Virginia Drive Fort Washington, PA 19034
� 16,000 � $18.00
Net3
� Korea Week (1,200 sf) � Clean All USA (8,000 sf)
1969 3.12/1,000 SF
300 Welsh Road - Building 2 Horsham, PA 19002
� 17,750 � $25.00
MG Electric3
� Center for Interventional Pain & Spine (3,529 sf) � Center for Vein Restoration (3,456 sf)
1980 6.67/1,000 SF
Old York & Susquehanna Roads Abington, PA 19001
� 35,000 � $35.00
Net1
� CHOP (Turnkey Fitout) � Build-to-suit delivery February 2021
2021 N/A
3 Village Road, Horsham, PA Offering Memorandum
FINANCIAL ANALYSISOWN VS. LEASE
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Notes
Own Option
Revenue
Suite SF Rent (NNN)
1 3,373 $23.00 $77,579 $79,131 $80,713 $82,327 $83,974 $85,653 $87,367 $89,114 Abington Endo / Garden Suite
100 5,266 $23.00 $121,118 $123,540 $126,011 $128,531 $131,102 $133,724 $136,399 $139,127 $141,909 $144,747 Suburban Urology
101 1,563 $23.00 $35,949 $36,668 $37,401 $38,149 $38,912 $39,691 $40,484 $41,294 $42,120 Vacant Unit
200 6,161 $19.00 *Assumes unit stays occupied by buyer
Potential Gross Revenue $121,118 $159,489 $240,258 $245,063 $249,965 $254,964 $260,063 $265,264 $270,570 $275,981
Costs to Owner
Turnover / Downtime $(40,117) $(11,907) $(25,696) 30% of revenue in roll over years
Tenant Improvements* $(105,320) $(46,890) $(67,460) $(31,596) $(14,067) $(20,238) New TI: $20 PSF; Renewal TI: $30*
Leasing Commissions $(52,660) $(15,630) $(33,730) $(15,798) $(4,689) $(10,119) $10 PSF for new; $5 PSF for renewals
Owner Expenses $8.00 PSF $(39,488) $(26,984) $(11,846) $(8,095) $(12,638)Only for vacancies as they are net even vs. leasing option; Assumes 30% expense margin during rollover years
Debt Service $(176,422) $(176,422) $(176,422) (176,422) $(176,422) $(176,422) $(176,422) $(176,422) $(176,422) $(176,422) See Acquisition Assumptions
Cash Flow After Debt $(131,654) $53,053 $202,904 $313,705 $323,507 $234,148 $304,946 $285,415 $364,717 $375,540
Replacement Reserve $0.40 PSF $(6,545) $(6,676) $(6,810) $(6,946) $(7,085) $(7,226) $(7,371) $(7,518) $(7,669) $(7,822)
Cash Flow After Reserves $(850,000) $(138,199) $46,377 $196,095 $306,759 $316,422 $226,922 $297,575 $277,897 $357,049 $367,718
Net Cash Flows
Sale Price at Exit $4,144,581 Purchase Price inflated 2% per year
Loan Balance at Sale $(1,862,542)
Net Cash Flow $(850,000) $(138,199) $46,377 $196,095 $306,759 $316,422 $226,922 $297,575 $277,897 $357,049 $2,649,757
Lease Option
SF Rent (NNN)
6,161 $23.00
$(141,703) $(145,954) $(150,333) $(154,843) $(159,488) $(164,273) $(169,201) $(174,277) $(179,505) $(184,890)
NPV of Owning The Homestead Professional Center $1,417,617
NPV of Leasing The Homestead Professional Center $(1,069,877)
ACQUISITION ASSUMPTIONS
PURCHASE PRICE$3,400,000
LTV75%
INTEREST RATE4.75%
AMORTIZATION25
INFLATION2%
NPV DISCOUNT RATE8%
The below analysis highlights quantified the pretax advantages of owning vs. leasing. This assumes a 6,161 SF tenant owns 3 Village and leases the remaining three suites at market rates over a two year period. It assumes market assumptions for turnover, tenant improvements, lease commissions and operating expenses over a 10 year period. Compared to leasing the same square footage in the market, over $2,000,000 can be saved by owning 3 Village over the 10 year span.
DEBT INFORMATIONAvison Young will identify local banks and SBA lenders that will be aggressive in placing a loan on the property. Because the Homestead Professional Center is an ideal purchase for an owner/user, an SBA loan could be a solution for a company that lacks the down payment necessary with a traditional bank.
Local Bank SBA Loan
LTV 75% 90% plus improvement and moving costs
Interest Rate 4.75% 7%+ floating
Amortization 25 25
Term 10 Years Fully Amortizing
Information contained herein from sources deemed reliable. We have no reason to doubt its accuracy but make no warranty or representation. All information is submitted subject to errors, omissions, change, withdrawal without notice and any special listing conditions of the owner.
© Avison Young - Philadelphia LLC. All rights reserved.
For More Information, Please Contact:
Michael Sweeney, Vice PresidentD 610 557 0504C 610 724 [email protected]
Adam Gillespie, PrincipalD 610 276.3153C 215 384 [email protected]
Jim Pasquarella, CCIM, Senior Vice PresidentD 610 557 0501C 215 654 [email protected]
Avison Young - Philadelphia300 Barr Harbor Drive, Suite 150West Conshohocken, PA 19428T 610 276 1080
3 Village Road, Horsham, PA Offering Memorandum
Suburban Philadelphia Office300 Barr Harbor Drive
Suite 150West Conshohocken, PA 19428
T 610 276 1080 | F 610 276 1079
Center City Philadelphia Office1835 Market Street
Suite 1010Philadelphia, PA 19103
T 215 383 2690 | F 610 276 1079
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