riverport portfolio

RIVERPORT
PORTFOLIO
EX E CUT I V E
S U MMA RY
A Class A Office Portfolio Anchored By Investment Grade Tenants
Located in Maryland Heights, Missouri
Holliday Fenoglio Fowler, L.P. (“HFF”) a Missouri licensed real estate broker
RIVERPORT
PORTFOLIO
E XE CU TIV E SU M M A RY
THE RIVERPORT PORTFOLIO IS AN ICONIC OFFICE
C A M P U S T H AT T R A N S C E N D S T H E L O C A L A R E A
Holliday Fenoglio Fowler, L.P. (“HFF”) a Missouri licensed real estate broker is pleased
to present the 100% fee simple interest in The Riverport Portfolio (the “Property”), two
Class A office buildings totaling 459,665 RSF in St. Louis, Missouri. The Property offers
an investor incredible contractual income of over $56.9 million. With a weighted average
lease term of 6.1 years, The Riverport Portfolio, which is currently 99.4% leased, offers
a rare combination of high profile asset, investment grade tenancy, unmatched amenities
and premier location. The Property is the epicenter of growth for the Maryland Heights
submarket. The Riverport Portfolio tenants have exhibited a long-term commitment to
the buildings because of the tremendous access to both workforce housing in St. Charles
County and executive housing in West County culminating in an ideal corporate location.
The offering is a rare occasion for an investor to purchase an office portfolio that has
the best location in Maryland Heights, efficient floor plates, superior amenities, and
unobstructed views of the surrounding affluent communities. The Riverport Portfolio
has been the destination of choice since its development through a combination of its
irreplaceable location and best-in-class construction. This unique combination results in
its ability to attract the area’s highest quality tenancy and rental rate premium.
Furthermore, The Riverport Portfolio is strategically located at the intersection of I-70
and Maryland Heights Expressway surrounded by affluent suburban communities of
the St. Louis County. The Property is only 10 miles away from Lambert International
Airport providing easy access for tenants. The Riverport Portfolio income stream
is anchored by the The Boeing Company (S&P: A), SunEdison (S&P: B-), Charter
Communications (S&P: BB-) and Essence Group Holdings. These tenants combined
cover 90% of the rentable square feet of the Property. Additionally, there is no
tenant rollover during the first three years until October 2018. The Riverport
Portfolio is 99.4% leased to investment grade and high quality tenancy with a
weighted average lease term of 6.1 years. Over $56.9 million in contractual rent from high quality tenancy with 6.1 years of weighted average lease
term provides excellent downside protection while also offering substantial upside from owning the premier asset in the submarket, with substantial
projected rent growth and rates well below replacement cost rents of $35 PSF gross.
Key Property Statistics
The Riverport Portfolio
Address:
City, State:
Year Built:
Rentable Area:
Tenancy:
(notable tenants)
Number of Stories:
Occupancy:
Average Floor Plate:
Finished Ceiling Height:
Parking:
|
2
Maryland Heights, MO
1991-1999
459,665
Multi-Tenant
13900 Riverport Drive
13900 Riverport Drive
Maryland Heights, MO
1999
141,774
Multi-Tenant
Essence Group Holdings
The Boeing Company (S&P: A)
Varies
99.4%
Varies
8’ - 12’
6.00/1,000 RSF
3
100.0%
47,258
10’
6.0/1,000 RSF
Riverport Tower
13736 Riverport Drive
Maryland Heights, MO
1991
317,891
Multi-Tenant
SunEdison (S&P: B-)
Charter Communications (S&P: BB-)
The Boeing Company (S&P: A)
11
98.8%
28,899
8’ - 12’
6.0/1,000 RSF
RIVERPORT
PORTFOLIO
E XE CU TIV E SU M M A RY
SURGING RENTAL RATES PROJECTED FOR ST. LOUIS AREA
Ideal Market Timing
The St. Louis market has been primed for an economic breakout and it came in 2014. The office market experienced over 474,000 RSF of net positive
absorption at the end of 2014. Overall, the market absorbed over 680,000 RSF in 2014. The overall vacancy rate for class A office buildings in North County
is an impressive 9.2%, while the St. Louis market overall is a meager 9.4%. Asking rents for office space hit historic highs and it is becoming more difficult
for tenants to lease large blocks of contiguous space. This rising rental rate trend is projected to continue. CBRE Torto Wheaton Research projects rental
rates in Maryland Heights to increase 5.9% in 2015, 7.3% in 2016, 7.8% in 2017, 7.2% in 2018, and 6.2% in 2019. These rental rate increases are easily
achieved given the discount to current replacement cost rents of $35 PSF gross The Riverport Portfolio offers a new investor an opportunity to purchase the
best asset in a surging leasing market, while capitalizing on today’s historically low interest rate environment.
Institutional Ownership
The Riverport Portfolio has been institutionally owned and maintained since the properties were developed. The previous and current owners have a track
record of immaculately maintained and well-managed properties. The ownerships did not hesitate to make changes or renovations that will ensure their
properties stay on the cutting edge of the competitive property market. The Riverport Portfolio provides investors the opportunity to acquire a Class A
office campus with burgeoning tenant base at a substantial discount to replacement cost, providing a competitive basis for years to come. Built to a higher
standard than current office developments, and institutionally owned and maintained, the cost to replicate the asset today in St. Louis would cost in excess
of $300 per square foot.
Hollywood Casino
& Hotel
13900 Riverport Drive
University
of Phoenix Holiday Inn
Express
Riverport Tower
Riverport I
Riverport II
1400 Riverport
Drive
Riverport
Distribution Center
3251 Riverport
Lane
13655 Riverport
Drive
13690 Riverport
Drive
rive
tD
por
er
Riv
Wingate By
Wyndham
Homewood Suites
by Hilton
|
3
RIVERPORT
PORTFOLIO
E XE CU TIV E SU M M A RY
INVESTMENT GRADE ANCHOR TENANCY
High Profile Quality Asset
Riverport Tower was completed in 1991 by Duke Realty and projects an image that stands
the test of time. 13900 Riverport Drive was completed in 1999 and complements Riverport
Tower by offering large efficient floorplates. Riverport Tower sits prominently in the center of
Riverport Drive Campus, the premier office park in Maryland Heights. Standing 11 stories tall
with abundant parking, the property is highly visible from Maryland Heights Expressway and
is right off of I-70, the main east/west artery for St. Louis. Floor to ceiling windows provide
maximum light and scenic views. The breathtaking views to the east provide visibility of the St.
Louis Arch from the upper floors. To the west, views include the Missouri River valley and rolling
hills of western St. Louis County and St. Charles County. The Riverport Portfolio has the best-insubmarket assets that attracts and retains loyal tenants as evidenced by The Boeing Company,
SunEdison and Essence Group Holdings.
Office Space by Industry
Business Services
20%
Aerospace
28%
F.I.R.E
8%
Health Care
23%
Manufacturing
21%
Long Term Anchor Tenants
The anchor tenants at The Riverport Portfolio are some of the most established and highly
regarded firms in St. Louis and the country. The Property’s tenant roster includes St. Louis’
business community leaders and acts as a building amenity to prospective tenants. This
diverse tenant base insulates an investor from any industry specific risks. Over $56.9 million
in contractual rent from high quality tenancy with 6.1 years of weighted average lease term
provides excellent downside protection while also offering substantial upside from owning the
premier asset in the submarket, with substantial projected rent growth and rates well below
replacement cost rents of $35 PSF gross.
The Riverport Portfolio possesses an outstanding investment profile, offering a roster of publicly
traded companies that is complemented by superb duration. The strong presence of investment
grade tenants ensures investors stability of cash flow and ease of obtaining the best possible
financing, further enhancing returns.
Investment Grade
Not Rated
23%
Non-Investment
Grade
48%
Investment
Grade
29%
Investment Grade
Non-Investment Grade
Not Rated
The Boeing Company (S&P: A)
The Boeing Company (“Boeing”) is the world’s largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security
systems. In Missouri alone, there are 612 Boeing Supplier/Vendor locations, $860 million of Boeing Supplier/Vendor purchases, supporting approximately
29,000 direct and indirect jobs, and there are nearly 15,000 Boeing employees. The credit quality and presence of Boeing at The Riverport Portfolio helps
improve the city’s image and makes the Property highly attractive. According to Christopher Chadwick, president of Boeing’s Defense, Space & Security
division, Boeing chose St. Louis “to leverage the skill of our employees.” Additionally, Boeing considered other locations, but St. Louis “became a real natural
(for the work).”
SunEdison (S&P: B-)
SunEdison is one of the world’s largest renewable energy asset managers and provides customers with asset management, operations and maintenance,
monitoring and reporting services. The company was established in St. Peters, Missouri in 1959 and employs over 5,600 employees worldwide. They have
been awarded more than 750 patents to date. Shortly after taking occupancy at Riverport Tower in 2014, SunEdison is expanding from 56,842 RSF to 86,984
RSF by 2016 (occupancy is in phases). SunEdison’s corporate headquarters is at Riverport Tower and the firm has committed to the asset and the market for
the long-term as its lease term runs through March 2026.
|
4
RIVERPORT
PORTFOLIO
E XE CU TIV E SU M M A RY
THE RIVERPORT PORTFOLIO OFFERS A COMBINATION OF
AMENITIES THAT SETS IT APART FROM THE COMPETITION
Essence Group Holdings
Essence Group Holdings Corporation is a private holding company with three operating companies: Essence Healthcare, ClearPractice and health management
services provider Lumeris. The company was founded in 2003 and is based in Maryland Heights, Missouri. In 2014, Essence Group Holdings raised $71 million for
health management services in its latest round of financing from investors including Sandbox Industries, BlueCross BlueShield Venture Partners, and Kleiner Perkins
Caufield & Byers. Overall, the company has raised $141 million. In 2009, Essence Healthcare signed a 10-year lease term and moved their headquarters from Creve
Coeur to 13900 Riverport Drive, occupying over 104,000 RSF in the building. The move represents a major expansion for the corporation. “As a growing company, the
13900 Riverport building offers us a great location and the space needed to accommodate future expansion,” said Frank Ingari, CEO of Essence Healthcare. Essence
Healthcare is headquartered at 13900 Riverport Drive and has invested in their space with the opportunity to expand and renew at lease expiration.
Unparalleled Amenity Base
The Riverport Portfolio offers a combination of amenities that sets it apart from the competition – proximate access to major interstates, 6.0/1,000 RSF
parking ratio, high quality finishes, large and efficient floor plates, fitness center, full-service cafeteria, several conference rooms and prominent signage
visibility off of I-70. The immediate surrounding area offers park amenities including three hotels, dining and entertainment. There are over twenty hotels
ensuring hospitality for corporate guests and visitors and several major entertainment centers and shopping centers in the area.
Riverport Tower Lobby
|
5
RIVERPORT
PORTFOLIO
E XE CU TIV E SU M M A RY
St. Louis’ Thriving Submarket
The Property is located in Maryland Heights, minutes to Lambert International Airport, historic St. Charles and several major entertainment centers. The city
is home to nearly 1,700 businesses, with top employers that include Magellan Health Services, Edward Jones, United Healthcare, World Wide Technology
and Hollywood Casino St. Louis. The city is a thriving hospitality center that welcomes nearly 10 million visitors annually. Additionally, Maryland Heights
generates $750 million annually of retail sales, which is one of the highest in the region.
The indicators of success for Maryland Heights are that out of the 90 municipalities in St. Louis County, the city is the second highest in assessed value
and is the second highest in terms of sales tax generation. In 2013, the city was awarded Digital Capital of Missouri by Google. Only one city in each state
is recognized for this award. After receiving such a prestigious award, the growth has not stopped. The city invested a significant amount of revenue into
improving many of the commercial streets, extending the Maryland Heights Expressway, and partnering with the state and St. Louis County in completely
restructuring I-270 at Dorsett Road interchange.
67
The Riverport Portfolio is the epicenter of growth in the submarket. This is best evidenced by Essence Group Holdings relocating their headquarters to
13900 Riverport Drive in 2009. The move from Creve Couer represents a major expansion for the corporation. SunEdison has over 10 years of weighted
average lease term remaining and is headquartered
at Riverport Tower. Furthermore, Charter Communications recently signed a lease extension through
M I S S O
U R
August 2022. The Riverport Portfolio tenants have exhibited
aR long-term
commitment to the buildings because of the tremendous access to both workforce
E R
I
I V
housing in St. Charles and executive housing in West County culminating in an ideal corporated location.
370
67
Blv
SPANISH
LAKE
ST CHARLES
FLORISSANT
HASELWOOD
180
70
Dr
Pa
AFTON
R I V E R
ST. LOUIS
CBD
Jefferson Av
e
TOWER
GROVE
SOUTH
55
70
R
R I
V
30
e
55
3
E
DUTCHTOWN
SOUTH
Rd
Av
e
au Av
I
on Rd
Wats
MacKenzie
MARLBOROUGH
366
Ave
a St
44
Big Bend Rd
ge
Choute
100
Grand Blvd
Arsenal St
WEBSTER
GROVES
rid
d
t Park
way Blvd
Pkwy
RICHMOND
HEIGHTS
al B
Blv
Fores
64
Kingshigh
d Blvd
Big Ben
Forest Park
Skinker
R
d
nR
kso
ing
M
py
Cla
r
rK
tur
Ex
ain
Tw
ark
Na
Chippew
Adams Ave
t
ll S
ROCK HILL
e
Av
n Rd
d
ter R
hes
M a nc
GREATER VILLE
the
CENTRAL
WEST END
CLAYTON
BRENTWOOD
61
Ha
nt
sa
6
115
Lu
ge
40
KIRKWOOD
|
rtin
Delmar Blvd
xpy
LADUE
FRONTENAC
MANCHESTER
Ma
elt E
BALLWIN
Manchester Rd
Dr
UNIVERSITY
CITY
Clayto
New Ballas Rd
LLE
Rd
i 141
Misso ur
ton
Clay
er B
61
Inn
64
OLIVETTE
Lindbergh Blvd
Ladue Rd
TOWN AND
COUNTRY
ris
Flo
340
CREVE
COEUR
LAFAYETTE
FARMS
170
67
Bl v
d
ELD
KSON
LLEY
3
BADEN
PINE LAWN
E
Oli
ve
ve
Ri
JENNINGS
Calvary
Cemetery
Page A
ve
340
367
BELLEFONTAINE Dr
NEIGHBORS rview
NORMANDY
270
V
R I
270
GLASGOW
VILLAGE
I
M I S S S S I P
P I
Creve Coeur
County Park
Woodson Rd
RIVERPOR
T ANN
SAINT
P O R TMARYLAND
FOLIO
HEIGHTS
Chambers Rd
FERGUSON
Ashby Rd
e
Av
41
ge
M
iss
o
BERKELEY
Lambert-St Louis
International Airport
Pa
Creve Coeur
Airport
e Rd
70
1
uri
270
170
Bellefontain
BRIDGETON
O U R I
00
rgh
be
d
Lin
2 miles
Saint Louis
Downtown
Airport
3
RIVERPORT
PORTFOLIO
E XE CU TIV E SU M M A RY
Regional Market Revitalization
St. Louis’ revitalization can be attributed to its unique advantage of having both a highly educated workforce and a relatively low cost of conducting
business, as well as a diverse range of industries. This favorable combination has led several strong industry clusters to gravitate towards the region, such as
life sciences, financial services, IT, and advanced manufacturing. Most recently, St. Louis was ranked in the Forbes Top 100 Places for Business and Careers,
while Missouri has been recognized as a Top 10 Pro-Business state.
•
Strong & Consistent Employment Gains: From Q1 2014 to Q1 2015, the St. Louis market saw an increase of roughly 27,000
jobs, and is projected to continue this rate of growth through Q1 2016.
•
Impressive Annual Job Growth: Forbes has projected an impressive annual job growth rate of almost 2.0% for the St. Louis
MSA, a faster rate than nearby hubs such as Kansas City. Since a low of approximately 1,287,000 jobs in November 2009, St.
Louis has gained 104% of all jobs lost. St. Louis was a Top 20 market for office using job growth according to National Real
Estate Investor.
•
Fortune 500 Magnet: As a whole, St. Louis metro area is home to 18 Fortune 1000 companies, of which 9 are in the Fortune
500, including Express Scripts, Emerson Electric, Monsanto Company, Reinsurance Group of America, Peabody Energy, Ameren
Corporation, and Graybar Electric.
Riverport Tower Lobby
|
7
Contact Information
HFF Chicago
181 West Madison | Suite 3900
Chicago, IL 60602
Telephone: 312.528.3650
Fax: 312.528.3651
Investment Contacts
Jaime M. Fink
Senior Managing Director
312.528.3683
jfink@hfflp.com
Jeffrey M. Bramson
Senior Managing Director
Managing Broker
312.528.3687
jbramson@hfflp.com
Mark B. Katz
Managing Director
312.980.3604
mkatz@hfflp.com
Bryan D. Rosenberg
Analyst
312.300.7282
brosenberg@hfflp.com
Rochelle B. Rafael
Analyst
rrafael@hfflp.com
312.300.7315
Daniel A. Kaufman
Atlanta
Austin
Boston
Charlotte
Chicago
Denver
Dallas
Florham Park (NJ)
Houston
Indianapolis
Los Angeles
Miami
New York
Orange County (CA)
Orlando
Managing Director
312.528.3684
dkaufman@hfflp.com
MO License # 2012028715
Philadelphia
Financing Contacts
Portland (OR)
Michael A. Kavanau
Senior Managing Director
312.528.3676
mkavanau@hfflp.com
Stephen R. Skok
Managing Director
312.528.3681
sskok@hfflp.com
Pittsburgh
San Diego
San Francisco
Tampa
Washington, DC
©2015 HFF (Holliday Fenoglio Fowler, L.P.) and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial
real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform
including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter
at twitter.com/hff.
HFF has been engaged by the owner of the properties to market them for sale. Information concerning the properties described herein has been obtained from sources other than HFF and
we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references to age, square footage, income, expenses and
any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based
on assumptions or due diligence criteria different from that used by a buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained
herein is subject to change.