Peckham Boston Advisors

VERIZON BUILDING

MANCHESTER, NEW HAMPSHIRE


EXECUTIVE SUMMARY

OVERVIEW: Investment opportunity for the acquisition of a flex office industrial space of 56,800 square feet in Manchester, New Hampshire. The building was built in 1987 is located on 5.9 acres, is leased to the New England Telephone subsidiary of Verizon and is operated as a major-client call center. There are 200 parking spaces and all municipal utilities.
TENANT: Verizon New England, Inc

LEASE DATED: September, 1993
ORIGINAL TERM: Ten (10) years with three 5 year options
RENEWAL OPTIONS: The first five year option renewal lease term expiring August 31/2008 has been exercised. Two additional renewal options of five (5) years each remain.
ANNUAL RENTAL: $519,720 ($9.15/sf) commencing September 2003 for five years.
EXPENSE OBLIGATION: The lease is net with the tenant responsible for all expenses except roof structure and hvac.
RENEWAL TERMS: The lease is renewable for two additional five year terms commencing in 2008 at the higher of market or $9.00/sf and the higher of $9.50/sf or market rate for the five year term commencing in 2013.
LOCATION: The property is ideally located in a business park west of Manchester, less than one mile from Interstate 93 which connects to the capital city of Concord to the north and to Boston, Massachusetts, to the south. The Manchester PMA and Hillsborough County are among the fastest growing areas in the Greater Boston Metropolitan area and the most cost effective area for business growth in the metropolitan area.
MARKET DATA: Traditional office space in the Manchester market, without the efficiencies of this size floor plan for this type of operation, are priced at $18-$19 per square foot gross rent, which translates into a triple net equivalent of $11-$12 per square foot.
SALE PRICE: $5,100,000
TERMS: Cash over the existing debt financing originally $3,400,000. Current loan with an approximate balance of $3,300.000 matures January 1, 2013 with an interest rate of 6.4% and an amortization of 20 years. Annual debt service is $ 303,935. Current lender requires an annual escrow of $62, 480 for future TI and leasing commissions.


We will be happy to provide additional information regarding this offering.
Upon return of the attached confidentiality agreement we will provide comprehensive detail.

CASH FLOW ESTIMATE

All information is from sources we deem reliable and is submitted subject to errors, omissions, prior sale, lease, withdrawal without notice, or change in price and conditions. While we do not doubt its accuracy, no representation thereof is made. The estimates below are unverified and must be verified by any prospective purchaser.

1. Annual Rent: $519,720
2. Fit up Reserve 62,480
3. Est. Repair and Replacement Reserve 20,000* * Est. PFA
4. Net before Debt Service 437,240
5. Debt Service 303,935
6. Estimated cash flow $133,305


Estimated NOI before fit up reserve: $499,720
Cap at $5,500,000 9.1%

Net after fit up reserve $437,240

Cash Flow after debt service: $133,305
Based on $2,200,000 down at $5.5M 6.05%

Note At renegotiated price of $5,100,000 cash required is $1,800.000

Cap: 9.8%
Cash on Cash: 7.4% (After funding of $62, 480 fit up reserve)

VERIZON LEASE ANALYSIS

Verizon's corporate policy is to shorten the term of its triple net leased space across the Country, taking the risk of more variable occupancy cost in exchange for greater flexibility, irrespective of the long term business strategies and market presence central to their business planning.

The operating success of the business units occupying this building, combined with the unlikely event that Verizon could duplicate this space at a lower cost after necessary tenant improvements are made and technology infrastructure added, promise a high retention factor for this tenant.

The space is configured as 100% office with a ring of offices on the exterior and a large area of partitioned office space at the center. Verizon has put in excess of $40 per square foot in finishes and technology support with carpeting and drop ceilings throughout! Efficient lighting systems for computer screened cubicles and computer and telecommunications wiring throughout. With redundant power and below floor wiring, the space has functioned optimally for Verizon as a call center.

VERIZON RETENTION ANALYSIS

Verizon has occupied the building for 10 years and has a substantial investment in modular office systems and finishes, information technology infrastructure, and telecommunications systems support. The property is used by the Network/Large Business Group units that operate a customer service facility on site. The building is built out to a high standard with a high quality security system, redundant HVAC and electrical capacity, raised floor and other specialized features.

Verizon has a major corporate visibility in Manchester (the minor league professional hockey team plays in Verizon Arena.) The New England Telephone subsidiary of Verizon that serves this market, and is the lessee of the subject property, is deemed by Wall Street analysts to be (along with Virginia) one of the two top regional operating subsidiaries of Verizon. The efficiency of the call center operation, the cost effective labor pool in the Manchester market, and the competitive barriers to entry for Verizon in this market make retention prospects for Verizon, as a lessee, a high probability. The lower end of flex space available for sale is in inferior locations in the Manchester market and is available for purchase at $50 per square foot. To add the infrastructure and finishes comparable to this space is estimated to cost in excess of $45 per square foot, exceeding the purchase price for this property even with an existing credit tenant in place.

Traditional office space in the Manchester market, without the efficiencies of this size floor plan for this type of operation, are priced at $18-$19 per square foot gross rent, which translates into a triple net equivalent of $11-$12 per square foot.


Contact Information

John M. "Jack" Peckham III CCIM, CIPS, RECS
Peckham Boston Advisors
(Founded 1963 - Our 47th Year)
Four Longfellow Place, Suite 2003
Boston, MA 02114
Phone 617 523 4441 Ext. 6

Email: info@REOtoCash.com
Web: www.REOtoCash.com

All information is from sources we deem reliable and is submitted subject to errors, omissions, prior sale, lease, withdrawal without notice, or change in price and conditions. While we do not doubt it's accuracy, no representation thereof is made.

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