Raytheon - Marcus & Millichap€¦ · Albuquerque, NM 87123 Offering Highlights Income Income...

Offering Memorandum

RaytheonAlbuquerque, NM

The information contained in the following offering memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and it should not be made available to any other person or entity without the written consent of Marcus & Millichap. By taking possession of and reviewing the information contained herein the recipient agrees to hold and treat all such information in the strictest confidence. The recipient further agrees that recipient will not photocopy or duplicate any part of the offering memorandum. If you have no interest in the subject property at this time, please return this offering memorandum to Marcus & Millichap.

This offering memorandum has been prepared to provide summary, unverified financial and physical information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCBs or asbestos, the compliance with local, state and federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this offering memorandum has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Prospective buyers shall be responsible for their costs and expenses of investigating the subject property.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONTACT THE MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

Confidentiality Agreement

exclusively listedExclusively listed by:

OFFICES NATIONWIDE

www.marcusmillichap.com

Patrick O’MearaDirector phOENIx OFFICETel: (602) 687-6756Fax: (602) [email protected] License: AZ License BK 093255

Jamie MedressSenior Vice president Investments phOENIx OFFICETel: (602) 687-6778Fax: (602) 687-6717 [email protected] License: AZ License SA108228000

Investment Sales: Debt & Structured Finance:

Robert GallegosLicense: NM 17019

New Mexico Broker of Record:

Mark J. RubleVice president Investments phOENIx OFFICETel: (602) 687-6766Fax: (602) 687-6710 [email protected] License: AZ License SA550593000

Cyber EngineeringResearch Institute

Gib

son

Blvd

SE

Dev

elop

men

t Rd

SE

Res

earc

h R

d SE

Innovation Pkwy SE

International ProgramsBuilding

International ParkwayOffice Center

SS&TP Program Office

Emcore Fiber Optics

Emcore Photovoltaics

HEEL USA

FASORtronicsTEAM technologies

Analytical Solutions

Computer ScienceResearch Institute

International Information Technology CompanyCSU-STP

Sandia Synergy CenterMoog- CSA Engineering

MOOGAdvanced Nuclear Energy Programs Group

Kirtland Partnership CommitteeSSTPDC

Air Productsand Chemicals

Applied Technology Associates ATAMIR WSMR, IVATA Aerospace, JV

La Luz Early Childhood CenterSandia Laboratory Federal Credit Union

Eubank Blvd SE

MCAD TechnologiesNanogenesis

Gate/Entrance to Kirtland Air Force Base and Sandia National Laboratories

Raytheon Telemetry Testing Facility

raytheon

ExECuTIvE SuMMARyOffering Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Investment Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

PROPERTy DESCRIPTIONProperty Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Regional Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Local Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Aerial Photograph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Market Aerial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Site Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Parcel Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

FINANCIAl ANAlySIS Schedule of Prospective Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . 18

Tenant Overview and Lease Abstract . . . . . . . . . . . . . . . . . . . . . . . 19

MARkET OvERvIEwLocation Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Albuquerque MSA Market Overview . . . . . . . . . . . . . . . . . . . . 23-29Demographic Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-32

Table of Contents

summaryE x E C U T I V E S U M M A R y

EXECUTIVE SUMMARY

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap ACT ID U0070164

2

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fin

an

cia

la

na

lyS

iSc

om

Par

ab

lES

ma

rk

Et

ov

Er

viE

wraytheon

OFFERING SUMMARY Offering price $18,734,000

Cap Rate 7.00%

Cap Rate in 2016 8.08%

Gross Leasable Area (GLA) 102,373 SF

price/SF (GBA) $182.99

Year Built 2002-2006

Lot Size 6.0135 Acres

Eubank Boulevard Total 82,333 SF

Office 40,890 SF

Manufacturing/Labs 36,263 SF

Machine Shop 5,180 SF

Development Road Total 20,040 SF

Office 13,240 SF

Manufacturing/Labs 6,800 SFLEASE SUMMARY Original Lease Term 10 Years, 2 months

Rent Commencement Date 6/14/2011

Lease Expiration Date 8/31/2021

Remaining Lease Term Approximately 8 Years

Options Five, Three -Year

Increases See pg. 19

LANdLORd RESpONSIbILItIES"Base Building" which includes the following:

(i) the foundation, concrete floors, exterior walls, and load-bearing interior walls and columns of the building shell for each Building;(ii) structural elements of the roof of each Building; (iii) electrical, plumbing, fire sprinkler, water and sewer systems (and other utility systems) stubbed to the existing locations on the exterior of each Building and otherwise in a condition to receive and be connected to distribution of such systems within the applicable Building by Tenant.

RAYthEON1300 Eubank Boulevard and 10421 Development Road SE Albuquerque, NM 87123

Offering Highlights

IncomeIncome $1,311,349.00

CAM Reimbursements $648,350.00

Total Income $1,959,699.00

eXPenSeS

Janitorial $67,209.00

Utilities $338,042.00

Repairs and Maintenance $90,832.00

Landscaping & parking $36,616.00

Security & Fire $4,920.00

Management Fee $42,095.00 3%

General & Administrative $8,581.00

Insurance $30,056.00

Real Estate Taxes $30,000.00

Total expenses $648,350.00 $6.33 /SF

INcOME & ExpENSES


3

EXECUTIVE SUMMARY

EX

EC

UT

IVE

SU

MM

AR

YP

Ro

PE

RT

YD

ES

CR

IPT

Ion

FInA

nC

IAl

An

AlY

SIS

Co

MPA

RA

blE

SM

AR

kE

To

VE

RV

IEw

raytheon

Marcus & Millichap has been selected to exclusively market for sale the Raytheon buildings located in the Sandia Science & Technology Park of Albuquerque, New Mexico . The subject property consists of two freestanding buildings used as flex and office space and located on 6 .0135 acres of land . The total building area is 102,373 square feet divided between the following two addresses: 1300 Eubank Boulevard SE (82,333-square-foot building) and 10421 Development Road SE (20,040-square-foot building) . The buildings were constructed between 2002 and 2006 .

Raytheon, at its sole cost and expense (+/- $1 million), recently completed a 1,500-square-foot building expansion on the east side of the Eubank Building . The expansion included the addition of a secured facility . This is a mission critical facility for Raytheon for national non-lethal defense projects and was originally a build-to-suit for Ktech, which was recently acquired by Raytheon in June 2011 .

The existing lease is a 10-year, triple-net lease (net of the “Base Building” as defined in the Landlord Responsibilities on Page 2) with Raytheon Company . There are approximately eight years remaining on the primary term and five, three-year renewal options . The rent increases approximately 15% in year six (2016), approximately 17 .5% in the first option, and approximately 9 .25% in each succeeding option .

The main building located at 1300 Eubank Boulevard SE is vested in fee-simple by the City of Albuquerque, and leased to Landlord pursuant to the terms and provisions of the City of Albuquerque, New Mexico Taxable Variable Rate Demand Industrial Revenue Bonds (Ktech Corporation Project – “IRB”) . Landlord subleases this portion of the premises to Tenant pursuant to the Lease . This portion of the property retains tax-exempt status until the Bond matures in November 2022 . At Bond maturity the landlord has the right and obligation to purchase the property for $1 .00 from the City .

Significant real and personal property tax and compensating tax exemptions occur through the use of an Industrial Revenue Bond (IRB) . An IRB is a loan from the bond purchaser to a company where the loan proceeds and repayment flows through a governmental issuer . Instead of purchasing a facility directly, companies enter into a lease with the issuer, provided the company will lease the facility from the issuer and at end of lease, purchase the facility from the issuer for a nominal amount .

IRBs can also be used when a developer is involved . A separate series of bonds is issued to finance the developer’s real estate and building costs and the tax savings of the IRB can flow through to the ultimate user through a sublease . The benefit of remaining property tax exemptions can be passed on to the new owner or flow through a lease in the event of a sale or lease to a new user under certain qualifying conditions .

City Council (or another taxing authority) must vote to induce an IRB, and the community does not lend its credit to an IRB . The company must secure its own purchaser of IRBs or the company can purchase its own IRB . Amount of property tax exemption and term of bond is determined (subject to negotiation) by the appropriate governing entity in each community .

Raytheon Company, with 2012 sales of $24 billion and 68,000 employees worldwide, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world . With a history of innovation spanning 91 years, Raytheon is composed of four major businesses: Integrated Defense Systems; Intelligence, Information and Services; Missile Systems; and Space and Airborne Systems . Headquartered in Waltham, Massachusetts, Raytheon Company is traded on the New York Stock Exchange under RTN and ranks No . 104 on the Fortune 500 . The company is rated A- by Standard & Poor’s and Fitch and A3 by Moody’s .

The subject site was formally Ktech Corp ., one of Albuquerque’s leading high-tech companies, and Ktech was acquired by Raytheon in 2011 (except for the real estate) . Ktech sold the real estate to Eu-Ray Investments and in turn the building was leased back to Raytheon . The acquisition of the 40-year-old, 330-employee Ktech, was consummated in order to integrate the company’s expertise in pulsed power, directed energy, and telemetry into its missile systems business . Raytheon Missile Systems, one of four Raytheon divisions, is the largest provider of weapons systems to the U .S . and over 50 allied countries .

Investment Overview


5

EXECUTIVE SUMMARY

EX

EC

UT

IVE

SU

MM

AR

YP

Ro

PE

RT

YD

ES

CR

IPT

Ion

FInA

nC

IAl

An

AlY

SIS

Co

MPA

RA

blE

SM

AR

kE

To

VE

RV

IEw

raytheon

Summary of Terms

Interest Offered

Fee simple interest (including the IRB) in Raytheon, a 6 .0135 acre parcel consisting of two lots and a total of 102,373 square feet of gross leasable area located at 1300 Eubank Boulevard SE and 10421 Development Road SE Albuquerque, NM 87123 .

Terms of the Sale

The property is being offered at $18,734,000 . For further details, please review the Financial Analysis section of this offering memorandum .

Property Tours

Prospective purchasers are encouraged to visit the subject property prior to submitting offers . However, all property tours must be arranged with the Marcus & Millichap listing agents . Please do not contact Tenant, on-site management or staff without prior approval .

■ Two-building office-lab-manufacturing facility located on 6 .0135 acres of land

■ Tenant recently invested approximately $1 million in a 1,500-square-foot addition to the property which includes a secured facility

■ 10 year (approximately 8 years remaining), triple-net (NNN) lease (net of the “Base Building” as defined in the Landlord Responsibilities on Page 2)

■ Unique opportunity to acquire a lease of a Fortune 500 company located in the Sandia Science & Technology Park

■ Cap rate increases to 8 .08% in 2016

Investment Highlights

descriptionP R O P E R T y D E S C R I P T I O N

ProPerty DescriPtion

9

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



thE OFFERINGproperty Raytheon

property Address 1300 Eubank Boulevard SE and 10421 Development Rd SE

Albuquerque, NM 87123

SItE dEScRIptION Gross Leasable Area: 102,373

Floor Aera Ratio: 38.50%

parking Spaces: 244

parking Ratio: 2.32 spaces per 1,000

Landscaping: xeriscape / Desert

Topography: Level and at grade with adjoining streets

pARcELS

Number of Tax parcels 2

ApN 102105505451820301 and 102105506349420303

ZONINGpUD: SU-1 Ip Uses

cONStRUctION Foundation Concrete

predominantly 7.5˝ concrete tilt-up panels to a height of 31 feet. The panels have above-average quality reveals and a paint finish. As shown on the plans, other elevation finishes are frame/stucco

with glass in aluminum panel system and translucent insulated fiberglass panels.

Number of Floors: 2 Floors in Each Building (2 Buildings)

Roof: TpO (thermoplastic polyolefins) roofing over recovery board over 2.5˝ rigid insulation over a metal deck on a steel truss system.

parking Surface: Asphalt

MEchANIcAL hVAC Rooftop package units with natural gas-fired heat and refrigerated air

conditioning throughout (both buildings)

Fire protection The building is equipped with a wet pipe system. The lab areas have eye wash stations.

plumbing: Both buildings equipped with plumbing

Elevator 1 centrally located elevator in the Eubank building (none in the Development Road building)

Utilities All typical utilities: water, sewer, natural gas, electricity and telephone

AccESS pOINtS Street Frontage: Eubank Boulevard, Development Road and Gibson Boulevard SE

Cross Streets: Major: Eubank Boulevard and Southern Boulevard SE

INtERIOR dEtAILWalls: Finished drywall in the partitioned areas.

painted concrete panels at the perimeter of the shop areas. Specialized finishes at the perimeter of the lab areas.

Ceiling: 9´ suspended ceilings in office & laboratory areas. Exposed structure in the balance. (Eubank Building) 9' suspended ceilings in office

areas. 22' suspended ceilings in the lab areas (Development Road Building)

Floor Covering: Carpet and ceramic tile in the office areas and restrooms. A mixture of vinyl tile, epoxy paint and sealers in the other areas.

Rest Rooms: 15 (Eubank Building: Ten restrooms with a total of 50 fixtures, including two shower stalls. Development Road Building: Five restrooms with a total

of 22 fixtures, including two shower stalls.)

Property Details

180

285

285

285

285

380

380

54

54

54

550

56

60

6060

6464

64

64

666

70

70

70

82

82

84

84

84

85

160

180

666

666

80

160

160

160 160

287

666

84

285

385

60

62

62

70

80

87

10

10

25

25

25

25

25

40

40

40

10

10

20

Mora River

Ute Creek

Rio Chama

Gallinas R.

San Franc

isco

R.

Pecos R.

Peco

s R.

Rio San Jose

Gila R.

Rio Grande

RIO GRANDE

Cimmaron River

Corrizo Creek

Canadian River

Pecos R.

Rio Grande

Rio

Gra

nde

San Juan R.

Rio Puerco

Canadian R.

Red Bluff Reservoir

AbiquiuRes.

Caballo Res.

Navajo Res.

L. Sumner

Ute Res.

Conchas L.

Elephant Butte Res.

Guadalupe Mountains NP

Chiricahua NM

Carlsbad Caverns NP

White Sands NM

El Malpais NM

Petroglyph NM

Bandelier NM

Chaco Culture NHP

Canyon de Chelly NM

Mesa Verde NP

B E R N A L I L L O

C AT R O N

C H AV E S

C O L F A X

C U R R Y

D E B A C A

D O N A A N A

E D D Y

G R A N T

G U A D A L U P E

H A R D I N G

H I D A L G O

L E A

L I N C O L N

L O S A L A M O S

L U N A

M C K I N L E Y

M O R A

O T E R O

Q U AY

R I O A R R I B A

R O O S E V E LT

S A N D O VA L

S A N J U A N

S A N M I G U E LS A N TA F E

S I E R R A

S O C O R R O

TA O S

T O R R A N C E

U N I O N

VA L E N C I AC I B O L A

A PA C H E

C O C H I S E

G R E E N L E E

A L A M O S A

A R C H U L E TA

B A C A

C O N E J O SC O S T I L L A

H U E R F A N O

L A P L ATA

L A S A N I M A S

M I N E R A LH I N S D A L E

M O N T E Z U M A

S A N J U A N

R I O G R A N D E

C I M A R R O N

A N D R E W S

B A I L E Y

C O C H R A N

C R A N EC U L B E R S O N

D A L L A M

D E A F S M I T H

E C T O R

E L PA S O

G A I N E S

H A R T L E Y

H U D S P E T H

L O V I N G

O L D H A M

PA R M E R

R E E V E S

W A R D

P E C O S

W I N K L E R

Y O A K U M

Capitan

Carlsbad North

Carrizozo

Causey

Chama

Cimarron

Cloudcroft

Columbus

Corona

Crownpoint

Cuba

Des Moines

Dexter

Dora

Dulce

Eagle Nest

Elida

Encino

Estancia

Folsom

Fort Sumner

Grady

Grenville

Hagerman

Hatch

Hope

House

Hurley

Isleta Pueblo

Jemez Pueblo

Jemez Springs

La Luz

Lake Arthur

Logan

Loving

Magdalena

Maxwell

Melrose

Mescalero

Mosquero

Mountainair

Nambe

Questa Red River

Reserve

Roy

Ruidoso Downs

San Jon

San Ysidro

Springer

Tatum

Texico

Thoreau

Tohatchi

Vaughn

Virden

Wagon Mound

Willard

Williamsburg

Duncan

Lukachukai

Aguilar

Antonito

Bayfield

Blanca

Branson

Campo

Cokedale

Dolores

Ignacio

KimLa Jara

Mancos

Pagosa Springs

Pritchett

Romeo

San Luis

Boise City

Adrian

Bovina

Clint

Dell City

Goldsmith

Grandfalls

Horizon City

Plains

Pyote

San Elizario

Sudan

Texline

Toyah

Whiteface

Wink

Anthony

Bayard

Bernalillo

Bosque Farms

Clayton

Eunice

Jal

Lordsburg

Los Lunas

Meadow Vista

Mesilla

Milan

Ruidoso

Santa Rosa

Santo Domingo Pueblo

Taos

Tularosa

University Park

White Sands

Aztec

Deming

Espanola

Holloman AFB

Lovington

Portales

Raton

Shiprock

Silver City

Socorro

Truth OrConsequences

Tucumcari

White Rock

Zuni Pueblo

Clifton

Eagar

FortDefiance

St. Johns

WindowRock

Alamosa

Cortez

Trinidad

AnthonyFabens

Friona

Morton

Muleshoe

Seagraves

Van Horn

Dalhart

Kermit

Monahans

Seminole

Carlsbad

Clovis

Farmington

Hobbs

Las Cruces

Roswell

South Valley

Alamogordo Artesia

Gallup

Grants

Las Vegas

Los Alamos

North Valley

Durango

Andrews

Fort Bliss

Pecos

Ascension

Albuquerque

El Paso

Santa Fe

Colorado

Texas

Utah

NEW MEXICO

Mexico


ex

ec

ut

ive

su

mm

ar

yP

ro

Pe

rt

yD

es

cr

iPt

ion

Fin

an

cia

la

na

lys

isc

om

Par

ab

les

ma

rk

et

ov

er

vie

wraytheon



10

Regional Map

Raytheon

EastCentral

Business Park

Longford Village East

Skyline Heights

Southern Blvd SE Terracita

Mirabella

Mirabella Heights

Apartments Four Hills MHP

Mountain Shadow Estates

Towne Park

Rhodes Sandia Vista

Sandia Science and Technology

Park

Hidden Valley

Tijeras Heights

Singling Arrow Park

Manzano Mesa Park

Manzano Mesa

Central Ave NE

Central Ave NE

Central AveSE

Central AveSE

Foothill Estates

Singing Arrow

Cenaroca

Casitas Coronado

Executive Hills

Oakcrest Estates

Canyon Acres

Franklin Plaza

Southern Blvd SE

40

40

556

Sandia Research Park

South San Pedro Shopping Center


11

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



local Map

Raytheon

pROpERtY dEScRIptION

Ex

Ec

Ut

IvE

SU

MM

AR

Yp

RO

pE

Rt

Yd

ES

cR

Ipt

ION

FIN

AN

cIA

LA

NA

LYS

ISc

OM

pAR

Ab

LES

MA

Rk

Et

Ov

ER

vIE

wraytheon

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information . References to square footage or age are approximate . Buyer must verify the information and bears all risk for any inaccuracies . Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property . Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc . © 2012 Marcus & Millichap ACT ID T0210066

12

Aerial Photo

Gibson Blvd SE

Development Rd SE


13

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



Walgreens

Central Ave

Wyo

min

g Bl

vd

Raytheon

Sandia National Labs

Kirtland Airforce Base

NationalAtomic

Museum

ComputerScience

ResearchInstitute

Air Products

SandiaNational

Labs

Emcore

Center forIntegrated

Nanotechnology

Euba

nk B

lvd

Central Ave

Market Aerial



ex

ec

ut

ive

su

mm

ar

yP

ro

Pe

rt

yD

es

cr

iPt

ion

Fin

an

cia

la

na

lys

isc

om

Par

ab

les

ma

rk

et

ov

er

vie

wraytheon



14

Site Plan

GIBSON BLVD SE

DEVELOPMENT RD SE

EU

BA

NK

BLV

D S

E

1300 Eubank Blvd SE2 Story

Research IndustrialBuilding

82,333 SF 10421Development Rd SE

2 StoryResearch Industrial

Building20,040 SF

EUBANK BLVD

SO

UTH

ER

N B

LVD

SE

STEPHEN MOODY ST SE INNO

VATI

ON PKWY SE

1 2

35

6

H-1-A

H-1-B

8

7

4

1213 19

38

39

40

37

36

31

32

33

34

35

30

29

28

2726

25

24

23

22

18

Albuquerque Public Schools

Build New Mexico

New Mexico State Land Office

Amelang Partners

Morgan Realty

Department of Energy

Sandia National Laboratories

Innovation Park, LLC.

Existing Buildings

Proposed Buildings

Common Areas

Avalon Investments

10’ Wide Trail6’ (min) Sidewalk

LAND OWNERSHIP / LEGEND

pROpERtY dEScRIptION

15

Ex

Ec

Ut

IvE

SU

MM

AR

Yp

RO

pE

Rt

Yd

ES

cR

Ipt

ION

FINA

Nc

IAL

AN

ALY

SIS

cO

MpA

RA

bLE

SM

AR

kE

tO

vE

Rv

IEw

raytheon

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information . References to square footage or age are approximate . Buyer must verify the information and bears all risk for any inaccuracies . Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property . Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc . © 2012 Marcus & Millichap ACT ID T0210066

Raytheon

Sandia Science & Technology Park

analysisF I N A N C I A L A N A Ly S I S

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fin

an

cia

la

na

lyS

iSc

om

Par

ab

lES

ma

rk

Et

ov

Er

viE

wraytheon


18

FINANcIAL ANALYSIS – Schedule of prospective cash Flow

Income

Income $1,311,349.00CAM Reimbursements $648,350.00

Total Income $1,959,699.00

eXPenSeS

Janitorial $67,209.00

Utilities $338,042.00

Repairs and Maintenance $90,832.00

Landscaping & parking $36,616.00

Security & Fire $4,920.00

Management Fee $42,095.00 3%

General & Administrative $8,581.00

Insurance $30,056.00

Real Estate Taxes $30,000.00

Total expenses $648,350.00 $6.33 /SF

Annual Income & Expenses

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

19

raytheon


financial analysis

Tenant Overview

Raytheon Company is a technology and innovation leader specializing in defense, security and civil markets throughout the world . With a history of innovation spanning 91 years, Raytheon is composed of four major businesses: Integrated Defense Systems; Intelligence, Information and Services; Missile Systems; and Space and Airborne Systems . Raytheon, with 2012 sales of $24 billion and 68,000 employees worldwide, trades on the New York Stock Exchange as “RTN .” Raytheon Company acquired Ktech Corporation in 2011 for its Missile Systems business . As a leader in pulsed power systems engineering and high efficiency magnetron technology, Raytheon enables integration of directed energy weapons on combat platforms . Raytheon is also a leader in the development of linear accelerator technology for government and commercial applications .

bASE RENt

Lease Years Annual Rent Monthly Rent Monthly Rent/SF

6/14/2011 - 8/31/2016 $1,311,348.90 $109,279.08 $12.81

9/1/2016 - 8/31/2021 $1,513,095.00 $126,091.25 $14.78

OptION RENt

Lease Years Annual Rent

9/1/2021 - 8/31/2024 $1,780,266.40 $148,355.54 $17.39

9/1/2024 - 8/31/2027 $1,945,086.90 $162,090.58 $19.00

9/1/2027 - 8/31/2030 $2,125,263.40 $177,105.29 $20.76

9/1/2030 - 8/31/2033 $2,322,843.30 $193,570.28 $22.69

9/1/2033 - 8/31/2036 $2,537,826.70 $211,485.56 $24.79

Property Raytheon Company

Property Address1300 Eubank Boulevard SE and

10421 Development Road SE Albuquerque, NM 87123

Property Type Office/flexTotal Net Rentable Area 102,373

Tenant Trade Name RaytheonTenant Raytheon Sales Volume (Parent Company) $24 BillionStock Symbol RTNLandlord Responsibilities “Base Building” which includes the following:

(i) the foundation, concrete floors, exterior walls, and load-bearing interior walls and columns of the

building shell for each Building;(ii) structural elements of the roof of each Building;

(iii) electrical, plumbing, fire sprinkler, water and sewer systems (and other utility systems) stubbed

to the existing locations on the exterior of each Building and otherwise in a condition to receive and be connected to distribution of such systems within

the applicable Building by Tenant .

Lease Commencement Date 6/14/2011Rent Commencement Date 6/14/2011Lease Expiration Date 8/31/2021Term Remaining on Lease Approximately 8 YearsLease Type Triple-Net (NNN) Lease (net of the “Base Building”

as defined in the Landlord Responsibilities above)

Lease Term 10 YearsYear 1 Net Operating Income $1,311,348 .90 Increases Sept-2021

Sept-2024Sept-2027Sept-2030Sept-2033

Options to Renew Five, three-year options

No . of Locations Offices in 19 countriesHeadquartered Waltham, MA

Website www .raytheon .com

overviewM A R K E T O V E R V I E W

Market Overview

ex

ec

ut

ive

Su

MM

ar

yP

rO

Pe

rt

yD

eS

cr

iPt

iOn

Fin

an

cia

la

na

lyS

iSc

OM

Par

ab

leS

Ma

rk

et

Ov

er

vie

wraytheon



22

location Highlights

The subject property is located within the Sandia Science & Technology Park, which consists of approximately 250 acres targeting technology-oriented companies doing business with Sandia National Laboratories and Kirtland Air Force Base .

Directly west of the subject property on the other side of Eubank Boulevard is Sandia Lab’s 96,000-square-foot Integrated Nanotechnologies Core Facility, which opened in 2006 . Just one-quarter mile north is the National Museum of Nuclear Science & History .

Located in the Southeast Heights neighborhood, the area is home to several major employers including Kirtland Air Force Base, Sandia National Laboratories, Albuquerque International Airport and the VA Medical Center . A high concentration of residential homes can be found in the northwest and southeast areas of the region, accounting for the dense demographics of over 187,000 residents within a five-mile radius of the subject property .

The primary access route into the area is Eubank Boulevard, an arterial that spans the city limits to the north and south . Eubank ends about one mile south of the subject property at the entrance into Kirtland Air Force Base and Sandia National Laboratories . Major east-west thoroughfares include Interstate 40 and Central Avenue, which are located approximately one mile north of the property . All of the major thoroughfares are dominated by commercial development .

location Overview

■ Located within the Sandia Science & Technology Park (250 acres)

■ Close proximity to Sandia Lab’s 96,000-square-foot Integrated Nanotechnologies Core Facility and the National Museum of Nuclear Science & History

■ Major area employers include Kirtland Air Force Base, Sandia National Laboratories, Albuquerque International Airport and the VA Medical Center

■ Subject property fronts Eubank Boulevard, the primary access route into the area


Market Overview

23

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



Albuquerque, NM

Market Highlights

population growth

■ It is projected that nearly 56,225 people will be added to the Albuquerque metro by 2017 .

Economic drivers

■ Defense, manufacturing, government and hightech lead the local economy

Economic expansion

■ Tax incentives and economic trade zones encourage business growth

GeographyStraddling the Rio Grande, the Albuquerque metro stretches 5,951-square miles across the northern edges of the Chihuahuan Desert and the Sandia and Manzano mountains located in the Albuquerque basin . The beautiful mountains, natural forest and grasslands host several state parks that attract locals and tourists year round . The most visited site includes the Sandia Mountains located east of Albuquerque .

Market Overview

ex

ec

ut

ive

Su

MM

ar

yP

rO

Pe

rt

yD

eS

cr

iPt

iOn

Fin

an

cia

la

na

lyS

iSc

OM

Par

ab

leS

Ma

rk

et

Ov

er

vie

wraytheon



24

Albuquerque, NM

Metro

The Albuquerque metropolitan area expands over Bernalillo, Sandoval, Torrance and Valencia counties . The metro has grown by 0 .5 percent over the last five years to host 907,253 citizens, almost half of the total population of New Mexico (2,085,538) . Over the next five years, population of the metro will increase by 1 .2 percent with Corrales and Rio Rancho expected to have the largest percentage of population growth .

InfrastructureThe Albuquerque region is served by Interstate 25, the main north and south thoroughfare that runs parallel with the Rio Grande . This roadway connects the metro to Santa Fe and Las Cruces . Additionally, Interstate 40, the main east and west highway, provides access to northern Texas and Arizona . It runs from the east coast to the west coast and is one of the most heavily traveled interstates in the country .

The rail system is utilized by commuter and freight trains using the BNSF Railway tracks . The New Mexico Rail Runner Express services the metro with commuter rail while Amtrak’s Southwest Chief offers high-speed service . Air service is provided by Albuquerque International Sunport and Double Eagle II Airport .

ABQ RIDE and Rapid Ride provide efficient public transit operations in the metro . The City of Albuquerque is also working on a bus rapid transit system that would span through the Central Avenue corridor

AIRpORt ■ Albuquerque International Sunport

■ Double Eagle II Airport

MAjOR ROAdwAYS

■ Interstates 25, 40

■ U .S . routes 85, 337, 528

RAIL

■ Freight - BNSF Railway

■ Passenger - Amtrak’s Southwest Chief

■ Commuter - New Mexico Rail Runner Express

pORt

■

thE ALbUqUERqUE MEtRO IS:

■ 280 miles from El Paso■ 400 miles from Phoenix■ 450 miles from Denver■ 775 miles from Los Angeles■ 642 miles from Dallas

LARGESt cOUNtIES: cItYALBUqUERqUE 545,202

RIO RANChO 87,443

SOUTh VALLEY 41,126

LOS LUNAS 14,820

NORTh VALLEY 11,196

CORRALES 8,329

2011 Estimate Sources: Marcus & Millichap Research Services, AGS

Market Overview

25

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



The major drivers of the Albuquerque economy are government, defense, manufacturing and high-tech . The local economy is pulling out of the recession and growth is slowly returning . GMP (Gross Municipal Product) is projected to rise 1 .6 percent through the end of 2013 and is forecasted to have an annual growth of 2 .5 percent in the following year . Retail sales are expected to outpace the national average by 2014 . The U .S . Military plays a vital role in the local economy attracting private and government high-tech institutions, a well-trained labor force, and capital investment to the region . The local government shows strong support for the expansions and relocations of business . Both government and business officials in the region have aggressively sought to provide tax incentives and create economic zones to encourage such growth . Sandia National, a government-owned research center operated by Lockheed Martin, and the Air Force Research Laboratory provide key aspects to the aerospace and defense sector . As such, the state provides various tax deductions for aerospace companies, along with various tax incentives for capital investment and work development in the field . The newest trend to emerge in the region is the number of companies capitalizing on the need for UAS (Unmanned Aircraft Systems), or drones . The White Sands Missile Range south of the metro offers the perfect climate to test multiple aerospace initiatives .

Albuquerque, NM

Economy

Market Overview

ex

ec

ut

ive

Su

MM

ar

yP

rO

Pe

rt

yD

eS

cr

iPt

iOn

Fin

an

cia

la

na

lyS

iSc

OM

Par

ab

leS

Ma

rk

et

Ov

er

vie

wraytheon



26

The information sector, with 2 .2 percent annual growth, will add roughly 500 new positions each year over the next five years as call centers expand in the metro . Government, which is the largest employment sector providing 22 percent of total jobs, will increase at an annual rate of 1 percent with the addition of 815 employees per year over the same time period . The trade, transportation and utilities sector, the second largest sector accounting for 16 percent of jobs, will record positive employment numbers over the next five years, by expanding at an annual growth of 1 percent adding over 600 positions per year .

Population growth in the metro has slowed since the recession, however, the region is expected to grow by 1 .2 percent annually through the next five years, outpacing the national average of 0 .9 percent . This growth ensures a steady flow of labor into the employment sector, which provides nearly 370,000 jobs . As the economy regains momentum, all sectors will expand . The education and health services sector will add the largest number of jobs, nearly 1,500 per year, with an annual rise of 2 .6 percent, as local hospitals such as Presbyterian Hospital and the University of New Mexico grow . The second-largest percentage of job growth through 2017 will be in the construction sector at 2 .4 percent annually, led by residential construction .

Albuquerque, NM

labor

Market Overview

27

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



Albuquerque’s economic activity relies partially on the government and defense sectors, which are increasing payrolls in the metro . The largest employer of the region is Kirtland Air Force Base, with approximately 35,700 civilians and nearly 5,000 military workers . Additionally, Sandia National Laboratories, Honeywell Defense & Space Electronic Systems and Northrop Grumman provide a substantial amount of residents’ vocational opportunities in the region . Manufacturing is another significant economic driver in the metro . Employers such as Intel Corporation, Thomas & Betts, General Mills, and TemperPedic provide substantial employment opportunities to the local community . While the metro has its share of large employers, small employers provide the majority of new positions . Establishments with one to 20 employees make up 97 percent of the total employment base . Existing firms and new startups are drawn to the friendly business environment and tax incentives allowing companies to leverage the different resources . Job creation in the metro has been slow in the past five years, nevertheless, growth has started to emerge with businesses expanding in the metro . Multiple call centers are currently adding hundreds of positions that were cut a few years ago due to the recession . Moreover, office-using employers are expected to return to prerecession levels by 2017 .

Albuquerque, NM

Major Employers

Kirtland Air Force Base UNM hospital

University of New Mexico Intel Corporation

Albuquerque public Schools honeywell Defense & Space Electronic Systems

Sandia National Laboratories General Mills

presbyterian hospital Lovelace health System

Employers

Market Overview

ex

ec

ut

ive

Su

MM

ar

yP

rO

Pe

rt

yD

eS

cr

iPt

iOn

Fin

an

cia

la

na

lyS

iSc

OM

Par

ab

leS

Ma

rk

et

Ov

er

vie

wraytheon



28

With a total metropolitan population of 907,253 residents, the population in the area is projected to expand at an annual rate of 1 .2 percent with the addition of 56,225 residents through 2017, which is well above the national rate . The region has a median age of 37 years, meeting the U .S . average . Educational attainment in Albuquerque exceeds the national average as nearly 30 percent of residents have completed a bachelor’s degree compared with 28 percent for the U .S . Additionally, more than 12 .5 percent of residents have gone on to earn a graduate degree . Students with university degrees will expand by 1 .3 percent annually through 2017 .

Albuquerque, NM

Through the last five years, the median household income has slightly fallen from the peak in 2009 to $45,380 per year, which is below the national average of $53,000 annually . Over the next five years, the median household income in the Albuquerque metro is expected to rise nearly 2 percent annually to $49,805 per year . Since the Great Recession, home prices have decreased 4 percent per year, which has afforded 65 percent of residents home ownership . The median home price in the Albuquerque metro is slightly under $169,000, which is about $81,000 below the U .S . average . Home prices are projected to increase on average 6 .5 percent annually during the next five years in the region, well above that of the country .

Demographics

Market Overview

29

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



The Albuquerque metro offers a wide array of recreational opportunities that residents and tourists can explore . Skiing, golfing, mountain biking, camping and hiking are a few of the activities available in the Sandia and Manzano mountains to the east of Albuquerque . The Sandia Peak Tramway provides access to ski resorts and an outstanding view of the beautiful mountains . Furthermore, the region is home to more than 400 miles of trials for biking and hiking . Albuquerque’s International Balloon Fiesta, the largest attraction during the year, brings in more than 800,000 visitors from all over the world each October . For 10 days, hundreds of hot air balloons fill the sky at dawn . Activities and concerts are held during the day, followed by a balloon glow in the evening . Cultural experiences are abundant from the architecture to the museums . Old Town Albuquerque historic village offers 18th century architecture coupled with world famous artwork covering the Spanish, Native American and Anglo heritages . The Albuquerque Museum and Explora Science Center & Children’s Museum are two of the most visited venues in the metro, along with the Popejoy Hall . Concertgoers enjoy eclectic performances by New Mexico Symphony Orchestra and Albuquerque’s Opera Southwest each performance season .

Albuquerque, NM

Quality Of life

Market Overview

31

Ex

Ec

ut

ivE

Su

mm

ar

yP

ro

PE

rt

yD

ES

cr

iPt

ion

Fina

nc

ial

an

aly

SiS

co

mPa

ra

blE

Sm

ar

kE

to

vE

rv

iEw

raytheon



Demographic Summary

Income 1-mile 3-miles 5-miles$ 0 - $14,999 11.3% 20.6% 16.5%$ 15,000 - $24,999 8.5% 14.5% 13.0%$ 25,000 - $34,999 16.3% 13.2% 11.8%$ 35,000 - $49,999 15.0% 14.5% 13.6%$ 50,000 - $74,999 17.2% 15.4% 17.8%$ 75,000 - $99,999 13.0% 9.4% 11.1%$100,000 - $124,999 8.2% 5.7% 7.0%$125,000 - $149,999 4.6% 2.8% 3.7%$150,000 - $199,999 3.8% 2.3% 3.0%$200,000 - $249,999 0.7% 0.7% 1.0%$250,000 + 1.6% 1.0% 1.4%2012 Median household Income $49,164 $36,647 $43,7612012 per Capita Income $26,820 $22,008 $27,0642012 Average household Income $67,908 $52,978 $61,537

Population 1-mile 3-miles 5-miles2000 population 5754 81543 1774032010 population 8221 87384 1836552012 population 8436 89445 1875152017 population 9229 91067 189376

Households 1-mile 3-miles 5-miles2000 households 2137 33210 756972010 households 3245 35957 800742012 households 3330 36840 818402017 households 3735 37931 835702012 Average household Size 2.51 2.4 2.262012 Daytime population 9001 44566 1061252000 Median housing Value $104,0172000 Owner Occupied housing Units 52.68% 45.46% 51.14%2000 Renter Occupied housing Units 38.13% 45.29% 40.89%2000 Vacant 7.79% 9.59% 8.21%2012 Owner Occupied housing Units 47.40% 44.34% 49.47%2012 Renter Occupied housing Units 50.19% 50.02% 45.59%2012 Vacant 2.41% 5.65% 4.95%2017 Owner Occupied housing Units 47.14% 44.67% 49.52%2017 Renter Occupied housing Units 51.28% 50.30% 46.04%2017 Vacant 1.58% 5.03% 4.44%

Market Overview

ex

ec

ut

ive

Su

MM

ar

yP

rO

Pe

rt

yD

eS

cr

iPt

iOn

Fin

an

cia

la

na

lyS

iSc

OM

Par

ab

leS

Ma

rk

et

Ov

er

vie

wraytheon



32

Demographic Summary

PopulationIn 2012, the population in a five mile radius was 187,515 . The population has increased by 5 .69% since 2000 . It is estimated that the population in the area will be 189,376 five years from now, which represents a change of 0 .99% from the current year . The current population is 48 .8% male and 51 .1% female . The median age of the population in the area is 37 .0, compare this to the U .S . average which is 37 . The population density in the area is 1,942 .02 people per square mile .

Households There are currently 81,840 households in a five mile radius . The number of households has changed by 8 .11% since 2000 . It is estimated that the number of households in the area will be 83,570 five years from now, which represents a change of 2 .11% from the current year . The average household size in the area is 2 .25 persons .

Income In 2012, the median household income in a five mile radius was $43,761, compare this to the U .S . average which is currently $53,535 . The median household income for the area has changed by 12 .93% since 2000 . It is estimated that the median household income in the area will be $48,503 five years from now, which represents a change of 10 .83% from the current year . The current year per capita income in the area is $27,064, compare this to the U .S . average, which is $28,888 . The current year average household income in the area is $61,537, compare this to the U .S . average which is $75,373 .

Race and Ethnicity The current year racial makeup in a five mile radius is as follows: 71 .78% White, 3 .98% African American, 5 .00% Native American and 3 .42% Asian/Pacific Islander . Compare these to U .S . averages which are: 72 .20% White, 12 .65% African American, 0 .96% Native American and 5 .01% Asian/Pacific Islander .

People of Hispanic origin are counted independently of race . People of Hispanic origin make up 37 .81% of the current year population in the selected area . Compare this to the U .S . average of 16 .55% . Housing The median housing value in a five mile radius was $173,216 in 2012 . In 2012, there were 41,612 owner occupied housing units in a five mile radius and there were 37,809 renter occupied housing units in the area . The median rent at the time was $585 .

Employment In 2012, there were 106,125 employees in a five mile radius, this is also known as the daytime population . The 2000 Census revealed that 60 .7% of employees were employed in white-collar occupations in this geography, and 39 .2% were employed in blue-collar occupations . In 2012, unemployment in this area was 3 .81% . In 2000, the median time traveled to work was 24 .9 minutes .

Geography: 5 Miles

Demographic data © 2010 by Experian/Applied Geographic Solutions.

exclusively listedExclusively listed by:

OFFICES NATIONWIDE

www.marcusmillichap.com

Patrick O’MearaDirector phOENIx OFFICETel: (602) 687-6756Fax: (602) [email protected] License: AZ License BK 093255

Jamie MedressSenior Vice president Investments phOENIx OFFICETel: (602) 687-6778Fax: (602) 687-6717 [email protected] License: AZ License SA108228000

Investment Sales: Debt & Structured Finance:Robert GallegosLicense: NM 17019

New Mexico Broker of Record:Mark J. RubleVice president Investments phOENIx OFFICETel: (602) 687-6766Fax: (602) 687-6710 [email protected] License: AZ License SA550593000

Raytheon - Marcus & Millichap€¦ · Albuquerque, NM 87123 Offering Highlights Income Income...

Documents

Transcript of Raytheon - Marcus & Millichap€¦ · Albuquerque, NM 87123 Offering Highlights Income Income...