University Tower by Ramon Rodriguez

UNIVERSITY TOWER RALEIGH–DURHAM•NORTH

CAROLINA

EXCLUSIVE MARKETING AGENTS:

UNDERWRITING SUPPORT:

FINANCING CONTACTS:

Patrick Gildea Senior Vice President CBRE | Investment Properties 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 331 1217 F +1 704 331 1259 patrick.gildea@cbre.com

Matt Smith Capital Markets Analyst CBRE l Investment Properties 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 331 1286 F +1 704 331 1259 matt.smith@cbre.com

Compie Newman Senior Vice President CBRE | Capital Markets 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 927 1454 F +1 704 334 0939 compie.newman@cbre.com

Ben W. Kilgore IV Executive Vice President CBRE Raleigh, LLC | Investment Properties 4208 Six Forks Rd Ste 1220 Raleigh, NC 27609 T +1 919 831 8191 F +1 919 856 2530 ben.kilgore@cbre-raleigh.com

Hal Kempson First Vice President CBRE | Capital Markets 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 927 1453 F +1 704 334 0939 hal.kempson@cbre.com

DISCLAIMER ÂŠ 2015 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

UNIVERSITY TOWER TABLE OF CONTENTS Investment Summary..................................................... 1 Property Summary........................................................ 7 Tenant Summary......................................................... 21 Financial Analysis........................................................ 25 The Triangle Economy.................................................. 35 Market Summary........................................................ 45

UNIVERSITY TOWER

INVESTMENT SUMMARY

UNIVERSITY TOWER

UNIVERSITY TOWER University Tower, located at 3100 Tower Boulevard, Durham, North Carolina 27707, is an attractive Class-A, 17-story multitenant office building featuring impressive 360-degree views. The Property, which was constructed in 1986, is 92.60% leased to a variety of high-profile tenants. The building consists of 184,969 rentable square feet situated upon 5.883 acres in the center of the South Durham submarket in the RaleighDurham-Chapel Hill, NC CSA. The Property is being offered without a stated asking price and is available on an “all-cash” basis under the following terms.

Site: University Tower Address: 3100 Tower Blvd, Durham, NC 27707 Built: 1986 Rentable Square Feet: 184,969 Acreage: 5.883 Occupancy: 92.60% Terms All Cash Asking Price Unpriced Projected Year-One NOI $2,818,925 Projected Five-Year Average NOI $3,189,231 Projected Ten-Year Average NOI $3,740,881

HIGH HISTORICAL RETENTION University Tower offers a unique mixture of stability with the potential for yield enhancement through leasing the modest amount of vacant space. The building is currently 92.60% leased to a variety of local, regional, and national tenants representing numerous high quality firms. Many of these tenants have occupied space within the building for multiple lease terms and will likely continue tenancy at the Property well into the future. > Duke University Health System started leasing 11,233 square feet in 1993. This same entity has expanded eight times, and now occupies 45,993 square feet. > A separate Duke entity subleased space originally occupied by Blue Cross Blue Shield. Upon expiration of the BCBS lease, Duke signed a long-term lease for 58,299 square feet. > Based on a percentage of occupied square footage, 89.90% of the current tenants have been in the building for more than one lease term. The property has historically operated at a higher occupancy than its current level of 92.60%. The 14th floor, which represents 6.3% of the building, was recently vacated when Blue Cross Blue Shield consolidated into their owned facilities, and will be part of Duke’s expansion space, based on the current LOI. Tenants are attracted to University Tower’s excellent views, easy access, surface and deck parking, and its close proximity to an excellent amenity base. As a result, the historical retention is exceptionally strong at University Tower and vacancies typically sit unoccupied for a short period. As these conditions offer very favorable investment fundamentals, University Tower will enjoy consistently high occupancies, high retention, favorable lease terms and attractive rent growth well into the future ensuring quality returns.

INVESTMENT SUMMARY PROMINENT TROPHY ASSET University Tower, positioned at the northeast quadrant of US 15/501 Bypass and US 15/501 Business, serves as the gateway to Durham for more than 60,000 vehicles that pass the building each day, according to the NC Department of Transportation. The building, clearly visible from miles away, is a Durham landmark. Highly visible properties such as University Tower have a competitive advantage over lesser visible properties within the market and often times are able to attract new tenants, retain current tenants, and offer exterior signage possibilities to dominant tenants seeking exposure. Over the past ten years, building ownership has spent over $2.6 million in capital improvements, including the nearly $350,000 Tower Energy Retrofit Project to upgrade HVAC systems. Nearly every element of the Property has been upgraded, including the security system, roof, lighting, several restrooms, flooring, wall coverings, modernization of the elevator system. The current owner invested significant capital (over $300,000) into lobby upgrades that included the addition of new furniture, artwork, sculptures, touchscreen directories, restroom and corridor upgrades, and the addition of a common tenant breakroom. The Property has been well-maintained and upgraded and therefore should not significant capital improvements in the near future. The South Durham Submarket, in which University Tower is located, has strengthened considerably over the past year. According to CBRE Research, vacancy in the submarket has dropped over the past four quarters from 17.3% to 15.5%; Class-A vacancy dropped during that same time, ending first quarter 2015 at 11.0% vacancy. ATTRACTIVE RENT ROLL WITH STRONG CREDIT TENANCY University Tower features an impressive rent roll with approximately 2/3 of the leased space occupied by investmentgrade credit tenants. In addition to the credit tenants, the Properties maintain a notable list of unrated local and regional firms that have strong financials and an impressive history of business success. Through the Property’s ability to attract the

Tenant Duke University Health System

Credit Rating Aa2 (Moody’s)

Bank of America Wells Fargo Advisors (as affiliate of Wells Fargo & Company) Ameritas Life Insurance SunTrust Mortgage (as SunTrust Bank)

Leased Area 104,292 square feet

A (Standard & Poor’s)

7,501 square feet

A+ (Standard & Poor’s)

7,398 square feet

A+ (Standard & Poor’s) A- (Standard & Poor’s)

3,890 square feet 959 square feet

top names in the area, the building achieves strong rents, high occupancies and longer lease terms. The quality of tenancy comprising the rent roll combined with an average remaining lease term of 4.1 years make this a stable investment with strong risk-adjusted returns, which can be enhanced through leasing the remaining vacant space. As follows is an overview of the quality credit found within the Portfolio. DISCOUNT TO REPLACEMENT COST University Tower can be purchased well below the cost to construct similar quality Class-A buildings in today’s market. With construction costs continuing to rise, replacement cost is estimated to be more than $250 per square foot for a building of this quality and design, particularly with structured parking. The current office market vacancy rate of 14.2% as of first quarter 2015 is unfavorable for new construction. The limited new construction available in the market will be offered at rental rates well north of asking rates for University Tower. STRONG AND GROWING LOCAL MARKET According to a 2014 projection from a United Nations study of world population growth, Raleigh will grow faster than any other large city in the U.S. over the next 15 years. The city is projected to grow 71% by 2030. Wake County, of which Raleigh is the seat, reached one million residents in late August 2014. The Raleigh–Durham–Chapel Hill Combined Statistical Area (CSA) (also known as the “Triangle”) is comprised of just over 1.75 million people, with more than 897,900 people making up the labor force. The Triangle office market, which totals nearly 48.5 million square feet, continues to excel. Vacancy rates have dropped each of the last four quarters to a low of 14.2% as of first quarter 2015. Lease rates have risen each quarter to a high of $22.82 per square foot, with new construction garnering $33.95 per square foot. For the ninth consecutive quarter, the Triangle experienced positive absorption in excess of 200,000 square feet, with over 374,000 square feet of net absorption in first quarter 2015. These trends are expected to continue throughout 2015.

OFFERING MEMORANDUM

UNIVERSITY TOWER EXCEPTIONAL LOCAL AND REGIONAL ACCESS From a local standpoint, University Tower is one of the more accessible office buildings in the Raleigh–Durham area. The Property features three points of ingress/egress from Tower Boulevard and two points of ingress/egress from Petty Road. Positioned approximately 2.5 miles from Interstate 40, the building is well located at US 15/501 Bypass and US 15/501 Business, ensuring tenants have access to the deep, well-educated labor pool for which the Triangle is known. The building is approximately four miles from downtown Durham and Duke University, 19 miles from Raleigh-Durham International Airport, and 28 miles from downtown Raleigh. Regionally, through the use of I-40, I-85 and I-95, the entire eastern seaboard is within a day’s drive of University Tower. Additionally, select regional cities such as Richmond, Virginia (156 miles), Charlotte, North Carolina (144 miles), and Wilmington, North Carolina (160 miles) are well within reach for an intra-day business trip for tenants at the Property. DURHAM CITY OF MEDICINE With the birth of the Research Triangle Park in the 1950s, Durham began its evolution into a global center for information technology, biotechnology, pharmaceuticals and medicine. The City of Durham is known as the “City of Medicine.” Healthcare is Durham’s major industry with more than 300 medical and health-related companies and medical practices with a combined payroll exceeding $1.5 billion annually. Since its founding in 1924, Duke University has grown into one of the most prestigious private universities in the world and its medical center ranks annually among the top in the nation. The university is the largest employer in Durham, providing jobs for more than 18,000 residents. Duke University Medical System is directly affiliated with Duke University and operates Duke University Hospital. The hospital is located in downtown Durham adjacent the college campus. Located approximately four miles from Duke University and the hospital, Duke University Medical System— University Tower’s second-largest tenant—is likely to remain a tenant at the building well into the future. The attractive, yet affordable (relative to pure medical office buildings) space available at University Tower is ideally suited for the administrative functions operated by Duke University Medical System at the Property. Capital Area Transit operates a bus line (number 40) that runs from Duke University to the University Tower area, providing convenient access for commuters to the Property.

INVESTMENT SUMMARY

HEAVY CONCENTRATION OF BLUE-CHIP CORPORATIONS Located in a premier corporate hotbed, University Tower is within close proximity to internationally renowned Research Triangle Park, a major medical and technological hub that serves as a home to major operations for IBM, Lenovo, Bayer, SAS, BASF, DuPont, Cisco Systems, GlaxoSmithKline, General Electric and Fidelity Investments. As a result, leasing to ancillary services for these companies typically help ideally located, Class-A properties such as University Tower maintain higher occupancies. An example of this dynamic is the presence of Jenkins, Wilson, Taylor and Hunt, a law firm that specializes in intellectual property counseling and services to clients with respect to patent, trademark, and copyright law, a perfect fit for many of the research and technology based companies at RTP.

OFFERING MEMORANDUM

UNIVERSITY TOWER ATTRACTIVE AREA AMENITY BASE University Tower is well supported by numerous on-site and area amenities. The Property is in close proximity to downtown Durham, Raleigh–Durham International Airport, I-40, I-85, RTP, and many banks, parks, retail shops, restaurants, hotels, residential neighborhoods, and recreational facilities located in the area. Tenants find numerous venues nearby serving every need during their business day. As the Triangle region’s population continues to rapidly grow, many additional amenities are likely to spring up in the future. GROWING URBAN REGION University Tower is located in Durham, the seat of Durham County. Both municipalities are part of the Combined Statistical Area of Raleigh–Durham–Chapel Hill, NC, which boasts almost 1.8 million residents. Also part of the CSA is Raleigh, which Forbes fourth in its 2013 list of 20 Fastest Growing Cities. They rated the 100 most populous Metropolitan Statistical Areas (MSAs) based on six metrics— using data from Moody’s Analytics, they assessed the estimated rate of population growth for 2012 and 2013, the rate of job growth in 2012, and the rate of gross metro product growth, or economic growth, for 2012. They also factored in federal unemployment data and median salaries for local college-educated workers, courtesy of Payscale.com. In November 2014, Forbes ranked Raleigh seventh on its list of smartest cities in the U.S. Using factors such as educational attainment and growth rate of residents with at least a bachelor’s degree, Forbes ranked 51 metro areas with populations of at least one million. Cities in the top 10 tend to be those with a concentration of universities and “those that long ago made the transition from industrial to information-based economies,” according to the report. Also in November 2014, Forbes named Raleigh the second easiest city in which to find a job, behind only San Jose,

2015 Demographics Population

Durham

Raleigh was listed in January 2015 as one of the “Cities to Watch in 2015”, published by Washington, D.C.-based blog Urbanful. In addition to the proximity to Research Triangle Park, the blog cites Raleigh’s Forbes rank as the number-one best city to raise a family and its recognition by TransferWise as one of the top tech hubs in the world. According to the Raleigh Office of Economic Development, every day for the last ten years, 35 residents were added daily to the City of Raleigh. Raleigh–Durham’s national status as a technology employment center continues to spawn immigration adding daily to a current metro-area population of over 1,787,000. Population growth has exploded in Durham and the CSA; both outrank NC and the U.S. Durham and the CSA also top NC and the U.S. in other measures including unemployment and education attainment. Durham is also home to a well-educated population with 68.9% having attained postsecondary education. A more urban and industrial setting than Morrisville or Raleigh’s other surrounding “bedroom” communities, Durham is nevertheless enjoying cultural and economic growth in downtown redevelopment with the new Durham Performing Arts Center and Durham Bulls Athletic Park and other new uses of the city’s former tobacco districts.

Raleigh–Durham–Chapel Hill, NC CSA

North Carolina

United States

1,787,447

9,993,105

319,459,991

9.58%

9.33%

4.80%

3.47%

2.32

2.52

2.47

2.57

Average Household Size Median Age (Years)

33.55

36.28

38.24

37.87

68.90%

69.10%

57.90%

58.00%

$67,339

$80,155

$64,208

$74,165

$187,587

$213,359

$160,748

$190,476

4.30%

4.70%

5.40%

5.50%

Post-Secondary Education Attained Median Housing Value

In December 2014, financial website 24/7 Wall St. ranked Raleigh number five on a list of cities with largest homes (1,871 median square feet), which directly correlates to income. The data was culled from Realtor.com and evaluated the 200 largest core-based statistical areas (CBSAs).

249,263

Population Growth 2010–2015

Average Household Income

California. Using the number of job openings in third quarter 2014 as a factor of population, the 10 best and 10 worst places to hunt for work were determined. San Jose has 123 openings per 1,000 people, and Raleigh has 88 openings per 1,000 people.

Unemployment Rate (March 2015)

Source: Neilsen, Bureau of Labor Statistics

INVESTMENT SUMMARY

UNIVERSITY TOWER

PROPERTY SUMMARY

OFFERING MEMORANDUM

UNIVERSITY TOWER

PROPERTY SUMMARY UNIVERSITY TOWER Site Overview 17-story Class-A office building Address 3100 Tower Blvd, Durham, NC 27707 Access Overview Three points of ingress/egress into the Propertyâ&#x20AC;&#x2122;s parking lot from Tower Boulevard; two points of ingress/egress into the lot from Petty Road; the lobby is accessible from both front and rear of building Rentable Area 184,969 square feet Site Size 5.88 acres Zoning GC General Commercial Year Built 1986 Parking Mix of surface parking lots and a three-level parking deck totaling 729 spaces, eight of which are designated as handicap reserved; there are 417 spaces available in the surface lots and 312 in the parking deck for a parking ratio of 3.94 spaces per 1,000 rentable square feet; the surface parking lot was resealed and restriped in 2010; pole light added to parking lot in 2011; parking deck lighting was retrofit (T12 to T8) in 2013 Foundation Reinforced concrete and masonry slab foundation Structure Concrete and structural steel frame

PROPERTY SUMMARY

Exterior Walls: Glass curtain walls with aluminum framing; spandrel glass set in gasket/aluminum framing attached to outrigger support; combination of marble, granite and stainless steel complete the design; certain exterior elements were painted and travertine tile was installed in 2012 Interior Walls Lobby walls are clad with mahogany panels with polishedchrome wall sconces; wall covering in the common areas and most suites is papered and/or painted drywall over metal partitioning; corridor wall coverings were replaced from 2008 to 2014 Roof A white TPO 100 fleece-back system was installed in 2010. The roof is under a ten-year warranty that expires in April of 2020; the warranty can be transferred to the new ownership through an application process and fee Stairwells Two fireproof concrete stairwells are located on the north and south sides of the building; the stairwell doors release when the fire alarm is activated.

Ceilings Primarily 2’ x 4’ lay-in acoustical tile with recessed fluorescent light fixtures; additional lighting is provided in some areas with recessed incandescent lighting Doors In 2013, six main lobby glass doors, six pivot assemblies and seven door closers were replaced. Floor Coverings Most suites primarily feature wall-to-wall carpeting; flooring in the bathrooms is ceramic tile while the lobby provides a combination of polished marble and travertine/granite and tile flooring; corridor carpeting was replaced from 2008 to 2014. Breakroom Renovated in 2014, including décor, television, storage room construction Lobby $220,000 has been invested in capital improvements in the lobby—new artwork, sculptures, furnishings, door replacements, and the installation of touchscreen directories

OFFERING MEMORANDUM

UNIVERSITY TOWER Restrooms Two restrooms—one women’s and one men’s—are located on each floor by the elevators. Generally, the women’s restrooms have three cubicles and three lavatories; the men’s rooms have two cubicles, two urinals and three lavatories. Cubicle partitions are metal with baked enamel finish. In 2012, restrooms on floors 1, 4, 9 and 16 were renovated; in 2014, Americans with Disabilities Act-compliant hardware was installed. Fire & Life Safety/Emergency Fully wet-sprinklered with jockey and main electric fire pumps; addressable fire alarm system that was installed in 2008; Caterpillar Model 3408 emergency power generator that serves building elevators and emergency functions only; in 2013, nine defibrillators were purchased and placed on every other floor of the Property; the fire panel was replaced and upgraded in 2014. HVAC Two 250-ton centrifugal Smardt oil-free Trane Centravac chillers both replaced in 2012, and a dual-cell Baltimore Aircoil Company cooling tower model 3272A was replaced in 2006; both units are located on the ground level; the air is powered by two 100-HP Flakt fan air handlers, which are located in the penthouse; these systems are controlled by a Trane Tracer building-automation system installed in 2013; air distribution for the building is controlled by the VAV and heat boxes located throughout each floor; a domestic-water booster

PROPERTY SUMMARY

pump was installed in 2012; there were backdraft dampers on new AHU motors and a vibration-monitoring system installed in 2013; also in 2013, chilled water pumps and condenser pumps, the elevator-room HVAC unit and jockey pump were replaced; projects in 2012–2013 are Tower Energy Retrofit Project (includes upgrade of air handlers with variable frequency drives and AHU motor replacement) Elevators Three 3,500-pound-capacity Westinghouse passenger cars and one Westinghouse 4,000-pound-capacity freight car; modernization to include aesthetic refurbishment of cabs began in 2014; project is to be complete in Spring 2015, with a total cost of approximately $760,000 Security Monitored 24/7 by Commercial Security & Fire; 24/7 card key access; security cameras are located in front and back lobby, stairwells, some elevator lobbies, and in the parking lot and deck Additional The top floor of the building is upfit as a restaurant, and operates as the University Club, containing dining areas and a kitchen Tax Parcel ID 0810-01-28-0616 (Durham County, NC)

PROPERTY SUMMARY SITE PLAN Petty Road

Two-Story Parking Deck University Tower 184,969 SF

Tower Blvd

OFFERING MEMORANDUM

UNIVERSITY TOWER FLOOR PLANS

Tucker Bria Wealth Strategies Suite 117 1,262 RSF LED 4/30/16

Duke University Suite 118 3,139 RSF LED 1/31/20

Bldg. Maintenance Suite 113 361 RSF

Suite 114

1st Floor Breakroom Suite 109 472 RSF

MAIL

ELEC

Couch & Associates Suite 105 704 RSF LED: 11/30/15

Suntrust Suite 100 959 RSF LED: 8/2018

Duke Comm. Closet Suite 111 198 RSF LED: 2/28/18

2nd Floor

Duke University Suite 200 11,133 RSF LED 1/31/20

Legend LED 2015

LED 2016

PROPERTY SUMMARY

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

PROPERTY SUMMARY

3rd Floor

Duke University Suite 300 10,974 RSF LED 1/31/20

Vacant Suite 400A 2,000 RS

Duke University Health Suite 400 3,652 RSF LED 2/28/18

4th Floor

DLP Health Care, LCC Suite 406 2,639 RSF LED 4/30/18

IMG College Suite 404 2,596 RSF LED 6/30/17

Legend LED 2015

LED 2016

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

OFFERING MEMORANDUM

UNIVERSITY TOWER

5th Floor

Duke University Suite 500 11,229 RSF LED 1/31/20

6th Floor

Duke University Health Suite 600 11,233 RSF LED 2/28/18

Legend LED 2015

LED 2016

PROPERTY SUMMARY

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

PROPERTY SUMMARY

7th Floor

Duke University Suite 700 11,233 RSF LED 1/31/20

Duke Comm. Closet Suite 804 253 RSF

Kornbluth Suite 800 2,552 RSF LED 4/30/19

8th Floor

Momentum Research Suite 802 7,979 RSF LED 3/31/16

Legend LED 2015

LED 2016

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

OFFERING MEMORANDUM

UNIVERSITY TOWER

Available Suite 925 1,850 RSF

9th Floor

Bank of America Suite 900 7,501 RSF LED 2/29/20

Zoweh Ministries, Inc. Suite 901 1,483 RSF LED: 1/31/18

10th Floor

Duke University Suite 1000 11,506 RSF LED 2/28/18

Legend LED 2015

LED 2016

PROPERTY SUMMARY

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

PROPERTY SUMMARY

11th Floor

Duke University Suite 1100 10,591 RSF LED 1/31/20

12th Floor

Jenkins, Wilson, & Taylor Suite 1200 11,725 RSF LED 12/31/16

Legend LED 2015

LED 2016

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

OFFERING MEMORANDUM

UNIVERSITY TOWER

Vacant Suite 1310 4,011 RSF

13th Floor

Duke University Health Suite 1300 7,426 RSF LED 2/28/18

14th Floor

Duke University Health Suite 1400 11,725 RSF LED 10/31/20

Legend LED 2015

LED 2016

PROPERTY SUMMARY

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

PROPERTY SUMMARY

Vacant Suite 1500A 3,835 RSF

15th Floor

Wachovia Securities Suite 1500 7,398 RSF LED 4/30/20 Michael Hemmerich Suite 1650 381 RSF LED: 10/31/16

University Club Durham Suite 1640 A & B 764 RSF LED: 10/31/16 Howard K Ross Suite 1630 382 RSF LED: 10/31/16

1650

ACWMG, LLC Suite 1605 1884 RSF LED 8/31/20

1640 A

Vacant Suite 1605A 1617 RSF

1630 1640 B

1620

16th Floor

1610

Ameritas Suite 1601 3,890 RSF LED: 5/31/17

Legend LED 2015

LED 2016

LED 2017

LED 2018

Neil O’Toole Suite 1610 984 RSF LED: 12/31/18

LED 2019

LED 2020

Concordis Group Suite 1620 382 RSF LED: 10/31/16

LED 2025

VACANT

OFFERING MEMORANDUM

UNIVERSITY TOWER

17th Floor

University Club Suite 1700 10,684 RSF LED 9/30/25

Legend LED 2015

LED 2016

PROPERTY SUMMARY

LED 2017

LED 2018

LED 2019

LED 2020

LED 2025

VACANT

UNIVERSITY TOWER

TENANT SUMMARY

OFFERING MEMORANDUM

UNIVERSITY TOWER

TENANT SUMMARY // UNIVERSITY TOWER

Suite:

Various

Square Footage:

104,292

Lease Expiration:

February 2018; January 2020

Tenant Since: Website:

June 1993 www.dukemedicine.org

Duke University Health System, the Duke University School of Medicine and the Duke University School of Nursing are all integrated into Duke Medicine. The System is the combination of research, clinical care, and education that takes place through the efforts of faculty, staff, students and trainees at many different sites throughout the Triangle and worldwide. As a world-class academic and health care system, Duke Medicine strives to transform medicine and health locally and globally through innovative scientific research, rapid translation of breakthrough discoveries, educating future clinical and scientific leaders, advocating and practicing evidence-based medicine to improve community health, and leading efforts to eliminate health inequalities. The 2014–2015 U.S. News & World Report rankings again placed Duke University Medical Center among its honor roll of top hospitals in the nation. Duke University Medical Center was among just 144 facilities—roughly three percent of the nearly 5,000 analyzed for the magazine’s Best Hospitals rankings— to be ranked in at least one of 16 specialties. For the 14th consecutive year, Triangle residents rated Duke University Medical Center as the best-quality hospital in the Raleigh–Durham metropolitan area. Duke University Medical Center was also again ranked first in North Carolina. Duke University Health System generates annual operating revenues of $2.6 billion. Its Medical Center campus size is 98 buildings located on 201 acres, totaling approximately 9.1 million gross square feet. Duke University Health System is the second largest employer in the Raleigh–Durham area, while Duke University is the largest

TENANT SUMMARY

private employer in North Carolina. Duke University Health System has approximately 16,627 full-time employees, while the academic Duke University Medical Center has 9,984 fulltime employees including 1,899 faculty in the clinical program, 208 faculty in the basic sciences and 89 faculty in the nursing school. The Private Diagnostic Clinic PLLC—an independent, for-profit limited liability company through which Duke faculty physicians practice medicine—has 1,107 employees. New U.S. News & World Report rankings again place Duke University School of Medicine among the top 10 medical schools in the nation. Duke tied for eighth with Columbia University. Five of Duke’s medical education specialty programs also were ranked in the top 10: > 3rd – Geriatrics > 4th – Internal Medicine > 8th – AIDS > 9th – Women’s Health > 9th – Family Medicine The Duke University School of Medicine comprises 21 basic science and clinical departments and numerous centers and institutes, with more than 2,000 faculty members. For the class entering in September 2014, the School of Medicine received more than 6,100 applications for 109 slots.

TENANT SUMMARY

Suite:

1200

Suite:

1640 & 1700

Square Footage:

11,725

Square Footage:

11,448

Lease Expiration:

December 2016

Lease Expiration:

September 2025

Tenant Since:

January 2003

Tenant Since:

Website:

www.jwth.com

Website:

Established in 1984, Jenkins, Wilson, Taylor & Hunt, P.A. is a specialized law practice devoted exclusively to providing intellectual property counseling and services to clients with respect to patent, trademark, and copyright law. With a team of over 40 professionals and staff, the firm assists clients in recognizing, defining and safeguarding intellectual property and acting to preserve that property for full commercial exploitation. Our clients represent a diversity of technologies, products, and services, including biotechnology products and processes, food processing equipment and products, chemicals, pharmaceuticals, medical devices, products and diagnostic equipment, electrical apparatus and circuitry, micro electrical-mechanical systems devices, semiconductors, fiber optics, robotics, mechanical and industrial apparatus and manufacturing equipment, automated mail processing apparatus, textile machinery and products, and computer software.

1987 www.universityclubnc.com

Established in 1987, the University Club is Durhamâ&#x20AC;&#x2122;s premier private dining club. The Club is home to members who conduct business and entertain socially in a fine dining atmosphere. Located in the 11,000-square-foot 17th-floor penthouse of the University Tower, the University Club offers gourmet dining with luxurious furnishings, gleaming chandeliers and tastefully arranged rooms. Throughout the Club, sparkling windows offer magnificent panoramic views of Durham, Chapel Hill, Duke University and Duke Forest. With six finely appointed private rooms, the University Club offers a variety of settings that can accommodate every event from an elegant wedding reception to an upbeat sales seminar. Conveniently located near Duke University, UNC Chapel Hill and NC Central University, the University Club provides the perfect location for educational programs and academic celebrations.

The firm engages in an extensive domestic and foreign practice serving U.S. and foreign clients in intellectual property matters. The client base is diverse and includes large corporations and research universities as well as small businesses. A primary objective of the firm is to provide high-quality patent legal services in a cost-efficient and expeditious manner.

OFFERING MEMORANDUM

UNIVERSITY TOWER

WELLS FARGO ADVISORS Suite:

900

Suite:

1500

Square Footage:

7,501

Square Footage:

7,398

Lease Expiration:

February 2020

Lease Expiration:

April 2020

Tenant Since:

May 1999

Tenant Since:

Stock Symbol:

NYSE: BAC

Stock Symbol:

Website:

www.bankofamerica.com

Bank of America is one of the world’s largest financial institutions, serving individual consumers, small businesses, middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 48 million consumer and small business relationships with approximately 4,900 retail-banking offices and approximately 15,700 ATMs and award-winning online banking with 31 million active users and more than 16 million mobile users. Bank of America is among the world’s leading wealthmanagement companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately three million smallbusiness owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries.

TENANT SUMMARY

Website:

January 1999 NYSE: WFC (Wells Fargo) www.wellsfargoadvisors.com

With $1.4 trillion in client assets as of June 30, 2014, Wells Fargo Advisors provides investment advice and guidance to clients through 15,189 full-service financial advisors and 3,472 licensed bankers. This vast network of advisors, one of the nation’s largest, serves investors through locations in all 50 states and the District of Columbia. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC.

UNIVERSITY TOWER

FINANCIAL ANALYSIS

OFFERING MEMORANDUM

UNIVERSITY TOWER

FINANCIAL ANALYSIS METHOD OF ANALYSIS The following cash-flow projection is based upon current lease information and assumptions regarding future occupancy, operating expenses, and revenues. The analysis period begins as of August 1, 2015. Both contractual lease terms for existing leases and anticipated lease terms for future lease contracts are projected over a tenyear analysis period. Upon expiration of a lease, a market rent is assigned to the space upon commencement of a new lease. The market rent is established for 2015 and increased by the rental growth rate on an annual basis during the analysis period. The assumptions for market rents, tenant improvements and leasing commissions are based upon current market activity and lease transactions completed at the property. The attached cash-flow projections have been prepared by CBRE using ARGUS software and incorporating appropriate assumptions that are detailed in the Table of Assumptions on the following pages. The projections set forth in this Offering Memorandum do not constitute a representation, warranty or guaranty by CBRE or the Owner of any of the numbers set forth herein or of any economic value attributable to the Property or income that may be derived therefrom.

F I N A N C I A L A N A LY S I S

FINANCIAL ANALYSIS

DETAILED SUMMARY OF ASSUMPTIONS Analysis Period The cash flow presented in the Offering Memorandum and ARGUS model herein commences August 1, 2015. The enclosed analysis includes a 10-year cash flow analysis.

MARKET LEASING ASSUMPTIONS Market Rent Growth

GLOBAL SUMMARY Rentable Area The following is a summary of the components of the leased rentable area. There is an opportunity to increase rentable square footage at the expiration of the Duke lease in 2020.

Market Rent

SF Totals Total Leased Management Vacant Additional SF Totals

Current SF 170,441 833 13,695 617 185,586

Current Space Available Available space in the building is assumed to be leased up over an 12 month period. Growth Rates Growth Rate Other Income Operating Expenses Real Estate Taxes

2.50% 2.50% 2.50%

Vacancy / Credit Loss 4.00% of PGR General Vacancy Loss factor includes losses attributable to projected lease up, rollover downtime, and fixturing downtime. The following tenants are excluded from this loss factor for current lease terms only: Duke University Health, Duke, Bank of America, Suntrust Mortgage, and Wells Fargo.

2016 5.90%

2017 5.30%

2018 4.60%

2019 3.90%

2020+ 3.00%

Based on CBRE Economic Advisors for Raleigh/Durham, Q1 2015

Office

$24.75 PSF

Executive Suites

$30.00 PSF

Lease Terms Office

6 Years

Executive Suites

3 Years

Rent Adjustment Within Term All Leases 3.00% Annually Renewal Probability 75% Downtime Before Probability of Renwal Applied All Tenants 6 Months Recovery Method Office

Base Stop with 95% Gross Up

Executive Suites

None

Capital Expenditures There are a number of ongoing capital improvement projects currently underway at the property, including, Elevator Modernization, and Corridor Upgrades (on floors 2, 3, 5, 7, 11 per the 2014 Duke Lease). The analysis assumes these capital projects are complete and any outstanding balance will be credited to the buyer at closing. Capital Reserve $0.15 PSF

OFFERING MEMORANDUM

UNIVERSITY TOWER

None

EXPENSES Operating expenses for the property are based upon the current ownershipâ&#x20AC;&#x2122;s 2015 budget after deducting one-time or owner specific expenses.

Rental Abatements are applied outside of the lease term and are only for available space within the first 24 months of the valuation.

Repairs and Maintenance Various one time expense items have been removed from the analysis.

Tenant Improvements

Plumbing Repair General Exterior Repair Marble Restoration Window/Wall Repair Parking Garage Exterior Paint Roof Socket Repair Drainline Extension Corridor Door Refinish Electricity Electricity is presented net of submetered electricity. The reduction is separate from the University Club charge detailed above of $1,700 per month.

MARKET LEASING ASSUMPTIONS - CONTINUED Rent Abatements Office

2 Months

Executive Suites

New Renewal

Office

Executive Suites

$18.00 PSF

$5.00 PSF

$6.00 PSF

$2.00 PSF

Leasing Commissions New

6.00%

Renewal

4.00%

REVENUES Parking Income Based on current parking leases escalated at 2.50%. University Club Utility This Revenue is based on a $1,700 per month charge from University Club for after hours electricity usage.

Security Non-recurring fire alarm repairs have been removed from the budgeted expense. Non-Reimbursable Non-reimbursable items include a general repairs contingency, equipment rental for copiers in the executive suites, locks and keys, cable tv and internet for the breakroom, tenant relations, accounting/legal fees, filing fees, bank service fees, postage and mileage. The budget includes an additional leasing/marketing expense. This expense is meant to offset revenue recognized in the budget associated with the IMG lease. Considering our analysis assumes a new owner will convert the IMG lease to true income, we have removed this expense. Specific Tenant Assumptions Duke -- As noted above, there is an opportunity to recapture square footage when the Duke lease expires in 2020. Duke executed a direct lease on 58,299 RSF, when its sublease with Blue Cross Blue Shield expired. The description of the premises notes square footage greater than 58,299, however an estoppel executed by Duke confirms the smaller square footage. The model assumes 617 SF will be recaptured in February 2020. IMG College -- Tenant is currently providing marketing services in lieu of cash rent payments. The landlord has the right to demand cash payment instead of services, at which point the tenant has the right to terminate the lease. Our analysis assumes the tenant will provide cash payments moving forward.

F I N A N C I A L A N A LY S I S

FY 2015

($0.16)

(272,748)

(63,912)

(21,036)

(35,940)

(9,888)

(102,408)

(369,792)

(38,928)

(34,920)

(29,400)

Utilities

Security

Parking

Landscaping

Communications

Management Fee

RE Tax

Insurance

General

$15.24

2,718,000

NET OPERATING INCOME

OFFERING MEMORANDUM (27,745) (473,263) 2,345,662

($0.15) ($2.56) $12.68

OPERATING CASH FLOW

Capital Reserves

TOTAL CAPITAL COSTS

(176,947)

($1.45) ($0.96)

Tenant Improvements

(268,571)

2,818,925

(1,408,807)

(29,830)

(35,432)

(39,490)

(375,180)

(105,693)

(10,034)

(36,465)

(21,339)

(64,844)

(282,682)

(248,243)

(159,575)

4,227,732

20,400

7,549

42,172

4,157,611

($82,090)

($215,191)

Leasing Commissions

CAPITAL COSTS

($7.62)

(1,378,224)

($0.21)

($2.03)

($0.57)

($0.05)

($0.20)

($0.12)

($0.35)

($1.53)

Total Operating Expenses

Nonreimbrusable

($0.19)

(244,680)

($1.34)

(154,572)

Repairs and Maintenance

($0.86)

$22.86

4,096,224

Janitorial

EXPENSES

EFFECTIVE GROSS REVENUE

$22.86 $0.00

Total Potential Gross Revenue

$0.11

$0.04

$0.23

$22.48

($0.44)

($1.16)

$24.08

4,096,224

University Club Revenue

General Vacancy

7,440

20,400

Parking Income

17,748

4,050,636

Total Scheduled Base Rent

Expense Reimbursement Revenue

(340,968)

Absorption & Turnover Vacancy

Base Rent Abatements

4,391,604

Base Rental Revenue

Scheduled Base Rent $4,454,892

2,829,146

(247,675)

(27,745)

(103,546)

(116,384)

3,076,821

(1,457,899)

(30,576)

(36,318)

(40,477)

(384,559)

(113,368)

(10,285)

(37,377)

(21,872)

(66,465)

(295,800)

(254,449)

(166,353)

4,534,720

20,400

7,737

74,566

4,432,017

($56,690)

($87,908)

$4,576,615

$24.96

$24.00

Prevailing Market Rent (PSF)

$/SF/Year

98.08%

95.17%

Physical Occupancy

In-place

96.84%

93.33%

Overall Economic Occupancy

REVENUES

Jul-2017

Jul-2016

Fiscal Year Ending Jul-31

CASH FLOW

2,314,646

(836,009)

(27,745)

(374,859)

(433,405)

3,150,655

(1,488,034)

(31,340)

(37,226)

(41,489)

(394,173)

(115,967)

(10,542)

(38,311)

(22,419)

(68,127)

(299,035)

(260,810)

(168,595)

4,638,689

(40,055)

4,678,744

20,400

7,931

90,172

4,560,241

($17,894)

($190,683)

$4,768,818

$25.96

96.00%

94.79%

Jul-2018

3,382,754

(111,098)

(27,745)

(38,931)

(44,422)

3,493,852

(1,542,779)

(32,123)

(38,157)

(42,526)

(404,028)

(125,916)

(10,806)

(39,269)

(22,979)

(69,830)

(313,694)

(267,331)

(176,120)

5,036,631

(51,384)

5,088,015

20,400

8,129

107,082

4,952,404

($22,291)

$4,974,695

$26.74

99.55%

98.52%

Jul-2019

1,943,694

(1,462,207)

(27,792)

(675,680)

(758,735)

3,405,901

(1,554,474)

(32,926)

(39,111)

(43,589)

(414,128)

(124,009)

(11,076)

(40,251)

(23,554)

(71,576)

(306,599)

(274,014)

(173,641)

4,960,375

(57,049)

5,017,424

20,400

8,332

101,343

4,887,349

($394,311)

$5,281,660

$27.54

92.53%

91.45%

Jul-2020

3,683,324

(294,945)

(27,838)

(125,546)

(141,561)

3,978,269

(1,625,950)

(33,750)

(40,088)

(44,679)

(424,481)

(140,105)

(11,353)

(41,257)

(24,143)

(73,365)

(327,696)

(280,864)

(184,169)

5,604,219

(63,708)

5,667,927

20,400

8,540

93,335

5,545,652

($70,074)

$5,615,726

$28.37

98.75%

97.62%

Jul-2021

3,950,010

(238,320)

(27,838)

(99,221)

(111,261)

4,188,330

(1,669,786)

(34,593)

(41,091)

(45,796)

(435,093)

(146,453)

(11,637)

(42,288)

(24,746)

(75,199)

(336,122)

(287,886)

(188,882)

5,858,116

(30,228)

5,888,344

20,400

8,754

128,406

5,730,784

($66,692)

$5,797,476

$29.22

98.85%

98.33%

Jul-2022

3,758,562

(552,478)

(27,838)

(250,865)

(273,775)

4,311,040

(1,707,761)

(35,458)

(42,118)

(46,941)

(445,971)

(150,470)

(11,928)

(43,346)

(25,365)

(77,079)

(341,700)

(295,083)

(192,302)

6,018,801

20,400

8,973

137,930

5,851,498

($141,880)

$5,993,378

$30.09

97.63%

Jul-2023

3,408,504

(926,383)

(27,838)

(425,588)

(472,957)

4,334,887

(1,741,883)

(36,345)

(43,171)

(48,114)

(457,120)

(151,919)

(12,226)

(44,429)

(25,999)

(79,006)

(345,958)

(302,460)

(195,136)

6,076,770

(27,758)

6,104,528

20,400

9,197

147,342

5,927,589

($251,331)

$6,178,920

$31.00

95.93%

95.48%

Jul-2024

4,523,277

(126,851)

(27,838)

(46,967)

(52,046)

4,650,128

(1,804,490)

(37,253)

(44,250)

(49,317)

(468,548)

(161,365)

(12,531)

(45,540)

(26,649)

(80,981)

(363,789)

(310,022)

(204,245)

6,454,618

(61,876)

6,516,494

20,400

9,427

149,562

6,337,105

($26,696)

$6,363,801

$31.93

99.58%

98.61%

Jul-2025

2,627,428

(1,838,311)

(27,838)

(865,413)

(945,060)

4,465,739

(1,813,055)

(38,185)

(45,356)

(50,550)

(480,262)

(156,970)

(12,845)

(46,678)

(27,315)

(83,006)

(353,634)

(317,772)

(200,482)

6,278,794

8,500

9,663

131,679

6,128,952

($519,520)

$6,648,472

$32.88

92.19%

Jul-2026

FINANCIAL ANALYSIS

UNIVERSITY TOWER EXISTING LEASE EXPIRATIONS Net Rentable

Percentage

Cumulative

Fiscal

Number

Square Feet

Square Feet Expiring

Year

of Suites

Expiring

2015

704

0.38%

2016

22,875

12.37%

12.75%

2017

6,486

3.51%

16.25%

2018

40,333

21.81%

38.06%

2019

2,552

1.38%

39.44%

2020

86,807

46.93%

86.37%

2021

0.00%

86.37%

2022

0.00%

86.37%

2023

0.00%

86.37%

2024+

10,684

5.78%

92.15%

Subtotal

170,441

92.15%

833

0.45%

92.60%

Maintenance/Breakroom Vacant

13,695

7.40%

100.00%

TOTAL

184,969

100.00%

100,000 90,000

RENTABLE SQUARE FEET

80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2015

2016

F I N A N C I A L A N A LY S I S

2017

2018

2019

2020

2021

2022

2023

2024+

FINANCIAL ANALYSIS RENT ROLL Square

Pro-rata

Suite

Feet

of Building

Begin

Lease Term End

Suntrust Mortgage

959

0.52%

Jan-1998

Aug-2018

100 Comments/Options

Rental Increases

Rental Rates

Begin

Monthly

Annually

PSF

Recovery Type 2015 Base Year

Current

$2,384

$28,607

$29.83

Sep-2015

$2,238

$26,852

$28.00

Sep-2016

$2,305

$27,658

$28.84

Sep-2017

$2,374

$28,492

$29.71

Tenant shall have the option to renew lease for one additional term of three years with six months notice at fair market rent. Couch & Associates

704

0.38%

Sep-2012

Nov-2015

105

Current

$1,480

$17,755

$25.22

Sep-2015

$1,517

$18,198

$25.85

Current

$65,052

$780,625

$22.78

Sep-2015

$66,851

$802,214

$23.41

2012 Base Year

Comments/Options Landlord at its option reserves the right to substitute the premises for another space in the building. Breakroom

472

0.26%

34,268

18.53%

109 Duke University Health

Jun-1993

Feb-2018

111, 400, 408, 600, 804, 1000, 1300

2009 Base Year

Sep-2016

$68,679

$824,145

$24.05

Sep-2017

$70,564

$846,762

$24.71

Current

$2,678

$32,130

$25.46

2013 Base Year

2014 Base Year

Comments/Options Tenant shall have two five year options with 180 days notice. The base rental rate shall be either a rental rate mutually agreed to between the tenant and the landlord or the current market rental rate. Tenant shall have a first right to lease on any floor space located in the building which is, or shall become "available for lease" during the lease term. Available

2,000

1.08%

361

0.20%

1,262

0.68%

Feb-2013

Apr-2016

58,299

31.52%

Jul-2014

Jan-2020

400A Maintenance Office 113 Tucker Bria Wealth 117 Current

$110,525

$1,326,302

$22.75

Jul-2015

$113,586

$1,363,031

$23.38

Jul-2016

$116,695

$1,400,342

$24.02

Jul-2017

$119,902

$1,438,819

$24.68

Comments/Options

Jul-2018

$123,205

$1,478,463

$25.36

Tenant Shall have the right to extend the lease for two additional periods of five years each with nine months notice. The Base rent shall be the fair market rental rate. Tenant shall have the right to lease the 14th floor between October 15, 2014 and June 30, 2015 under the same terms of the original Premises. The free rent period will be reduced to 1 month for the expansion space. Landlord shall provide an allowance of $8.00 PSF. Subject to the rights of other tenants in the building, including any existing renewal or extension rights of other tenants, Landlord grants tenant a continuing right of first refusal to lease all space in the building that is vacant or becomes vacant during the Term.

Jul-2019

$126,606

$1,519,272

$26.06

Duke (New Lease) 118, 200, 300, 500, 700, 1100

IMG College

2,596

1.40%

Jun-2012

Jun-2017

404

Current

$5,138

$61,655

$23.75

Jun-2015

$5,292

$63,498

$24.46

Jun-2016

$5,614

$67,366

$25.95

2012 Base Year

Comments/Options Tenant is currently providing marketing services in lieu of cash rent payments. The landlord has the right to demand cash payment instead of services, at which point the tenant has the right to terminate the lease. Our analysis assumes that the tenant will provide cash payments moving forward. DLP Healthcare

2,639

1.43%

Aug-2012

Apr-2018

406

Current

$5,366

$64,392

$24.40

Dec-2015

$5,527

$66,318

$25.13

Dec-2016

$5,694

$68,324

$25.89

2012 Base Year

Comments/Options Tenant has two options for 5 years each with 180 days notice. Rent shall be at fair market value or a rate mutually agreed to between the landlord and Tenant.

OFFERING MEMORANDUM

UNIVERSITY TOWER RENT ROLL Suite Taibi Kornbluth Law

Square

Pro-rata

Feet

of Building

Begin

Lease Term End

2,552

1.38%

Apr-2006

Apr-2019

800

Momentum Research, I

4,591

2.48%

Aug-2007

Mar-2016

Rental Increases

Rental Rates

Begin

Monthly

Annually

PSF

Recovery Type

Current

$5,232

$62,779

$24.60

2014 Base Year

Mar-2016

$5,363

$64,361

$25.22

Mar-2017

$5,497

$65,969

$25.85

Mar-2018

$5,634

$67,602

$26.49

Current

$10,819

$129,834

$28.28

2010 Base Year

Current

$7,586

$91,036

$26.87

2010 Base Year

2015 Base Year

802 Comments/Options Landlord at its option reserves the right to substitute the premises for another space in the building. Momentum Research, I

3,388

1.83%

Sep-2010

Mar-2016

808, 810 Comments/Options Landlord at its option reserves the right to substitute the premises for another space in the building. Bank of America

7,501

4.06%

Mar-1999

Feb-2020

900

Current

$14,533

$174,398

$23.25

Nov-2015

$14,971

$179,649

$23.95

Nov-2016

$15,421

$185,050

$24.67

Comments/Options

Nov-2017

$15,883

$190,600

$25.41

Tenant shall have the option to extend the term for an additional five years with 270 days notice. The option shall be 103% of the base rental rate in effect during the final year of the term with 3% escalations thereafter. Tenant shall have the right to terminate the lease efective February 28, 2018 with notice no later than March 31, 2017. The tenant shall pay a fee equal to the landlord’s unamortized costs for the broker commissions and allowances being $96,759.88 - discounted at an 8% interest rate, plus an amount equal to 6 months base rent. Through October 30, 2017, tenant shall have the right of first offer for the remaining space on the 9th floor.

Nov-2018

$16,358

$196,301

$26.17

Nov-2019

$16,846

$202,152

$26.95

Zoweh Ministries, Inc.

1,483

0.80%

Nov-2014

Jan-2018

901

Current

$3,090

$37,075

$25.00

Feb-2016

$3,182

$38,187

$25.75

Feb-2017

$3,277

$39,329

$26.52

2015 Base Year

Comments/Options Landlord at its option reserves the right to substitute the premises for anther space in the building. Available

1,850

1.00%

May2015

Jul-2020

11,725

6.34%

Mar-2011

Dec-2016

925 Jenkins, Wilson & TA 1200

Current

$25,179

$302,153

$25.77

Mar-2016

$25,932

$311,181

$26.54

2011 Base Year

Comments/Options Tenant shall have the first right to lease on any space located on the 11th floor which is or shall be available for lease 18 months prior to the expiration date. If the tenant desires to exercise the First Right to Lease when there are 36 months remaining on the Lease Term, in order for Tenant to exercise such right it must simultaneously exercise its renewal option, and in the event the tenant does not have a renewal option available at that time, the First Right to Lease shall be null and void. Tenant shall have the option to renew the lease for one additional five year period with 270 days notice. the rental rate shall be equal to either a rental rate mutually agreed upon by landlord and tenant or the “current market rental rate”. Available

4,011

2.17%

11,725

6.34%

1310, 1321 Duke University Health

Aug-2015

Oct-2020

1400

Current

$22,961

$275,538

$23.50

Sep-2016

$23,650

$283,804

$24.21

Sep-2017

$24,360

$292,318

$24.93

Comments/Options

Sep-2018

$25,091

$301,087

$25.68

Based on current LOI with Duke University. LOI incorporates the expansion of the existing Duke lease into Suite 1400, with Duke giving back Suites 1310, 1321 (4,011 RSF) and a portion of Suite 400 (2,000 RSF)

Sep-2019

$25,843

$310,120

$26.45

Sep-2020

$26,619

$319,423

$27.24

F I N A N C I A L A N A LY S I S

2015 Base Year

FINANCIAL ANALYSIS

Suite Wells Fargo

Square

Pro-rata

Feet

of Building

Begin

Lease Term End

7,398

4.00%

Oct-2002

Apr-2020

1500

Rental Increases

Rental Rates

Begin

Monthly

Annually

PSF

Recovery Type 2015 Base Year

Current

$14,796

$177,552

$24.00

Apr-2016

$15,240

$182,879

$24.72

Apr-2017

$15,697

$188,365

$25.46

Comments/Options

Apr-2018

$16,168

$194,016

$26.23

Tenant shall have the right to $147,960 ($20.00 PSF) in tenant improvement allowance to be dispursed prior to December 31, 2015. At Any time during the first 12 months, the tenant shall have the right to apply up to $36,990 ($5.00 psf) or the remainder of the TI Allowance after construction costs. Tenant shall have the oprion to extend the term for a a period of five years each, with 9 months notice. the Base rent shall be equal to either a rate mutally agreed to by the landlord and tenant or the current market rate. Tenant shall have the ongoing right of refusal to additional space on the 15th floor of the building.

Apr-2019

$16,653

$199,836

$27.01

Available

3,835

2.07%

382

0.21%

3,890

2.10%

1500A Available 1600 Ameritas Life Insurance

Nov-2011

May-2017

1601

Current

$8,146

$97,756

$25.13

Nov-2015

$8,389

$100,673

$25.88

Nov-2016

$8,642

$103,707

$26.66

Current

$4,553

$54,636

$29.00

2012 Base Year

Comments/Options Landlord at its option reserves the right to substitute the premises for another space in the building. Tenant shall have the right to extned the lease for one additional five year period with 180 days notice. The Base Rent shall be one hundred three percent of the basic annual rent for the last year of the initial lease term. The basic annual rent shall continue to increase at the rate of 3% per year during the renewal period. ACWMG, LLC

1,884

1.02%

May2015

Aug-2020

1605

Jun-2016

$4,690

$56,275

$29.87

Jun-2017

$4,831

$57,971

$30.77

Comments/Options

Jun-2018

$4,975

$59,704

$31.69

Tenant shall have the right to extend the lease period for an additional five year term, with 180 days notice at the current market rental rate. Landlord shall have the right to relocate the tenant.

Jun-2019

$5,124

$61,494

$32.64

Jun-2020

$5,278

$63,340

$33.62

Available

1,617

0.87%

984

0.53%

2015 Base Year

1605A Neil O'Toole

Oct-2008

Dec-2018

1610

Current

$2,317

$27,808

$28.26

Oct-2015

$2,376

$28,506

$28.97

Oct-2016

$2,435

$29,215

$29.69

Comments/Options

Oct-2017

$2,495

$29,943

$30.43

In the event Landlord exercises its right to relocate Tenant as described in Article 26th at any time following the 39th month after the extension commencement date, and the Tenant, in Tenantâ&#x20AC;&#x2122;s reasonable discretion, does not approve the proposed relocation premises, then the Tenant may terminate the Lease. Tenant shall have one five year renewal option with 180 days notice. The base annual rent shall continue to increase at 2.50%.

Oct-2018

$2,558

$30,691

$31.19

Current

$1,400

$16,800

$43.98

Current

$1,400

$16,800

$43.98

Concordis Group, Inc.

382

0.21%

Nov-2013

Oct-2016

2014 Base Year

1620 Comments/Options Landlord may terminate this lease (with or without cause) upon 90 days written notice to Tenant. Howard K. Ross

382

0.21%

Nov-2013

Oct-2016

1630 Comments/Options Landlord may terminate this lease (with or without cause) upon 60 days written notice to Tenant.

OFFERING MEMORANDUM

UNIVERSITY TOWER RENT ROLL Square

Pro-rata

Suite

Feet

of Building

Begin

Lease Term End

Rental Increases Begin

Monthly

Rental Rates Annually

PSF

University Club

764

0.41%

Nov-2013

Oct-2016

Current

$1,800

$21,600

$28.27

Current

$600

$7,200

$18.90

Recovery Type

1640 Comments/Options Landlord may terminate this lease (with or without cause) upon 60 days written notice to Tenant. Michael Hemmerich

381

0.21%

Nov-2013

Oct-2016

1650 Comments/Options Landlord may terminate this lease (with or without cause) upon 60 days written notice to Tenant. 10,684

University Club

5.78%

Oct-2010

Sep-2025

1700

Current

$17,299

$207,590

$19.43

Oct-2015

$19,080

$228,958

$21.43

Oct-2016

$19,445

$233,339

$21.84

Comments/Options

Oct-2017

$19,819

$237,826

$22.26

Pursuant to the First Amendment, tenant owes Landlord the sum of $98,956.92 for excess costs associated with Landord work. The Parties hereby agree as follows: (i) the $58,000 rent forgiveness credit otherwise due the tenant shall be applied to the $98,956.92 owed from the tenant to the Landlord for excess costs, reducing the balance due from the Tenant for Excess costs to $40,56.92; and (ii) the 40,956.92 in the remaining costs shall be amortized into the basic annual rent at a rate of eight percent per annum as part of the basic annual rent from January 1, 2015 through December 31, 2019. Lease is Guarenteed by Sun Lee Santel and Kelly Joseph Santel.

Oct-2018

$20,202

$242,420

$22.69

Oct-2019

$20,593

$247,121

$23.13

Total Occupied Office

171,274

92.60%

Total Vacant Office

13,695

7.40%

Total Office

184,969

100.00%

F I N A N C I A L A N A LY S I S

Jan-2020

$19,765

$237,185

$22.20

Oct-2020

$20,157

$241,886

$22.64

Oct-2021

$20,558

$246,694

$23.09

Oct-2022

$20,967

$251,608

$23.55

Oct-2023

$21,386

$256,630

$24.02

Oct-2024

$21,813

$261,758

$24.50

2014 Base Year

UNIVERSITY TOWER

THE TRIANGLE ECONOMY

OFFERING MEMORANDUM

UNIVERSITY TOWER

THE TRIANGLE ECONOMY RALEIGH–DURHAM–CHAPEL HILL CSA Raleigh–Durham–Chapel Hill Combined Statistical Area (CSA) exhibits vibrant growth that exceeds national trends, and enjoys a diverse and powerful economy with excellent job opportunities and a quality of life that has captured the attention of many who follow relocation trends. National publications have brought international recognition to the region for its pro-business atmosphere and affordable high-quality lifestyle. Several factors distinguish the area from most other desirable CSAs, including a diversified economy, excellent transportation infrastructure and a high quality of life.

THE TRIANGLE ECONOMY

THE TRIANGLE ECONOMY “Raleigh–Durham will continue to expand and be the leader in North Carolina thanks to its concentration in education,

healthcare and the Triangle’s science and tech-based cluster. The metro area is expected to outpace the U.S. in longterm job, income and output growth.”

–Moody’s Analytics, July 2014

INCOME AND POPULATION In August 2014, the United Nations Population Division ranked and projected Raleigh as the #2 Fastest Growing Large U.S. City from 2010 to 2030. Additionally, in July 2014, Forbes ranked Raleigh the #1 Best Place for Business. RALEIGH–DURHAM MSA Population: 2015 (Estimated)

1,787,447

2020 (Projected)

1,924,188

2010 Census

1,634,847

Growth 2000–2015

9.33%

Growth 2015–2020

7.65%

Households: 2015 (Estimated)

690,832

2020 (Projected)

743,915

2010 Census

633,053

Growth 2000–2015

9.13%

Growth 2015–2020

7.68%

2015 Estimated Average Household Income Source: Nielsen

$80,155

As the previous table demonstrates, the population for the metro area exhibited growth well over 9% between 2000 and 2015. The 2015 average household income in the Raleigh–Durham MSA stands at $80,155. Income levels are currently increasing at very aggressive rates, and the number of households represented by higher income levels is considerably higher than they were a decade ago. ECONOMY The area’s stable employment base is reflected in unemployment trends with relatively smooth peaks and valleys. As the national and local economies have regained strength, the Raleigh unemployment rate has ranged from a high of 9.1% to a low of 5.2% within the past three years. The first quarter unemployment rate of 4.6% in the Raleigh–Durham metro area is substantially lower than both the statewide unemployment rate of 5.7% and the national unemployment rate of 5.5%. The MSA ranks in the Top 12 major markets nationally for lowest unemployment. The regional labor force of over 850,000 is supplemented each year by graduates of the area’s top-tier universities (Duke University, University of North Carolina, North Carolina State University and North Carolina Central University) and by workers and companies relocating from outside the area.

UNEMPLOYMENT RATES 1Q15 4Q14 3Q14 2Q14 1Q14 4Q13 3Q13 2Q13 1Q13 4Q12 3Q12 2Q12 1Q12 4Q11 3Q11 2Q11 1Q11 3Q10 4Q10 2Q10

Raleigh 4.6% 4.3% 5.0% 5.0% 5.2% 5.3% 6.8% 7.5% 7.1% 7.5% 7.8% 7.7% 8.4% 8.4% 8.5% 7.9% 7.7% 7.2% 7.4% 7.9%

NC 5.7% 5.5% 6.8% 6.4% 6.5% 7.4% 8.7% 8.8% 9.2% 9.2% 9.6% 9.4% 9.7% 9.9% 9.1% 9.9% 10.1% 9.6% 9.7% 10.0%

U.S. 5.5% 5.6% 5.9% 6.1% 6.7% 6.6% 7.4% 7.6% 7.6% 7.8% 7.8% 8.2% 8.2% 8.5% 10.5% 9.2% 8.8% 9.6% 9.4% 9.5%

OFFERING MEMORANDUM

UNIVERSITY TOWER MAJOR EMPLOYERS, RALEIGH–DURHAM MSA Employer

THE PUBLIC SECTOR Raleigh–Durham is insulated from severe economic downturns due to a high percentage of employment in the public sector including federal, state and local governments plus local public universities and hospital-related employers. Among the Top 52 employers with employment above 1,000, the public sector represents 25 organizations that employ over 150,000 people. These public employers are either growing or maintaining a stable workforce. THE TECHNOLOGY SECTOR High technology is a staple of the local economy, and Raleigh– Durham has earned a reputation for attracting diversified technology employers. Of the Top 52 employers with employment over 1,000, high technology represents 25% of 186,000 jobs. Although the technology sector has endured recent challenges, especially in the telecommunication industry, high-tech jobs represent the future of the market and are responsible for recent gains in total employment. HEALTHCARE The Triangle area ranks sixth in physicians per capita in the nation according to the most recent U.S. Census. The physician-to-population ratio is five times the national average and the bed-to-population ratio is two times the national average. Durham, heralded as “The City of Medicine”, employs 30% of the workforce in health-related jobs. The presence of world-renowned Duke Medical Center is the primary reason for Durham’s acclaim. The establishment of this industry has influenced the relocation and expansion of many pharmaceutical and biotechnology companies within the immediate area.

THE TRIANGLE ECONOMY

Employees

State of North Carolina

24,739

Duke University Health System

18,000

Wake County Public School System

17,572

IBM Corporation

10,500

Duke University

10,000

North Carolina State University

7,730

Wake Med Health & Hospitals

7,607

GlaxoSmithKline

4,900

Rex Healthcare

4,800

SAS Institute, Inc.

4,742

Wake County Government

4,272

Cisco Systems

3,800

City of Raleigh

3,000

Verizon Business

3,000

Duke Energy

2,500

Affiliated Computer Services

2,300

RTI International

2,200

Four Fortune 1000 (two of which are Fortune 500) companies are headquartered in the Raleigh–Durham region. FORTUNE 1000 COMPANIES IN THE TRIANGLE 2014 Fortune 1000 Rank

City

County

2013 Revenue (In Millions)

The Pantry, Inc.

371

Cary

Wake

$7,013

Quintiles Transnational Holdings, Inc.

486

Durham

$5,100

Alliance One International, Inc.

904

Morrisville

Wake

$2,244

923

Raleigh

Wake

$2,159

Company

Martin Marietta Materials, Inc. Source: Fortune

THE TRIANGLE ECONOMY HIGHER EDUCATION Education has always been a priority in the Triangle. As a result, the K–12 schools, colleges and universities are rated as some of the best in the nation. Approximately 50% of the population over the age of 25 holds a bachelor’s degree or higher, easily placing Wake County as one of the most highly educated counties in the country. > Average SAT of 1585 (of 2400) in Wake County; 1480 in NC and 1506 in U.S. > 166 schools (104 elementary, 33 middle, 25 high and 4 special/optional) North Carolina State University With a total enrolment of more than 34,000 students and nearly 8,000 faculty and staff, North Carolina State University (NC State) is the largest university in the North Carolina system. The university is known for its leadership in science, technology, engineering and mathematics and offers 106 bachelors’ degrees. The graduate school offers 104 master’s degrees, 61 doctoral degrees, and a Doctor of Veterinary Medicine. NC State consistently ranks among the nation’s top 50 public universities and is ranked by Princeton Review as a best value for students. University of North Carolina The University of North Carolina at Chapel Hill (UNC) is the oldest state university in the United States. It has been recognized for the quality of its graduate programs in every national survey conducted in the latter third of this century and is consistently ranked by U.S. News & World Report as one of the best colleges and research universities in the nation. The UNC library system contains nearly four million volumes and is ranked among the top research libraries in North America. UNC’s academic offerings span more than 100 fields, including bachelor’s, master’s and doctoral degrees as well as professional degrees in dentistry, medicine, pharmacy and law. The university’s five health schools are integrated with liberal arts, basic sciences and high-tech academic programs. The university has approximately 12,000 staff and over 26,000 undergraduate and graduate students. Duke University and Duke Medical Center Duke University and Duke Medical Center together employ over 34,000 people. Duke is a private research university located in Durham with approximately 14,500 students. Duke is a nationally recognized research and educational institution with impressive accolades. U.S. News & World Report ranked the university’s undergraduate program eighth among national universities in 2013 and the 2012–13 QS World University Rankings ranked Duke 20th globally. The university and medical center are also major economic drivers for the Raleigh region. Forbes magazine ranked Duke seventh in the world on its list of “power factories” in 2012. Duke University Health System employs over 18,000 medical professionals and is one of the most advanced medical centers in the country. Duke’s medical campus totals over 9.1 million square feet.

OFFERING MEMORANDUM

UNIVERSITY TOWER

TRANSPORTATION Raleigh–Durham benefits from access to multiple interstate highways. Major highways include Interstate 85, which connects the Raleigh–Durham area to Richmond, Virginia, and Atlanta, Georgia; Interstate 40, which bisects Research Triangle Park; and Interstate 95, which links New England to Florida and passes through the metropolitan area east of Raleigh. Interstate 540, located north of Downtown, is a growing freeway serving North Raleigh and the RDU International Airport. This beltway serves to connect Interstate 40 and U.S. 64, allowing through-traffic to bypass the Downtown Raleigh area and increase overall accessibility for the central business district. The economic impact of this roadway is positive and serves to boost the significant development momentum and interest for the overall Raleigh–Durham area, as demographic trends show positive increases coinciding with road construction. The western section of the loop (“Triangle Expressway”) that traverses the Research Triangle Park is 39

THE TRIANGLE ECONOMY

slated to open in two phases. The first, the Triangle Parkway, which extends NC 147 to NC 540, opened in December 2011. Phase II, the Western Wake Freeway, opened for traffic in 2012. The Western Wake Freeway is a new multi-lane toll facility from existing NC 540 in western Wake County south of I-40 to NC 55 Bypass in Holly Springs, with a length of approximately 12.6 miles. Interchange connections are proposed for access at NC 55, at Green Level Road, US 64, Old US 1, US 1 and ending at the NC 55 Bypass at Holly Springs. The southern and eastern portions of the Expressway complete the loop and connect NC 540 between US 64 in Apex to NC 55 in Holly Springs. RDU International Airport (RDU) is served by eight major airlines and 19 regional airlines, operating nearly 400 daily flights from two terminals. The total economic impact of RDU to the Triangle economy is more than $2 billion per year, according to North Carolina Department of Transportation figures.

THE TRIANGLE ECONOMY RESEARCH TRIANGLE PARK Research Triangle Park (“RTP” or the “Park”) is centrally located between the three major Triangle research universities: Duke University in Durham, University of North Carolina and North Carolina State University in Raleigh. The Park, with 25 million square feet of developed space, is one of the world’s largest and most successful research and development centers in terms of number of jobs created, capital investment and the prestige of companies located there. Founded in 1959 by leaders from business, government and academia, its purpose was to attract companies engaged in world-class research and development in growing scientific and technological disciplines and is home to more than 170 companies employing over 40,000 fulltime knowledge workers and an estimated 10,000 contract employees. RTP drives Raleigh–Durham’s thriving economy. It is projected that over the next 15 years, employment will increase by 67%, total earnings by 48%, personal income by 46% and total retail sales by 41%. RTP is home to an outstanding, credit-worthy roster of tenants, anchored by its proximity to three world-class universities and the region’s most accessible transportation infrastructure. NetEdge Systems, Cisco Systems, Covance, Biogen, Ericsson, Eisai Pharmatechnology, Inc. of Japan, and Bekaert Corp. of Belgium call RTP home. Furthermore, the Research Triangle Park is home to the Environmental Protection Agency’s largest facility outside of Washington, D.C.—a 1.1-million-square-foot model of “green building”—one of the largest in the world. Other major employers in the Research Triangle Park include IBM, GlaxoSmithKline, DuPont, BASF, Fidelity, Credit Suisse, Becton Dickinson and Rhone Poulenc.

Research Triangle Park Facts: > 7,000 acres > Largest research park in the United States > 170+ companies > Approximate employment of 39,000 full time and 10,000 contract employees > 22.5 million square feet of office and research space > 1,800 startup companies created since 1970 > Capital Investment exceeds $2.8 billion > Total payroll estimated at $2.7 billion

OFFERING MEMORANDUM

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@TheRTP The Research Triangle Park The RTPNC’s Channel

www.rtp.org www.thertpblog.org parkinfo@rtp.org

Connect With Us

Bank of America Bright Horizons at RTP Bright Horizons at The Enrichment Center 37 Craig Davis Properties 37 First Citizens Bank 50 First Environments Early Learning Center 37 RTP Federal Credit Union 19 United States Postal Service 37 Wells Fargo

37 3A 6

Service Providers

DuPont Electronics and Communications 29 ElectroChemical Systems, Inc 52 JMC (USA), Inc 41 Linde 10E Memscap, Inc 34 Mustard Tree Instruments® 7 Sulzer 14 Troxler Electronic Laboratories, Inc 35 Underwriters Laboratories, Inc 7 Vacon, Inc 62 XinRay Systems Inc 62 Xintek, Inc

Instruments & Adv. Materials

108Labs, LLC Bayer CropScience Benson Hill Biosystems, Inc Cheminova, Inc FMC Corporation Intrexon Corporation Monsanto Corporation Nova Synthetix Syngenta Biotechnology, Inc

Agricultural Biotechnology

37 37 25 16 4

16 34

29 16 16 29 29 47

21st Century Creations Alexander Business Suites CrossView, Inc. EHR 2.0 First Flight Venture Center General Services Administration Defense Logistics Live Gamer Motor & Equipment Manufacturers Association NC State University MBA@RTP Passport Health Triangle Pharm-Olam International RTP Capital Associates, Inc The University of North Carolina Center for Public Television

Adherex Technologies Inc Aerie Pharmaceuticals, Inc AgBiome Agile EndoSurgery Alera Labs LLC Alion Science and Technology Corporation Attagene, Inc Avertica Avioq, Inc Baebies, Inc BASF Corporation BD Technologies BHV Pharma, Inc Biogen Idec BioMedica USA, LLC BioMedomics, Inc bioMONTR BioShape Solutions Brite Bio, Inc Camras Vision Centers for Disease Control and Prevention Chaperone Therapeutics, Inc ChemoGenics BioPharma CivaTech Oncology Clinical Sensors, Inc Cloud Pharmaceuticals, Inc Copernicus Group IRB CytoFlow, LLC Dharma Laboratories, LLC

Business & Professional Services

30 44 44 29 29 43 29 44

62 29 44 29 49 36 47 63 44 30 44 29 47 29 47

16 62 44 29 44 42

Biotechnology/Life Sciences

16 44 38 29 37 58 45 23 59 23 15 38 29 29 38 7 38 47 38 12 29 56 10E

3DMedia Corporation Aten Inc Avaya CertiRx Corporation Ciena Corporation Cisco Systems, Inc Compass Datacenters CSC Systems Delta Products Corporation Electronic Consulting Services EMC Corporation Ericsson Exam Design Inc Family Health Network Forse, Inc Freudenberg IT LP GENBAND Gilbarco Veeder-Root HCL Technologies Limited IBM Corporation Integrated Training Solutions, Inc Lenovo MCNC

Information Technology

Dignify Therapeutics Drug Safety Navigator, LLC Eisai, Inc Endacea, Inc Entegrion, Inc ENVIGEN Pharmaceuticals Eton Bioscience Excel Clinical Research Group Fujifilm Diosynth Biotechnologies G1 Therapeutics Galaxy Diagnostics, Inc GENEWIZ GlaxoSmithKline Global Vaccines, Inc Grifols Inc Howard Associates, LLC Humacyte ICON Clinical PLC Impact Pharmaceutical Services, Inc 29 Inanovate 44 Invitrox, Inc 40 KBI Biopharma 44 Martin-Protean, LLC 42 Medicago 47 MethodSense, Inc 44 Mokobio Biotechnology Group 51 National Toxicology Program 10B NC Biotechnology Center 25 Nephrogenex Inc 29 NIRvana Sciences, Inc

29 29 55 29 25 44 44 29 64 25 62 62 3 62 22 28 62 26 25

Microelectronics Assembly Technologies 29 myDrugCosts, Inc 50 National Computing Center 24 NC Families Accessing Services Through Technology 47 NC Healthcare Information and Communications Alliance 61 NetApp, Inc 29 Network Development Group 16 Optricity 29 OSSCube 29 Radius Social 29 Sciome, LLC 17 Sumitomo Electric Lightwave Corporation 12 Toshiba Global Commerce Solutions 25 Triumfant, Inc 16 UAI Technology, Inc 29 Warpwire Inc 29 Zenph, Inc

Novartis Vaccines NovaTarg, Inc Nutrasearch, LLC Oncotide Pharmaceuticals Inc Palmetto Biomedical Panacea Solutions Park Living Cell Ridge Diagnostics SciKon Innovation, Inc Sequenom, Inc Sirga Advanced Biopharma, Inc Southcot, Inc Stiefel, a GSK Company Strensor Systems Symmetry Biosciences Synnovator, Inc Synsei Medical Synthon Pharmaceuticals, Inc T3D Therapeutics Inc Triangle Research Laboratories, LLC 18A United Therapeutics Corporation 11 USDA Forest Service Southern Research Station 3 ViiV Healthcare 44 Vijaya Pharmaceuticals LLC 29 ViraSource 47 Zen-Bio, Inc 29 ZumaTek, Inc

62 29 47 25 29 29 44 29 29 62 29 44 9 29 44 44 29 54 16 30

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American Association of Textile Chemists and Colorists Burroughs Wellcome Fund The Hamner Institutes for Health Sciences International Microelectronics Assembly and Packaging Society International Services Assistance Fund International Society of Automation International Union of Pure & Applied Chemistry National Council for Air and Stream Improvement, Inc National Humanities Center National Inclusion Project National Institute of Environmental Health Sciences National Institute of Statistical Sciences NC State Education Assistance Authority NC GlaxoSmithKline Foundation Research Triangle Foundation of NC Research Triangle High School RTI International Sigma Xi, The Scientific Research Society Society of Biomolecular Imaging and Informatics Statistical & Applied Mathematical Sciences Institute

Foundations, Institutes & Scientific Associations

AXA Advisors Credit Suisse Excelerate Health Ventures Fidelity Investments KD Advisors, LLC

BaseTrace Biofuels Research Institute Bluecell Energy Cree, Inc Maverick Syngas Tetra Tech, Inc United States Environmental Protection Agency

Financial & Insurance Activities 37 53 29 38A 16

29 44 29 18 44 37 50

Clean & Green Technologies

UNIVERSITY TOWER

UR CH ST

THE TRIANGLE ECONOMY

TRIANGLE ACCOLADES #1 Mid-Sized American Cities of the Future (Raleigh), Financial Times – April 2015 2015 Award of Excellence Winner (Greater Raleigh CVB), Corporate & Incentive Travel – April 2015 #2 Cities Creating the Most Tech Jobs (Raleigh), Forbes – April 2015 Among Five LGBT Travel Picks for 2015 (Raleigh), Metro Weekly – March 2015 Among Five American Cities You Should Visit in 2015 (Raleigh), Huffington Post – February 2015 #3 Best Metro Areas for STEM (Science, Technology, Engineering and Math) Professionals (Raleigh MSA),

WalletHub – January 2015

#2 Fastest Growing Minority Cities in America for Hispanics, (#2) Asians and (#6) Blacks (Raleigh),

Brookings Institution – January 2015

#4 Life Science Cluster in the U.S. (Raleigh–Durham), Jones Lang LaSalle – June 2014 #2 Fastest Growing Large Metro, through 2020 (Raleigh), The U.S. Conference of Mayors, June 2014 #8 City for Technology Careers (Raleigh), CIO.com – June 2014 #8 City for Female Entrepreneurs (Raleigh), Intuit – May 2014 #7 American Dream City (Raleigh–Cary), The Burghard Group – May 2014 #8 City Creating the Most Information Jobs (Raleigh), Forbes – May 2014 #3 Best Regulatory Climate (Raleigh), U.S. Chamber of Commerce, May 2014 Top 10 Best City Art District (Raleigh), USA Today – May 2014 #4 Best City to Start a Business (Raleigh), Nerd Wallet – May 2014 #7 Best City for Recent College Graduates (Raleigh), Nerd Wallet – April 2014

#3 City for Minorities in Computing (Raleigh), Change the Equation – December 2014

#4 Best Big City for Jobs in 2014 (Raleigh), Forbes – April 2014

#1 School System with the Most National Board-Certified Teachers in the U.S. (Wake County Public Schools),

#1 Fastest Growing Metro from 2000–2013 (Raleigh–Cary), CityLab – April 2014

National Board for Professional Teaching Standards – December 2014 #2 Most Affordable Market with Good Schools (Raleigh), Realty Trac – November 2014 #7 Smartest City in America (Raleigh), Forbes – November 2014 #5 Digital City in America (Raleigh), Center for Digital Government – November 2014 #2 Easiest Place to Find a Job (Raleigh), Forbes – November 2014 #2 Most Internet-Connected City in the U.S. (Cary), U.S. Census Bureau – November 2014 #3 Safest City in America (Cary), 24/7 Wall Street – November 2014 #9 Best Place for Jobs Requiring Post-Secondary Education (Raleigh–Cary), CityLab – September 2014

#10 Most Optimistic Community (Raleigh–Cary), Gallup – April 2014 #6 Most Affordable Housing Market for 2014 (Raleigh), ZipRealty – April 2014 #10 City Gaining the Most College Graduates (Raleigh), Forbes – April 2014 #10 Best Metro for Small Business (Raleigh–Cary), Bizjournals.com – April 2014 #4 Most Cost-Attractive Mid-Sized, City for Business (Raleigh), KPMG – April 2014 #7 Best Regional Airport, in North America (Raleigh–Durham, International Airport), Skytrax – March 2014 #9 Market for First-Time Home Buyers (Raleigh), Realtor.com – March 2014 #3 Fastest Growing City (Raleigh–Cary), CNN Money – March 2014 #8 Up-and-Coming School (North Carolina State University), U.S. News & World Report – March 2014

#3 Best Up-and-Coming City for Art and Culture (Raleigh), Women’s Health Magazine, September 2014

#5 Fastest Growing, Retirement Place (Raleigh–Cary), Nerd Wallet – March 2014

#2 Most Educated City in the U.S. (Raleigh), WalletHub – September 2014

Top 8 Region on the Rise (Raleigh), Time – March 2014

#4 Metro for Economic Growth (Raleigh), CityLab – September 2014

#8 Top U.S. Biopharma Cluster (Raleigh–Durham), Genetic Engineering & Biotechnology News – March 2014

#8 Best City to Live in (Cary), 24/7 Wall Street – September, 2014 #1 Least Expensive Commercial Real Estate Market (Raleigh), BOMA International – August 2014 #2 Fastest Growing Large U.S. City from 2010 to 2030 (Raleigh), United Nations Population Division, August 2014 #8 Market in High-Tech Job Growth (Raleigh–Durham), CBRE – August 2014 #3 Best Place for Entrepreneurs to Start a Business (Raleigh), U.S. Chamber of Commerce, August 2014 #9 Fastest Growing U.S. Airport (Raleigh–Durham International Airport), Business Facilities – August 2014 #2 Fastest Growing City (Raleigh), Business Facilities – August 2014 #10 Best City for Women in Business (Raleigh–Cary), Bizjournals.com – July 2014 #10 Most Recession-Recovered City (Raleigh), Wallet Hub – July 2014 #4 Happiest Metro with a Population Greater than One Million (Raleigh), University of British Columbia, July 2014 #1 Best Place for Business in 2014 (Raleigh–Cary), Forbes – July 2014

#10 City for Biotech Investing (Raleigh–Durham), Fierce Biotech – March 2014 #6 Safest Suburb in America (Cary), Movoto – February 2014 #7 Safest Suburb in America (Apex), Movoto – February 2014 #8 Major Market for Brainpower (Raleigh), Bizjournals.com – February 2014 #3 Best City for Young Entrepreneurs (Raleigh), Credit Donkey – February 2014 #5 Emerging Tech Hub in the World (Raleigh), TransferWise – February 2014 #11 Best City for Female Entrepreneurs (Raleigh), Nerd Wallet – February 2014 #2 Fastest-Growing City in 2014 (Raleigh), Forbes – February 2014 #6 Most Affordable and Growing City in the U.S. (Raleigh), Cheapism.com – January 2014 #1 Best Value Public College (University of North Carolina), Princeton Review/USA Today, January 2014 #4 Best Value Public College (North Carolina State University), Princeton Review/ USA Today, January 2014

#7 Best City for Future Job Growth in 2014 (Raleigh–Cary), Forbes – July 2014

#1 Best Large Metro for Homeownership (Raleigh–Cary), Nerd Wallet – January 2014

#8 Best Place for STEM Graduates (Raleigh–Cary), Nerd Wallet – July 2014

#10 New Opportunity City (Raleigh), Yahoo Finance – January 2014

#4 City for Finding a Great Tech Job (Raleigh), TechRepublic – July 2014

#3 U.S. City for Business Prosperity in 2014 (Raleigh), Business Review USA – January 2014

#5 Most Stable Housing Market (Raleigh), Zillow and Bloomberg – July 2014 #2 Metro for Boomer Population Growth (Raleigh–Cary), Trulia.com – June 2014

#6 Best City for Job Seekers in 2014 (Raleigh), Nerd Wallet – January 2014 #10 Best Run City in America (Raleigh), 24/7 Wall Street – January 2014

OFFERING MEMORANDUM

UNIVERSITY TOWER

THE TRIANGLE ECONOMY

UNIVERSITY TOWER

MARKET SUMMARY

OFFERING MEMORANDUM

UNIVERSITY TOWER

MARKET SUMMARY

Source: Greater Raleigh Convention & Visitors Bureau

TRIANGLE OFFICE MARKET OVERVIEW The Triangle office market consists of a geographic area covering three counties—Wake, Durham and Orange—and is commonly referred to as the “Triangle”. At the close of the first quarter of 2015, the Triangle’s office space inventory totaled just over 48.9 million square feet. This inventory is divided into 15 submarkets. A number of major companies are headquartered in the Triangle, including SAS Institute, Quintiles and Red Hat.

The Triangle office market continues to perform admirably and recently commenced construction validates the current strength of the market. Overall activity continued the momentum seen earlier in the year as evidenced by an extremely strong quarter of positive absorption. Increasing quoted rental rates, brought on by a continued decline in vacancy rates, lend validity to the argument that the market is close to equilibrium. In the first quarter of 2015, overall market vacancy rates dropped to 14.2% from 15.6% a year ago.

Submarket

Market Rentable Area (SF)

Vacancy Rate

Class-A Vacancy Rate

Availability Rate

West Raleigh

5,139,769

10.60%

10.90%

16.40%

16,430

US 70/Glenwood

3,793,697

12.20%

10.90%

12.80%

67,117

Six Forks

3,293,358

10.20%

6.80%

22.00%

22,505

Falls of Neuse

3,122,452

0.16%

14.30%

16.30%

-2,772

US 1/Capital

2,208,594

12.40%

12.60%

12.70%

25,826

Downtown Raleigh

4,161,355

10.00%

7.70%

16.70%

-16,571

Cameron Village

605,775

7.70%

2.60%

8.50%

-1,619

$21.67

Eastern Wake

596,483

12.00%

N/A

12.00%

17,422

$16.43*

Southern Wake Cary RTP/I-40 Central Durham

1Q 2015 Net Absorption (SF)

Under Construction (SF) 249,476

Class-A Asking Lease Rate (SF/Yr) $22.98 $22.80

313,627

$23.17 $21.51 $20.94

242,969

$24.31

270,958

28.20%

53.70%

28.20%

6,098,565

11.90%

9.00%

18.30%

189,110

288,500

$22.25 $21.84

11,526,867

18.80%

7.30%

24.50%

114,896

192,225

$21.25

3,432,561

6.00%

2.70%

14.50%

-6,103

284,000

$26.98

North Durham

1,403,219

45.70%

N/A

45.70%

-48,411

$16.13*

South Durham

1,771,036

15.50%

11.00%

15.50%

-6,207

$22.47

Orange County

1,490,028

12.20%

12.70%

24.00%

2,544

156,000

$24.47

MARKET TOTALS

48,914,717

14.20%

8.80%

19.20%

374,167

1,726,797

$22.82

*Denotes Class-B Asking Rate and not factored into Market Average Rate.

MARKET SUMMARY

The largest and most active submarket, RTP/I-40, has a Class-A vacancy rate of 7.3%, and the overall submarket experienced 374,167 square feet of absorption in first quarter 2015. Much of this can be attributed to the delivery of the six-story, 245,352-square-feet Perimeter Three Building in September, at 74% occupancy. Downtown Raleigh benefited from the delivery to its growing submarket Citrixâ&#x20AC;&#x2122;s signature headquarters, which added 173,000 square feet and approximately 700 employees.

VACANCY & ABSORPTION (OVERALL MARKET) 800,000

25.00%

600,000

20.00%

400,000 200,000

15.00%

10.00%

Absorption

1Q15

4Q14

3Q14

2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

-600,000

2Q10

-400,000

1Q10

-200,000

5.00% 0.00%

Vacancy

AVERAGE LEASE RATES (OVERALL MARKET) $21.50/FS $21.00/FS $20.50/FS $20.00/FS $19.50/FS $19.00/FS

OFFERING MEMORANDUM

2015 1Q

2014 4Q

2014 3Q

2014 2Q

2014 1Q

2013 4Q

2013 3Q

2013 2Q

2013 1Q

2012 4Q

2012 3Q

2012 2Q

2012 1Q

2011 4Q

2011 3Q

2011 2Q

2011 1Q

2010 4Q

2010 3Q

2010 2Q

$18.00/FS

2010 1Q

$18.50/FS

UNIVERSITY TOWER UNIVERSITY TOWER University Tower is located in the South Durham Submarket. At the conclusion of the first quarter of 2015, the South Durham submarket consisted of 40 office buildings totaling 1,771,036 million square feet. The newest addition to the submarket in 2010, the Patterson Place II building, currently boasts a 6% vacancy rate, indicating the overall desirability of the submarket. The South Durham vacancy rate as of the first quarter of 2015 was 15.5% and Class-A office vacancy was 11.0%. SOUTH DURHAM SUBMARKET VACANCY RATES 27% 25% 23% 21% 19% 17%

1Q15

4Q14

3Q14

2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

4Q10

3Q10

2Q10

1Q10

13%

1Q11

15%

There is no new construction underway in the submarket, and it is unlikely that any additional office buildings will be constructed in the submarket in the near future. With construction limited and an economic boom underway, the submarket will likely witness a rent spike in 2015. Currently average weighted asking rental rates are $22.47 per square foot for the South Durham submarket. In the near term, rents are expected to remain stable, and then experience steady rent growth as the Triangle area features a diverse economy that generally weathers economic downturns easily.

MARKET SUMMARY

TRIANGLE OFFICE TOWER MARKET The Triangle office market contains 13 office towers consisting of over 10 stories each. This subset of the market, which includes University Tower, totals 3,984,042 square feet and equates to approximately 8.1% of the Triangle office market. At the end of the first quarter of 2015, the office tower subset reported an impressive 4.9% vacancy rate. The vacancy rate for the office tower subset is much healthier than the overall Triangle office market and South Durham submarket, which each reported a third quarter vacancy rate of 14.2%. The office tower market even outperforms the overall Class-A market, which boasts an 8.8% vacancy rate, further illustrating the desirability of these spaces. With all 13 towers reporting occupancies above the market average of 80.2%, the office tower subset represents a very stable asset class for the Triangle office market. It also resides at the top of the market in terms of lease rates with average asking rates for first quarter 2015, reported at $24.56窶馬otably higher than the overall market rate of $22.82. Additionally, Charter Square in Downtown Raleigh, at 11 stories, is expected to deliver 242,969 square feet to the market over 50% preleased. Additionally, North Hills Tower II, at 18 stories, should deliver by 2016 and add another 313,627 square feet to this coveted asset class. They will also push rates in the Raleigh market to a new high, with North Hills Tower II asking $33.95 per square feet. As the economy continues to strengthen, occupancies throughout the office market, including the office towers, are expected to reach historical highs throughout 2015.

OFFERING MEMORANDUM

UNIVERSITY TOWER COMPETITIVE PROPERTIES

1 - Carlisle Place

2 - Erwin Square Plaza

3 - Weston II

4 - Weston I

5 - Durham Centre

6 - CapTrust Tower

Building

Address

City

State

Zip

Size in SF

Occupancy

Rental Rate per SF (Full-Service)

Year Built

4721 Emperor Blvd

Durham

27703

120,000

100.0%

$24.75

2007

RTP/I-40

2200 W Main St

Durham

27705

238,792

94.3%

$14.00–$24.50

1989

Downtown Durham Cary

Submarket

Carlisle Place

Erwin Square Plaza

Weston II

5020 Weston Pkwy

Cary

27513

79,000

100.0%

$25.00–25.75

2008

Weston I

1001 Winstead Dr

Cary

27513

214,000

85.9%

$24.50–25.75

1988

Cary

Durham Centre

300 W Morgan St

Durham

27701

195,911

92.2%

$22.00–$23.00

1987

Downtown Durham

CapTrust Tower

4208 Six Forks Rd

Raleigh

27609

300,389

100.0%

$32.50

2009

Six Forks

191,349

95.4%

$24.92

Averages

MARKET SUMMARY

MARKET SUMMARY SALES COMPARABLES

2 - Quintiles

1 - Colonnade II

3 - Lenovo

5 - Wade I & II

4 - CapTrust Tower

6 - Citrix

7 - One Bank of America Plaza

Building

Address

City

State

Zip

Size in SF

Occupancy

Rental Rate per SF (Full-Service)

Colonnade II

8510 Colonnade Center Dr

Raleigh

27615

126,926

100.0%

$27,450,000

2008

Six Forks/Fall of Neuse

Quintiles

4820 Emperor Blvd

Durham

27703

259,531

100.0%

$75,800,000

2009

RTP/RDU

Lenovo

7001 & 8001 Development Dr

Morrisville

27560

485,536

100.0%

$27,000,000

1994â&#x20AC;&#x201C;1998

RTP/I-40

CapTrust Tower

4208 Six Forks Rd

Raleigh

27609

300,389

100.0%

$98,400,000

2009

Six Forks/Fall of Neuse

Wade I & II

5420 & 5430 Wade Park Blvd

Raleigh

27607

199,300

93.0%

$45,750,000

2008

West Raleigh

Citrix

120 S West St

Raleigh

27603

185,853

100.0%

$68,500,000

2014

Downtown Raleigh

One Bank of America Plaza

421 Fayetteville St

Raleigh

27601

373,641

90.0%

$84,000,000

1985

Downtown Raleigh

275,882

97.6%

$60,985,714

Averages

Year Built

Submarket

OFFERING MEMORANDUM

UNIVERSITY TOWER COMPETITIVE PROPERTIES MAP

LEGEND Competitive Properties

Sales Comparables

2 UNIVERSITY TOWER

1 2 3

6 4 5 5 6

MARKET SUMMARY

AFFILIATED BUSINESS DISCLOSURE CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum. CONFIDENTIALITY AGREEMENT This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the “Owner”), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.

OFFERING MEMORANDUM

UNIVERSITY TOWER RALEIGH–DURHAM•NORTH

CAROLINA

EXCLUSIVE MARKETING AGENTS: Patrick Gildea Senior Vice President CBRE | Investment Properties 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 331 1217 F +1 704 331 1259 patrick.gildea@cbre.com Ben W. Kilgore IV Executive Vice President CBRE Raleigh, LLC | Investment Properties 4208 Six Forks Rd Ste 1220 Raleigh, NC 27609 T +1 919 831 8191 F +1 919 856 2530 ben.kilgore@cbre-raleigh.com

UNDERWRITING SUPPORT: Matt Smith Capital Markets Analyst CBRE l Investment Properties 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 331 1286 F +1 704 331 1259 matt.smith@cbre.com

FINANCING CONTACTS: Compie Newman Senior Vice President CBRE | Capital Markets 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 927 1454 F +1 704 334 0939 compie.newman@cbre.com Hal Kempson First Vice President CBRE | Capital Markets 201 S College St Ste 1700 Charlotte, NC 28244 T +1 704 927 1453 F +1 704 334 0939 hal.kempson@cbre.com