LAKES ON POST OAKS INVESTMENT THESIS

Capitalize on significant upside potential of this Class A property re-acquiring the asset, which Crocker Partners sold in 2005. Acquisition was made at a time when perceived market risk, due to a pending 50% anchor tenant lease expiration, had substantially driven down pricing. Crocker Partners accurately assessed the rollover risks and leveraged its historical knowledge of the asset and prior relationships with the existing tenants to capture rent and revenue growth. This included renewing anchor tenant Bechtel at terms well above the pro forma, and replacing a one-level parking deck with a 10-story parking garage, freeing up a 4-acre development site for sale.

DESCRIPTION

• 1.2 million square foot office complex, 89% leased to a diverse roster of tenants
• Average in-place rents at acquisition: $4.50/square foot below market rents of $16.50/sq. ft. NNN
• Acquired at 49% of replacement cost and a 7.3% cap rate

VALUE-ADDED OPPORTUNITY

-Renewal of anchor tenant on a long-term basis added significant value
-Sale of a development parcel which was not factored in the base case analysis generated $29.8 million
-Crocker Partners enhanced property level returns by nearly 200 basis points without taking on additional risk by entering into a 90-10 joint venture with a large private equity fund investor

RETURN METRICS

The leveraged Gross IRR was a 67% and 5.2x multiple