NNN Central Plaza, LLC

Available for §1031 exchange w llc investment

Offering Purchase Price: $86,300,000

Offering Price Per SF: $212.93

  • Purchase Date: 4th Quarter 2007
  • Offering LTV: 73.10%
  • Offering Price Cap Rate: 6.13%
  • 1st Year Cash Flow: 6.00%

Central Plaza is an approximately 405,000-square-foot, Class A office complex in the Central Avenue Corridor of Phoenix, Arizona. The property is comprised of a 20-story office tower, three two-story office buildings, a single-story office building and a nine-level parking garage.

Available for §1031 exchange w llc investment

In addition, the nearly completed $1.2 billion light rail system that runs along Central Avenue will have a station stop directly in front of the property. Providing a generous parking ratio of 3.7 spaces per 1,000 square feet, the property offers ample parking with a nine-level, 1,464-space parking garage and an additional 28-space surface lot.

Property Summary

Central Plaza is an approximately 405,000-square-foot, Class A office complex in the Central Avenue Corridor of Phoenix, Arizona. The property is comprised of a 20-story office tower, three two-story office buildings, a single-story office building and a nine-level parking garage. Built in 1980 on approximately six acres of land, Central Plaza offers convenient transportation amenities, including access to major freeways and Phoenix Sky Harbor International Airport. In addition, the nearly completed $1.2 billion light rail system that runs along Central Avenue will have a station stop directly in front of the property. Providing a generous parking ratio of 3.7 spaces per 1,000 square feet, the property offers ample parking with a nine-level, 1,464-space parking garage and an additional 28-space surface lot. Central Plaza is 93 percent leased to numerous tenants, including the United States Internal Revenue Service, Phoenix International School of Law, Go Daddy Software, and Maricopa County.

TIC Offering

  • Offering Size: $32,800,000
  • Price Per 1% Ownership: $328,000 equity: $535,000    and assumed debt
  • Minimum Investment per SPE: 3.00% =$984,000 equity and $1,605,000 assumed debt for a total purchase price of $2,589,000
  • Suitability: Accredited Investors Only

LLC Offering

  • Offering Size: $1,640,000
  • Price Per Unit: $5,000
  • Minimum Investment: $25,000
  • Suitability: Accredited investors only

Business Plan

  • Preserve the capital investment.
  • Realize income through the acquisition, operation and sale of the
    property.
  • Make monthly distributions, which may be partially tax-deferred as a result of depreciation and amortization expenses.
  • Within approximately five years, profitably sell the property based on the value added through effective management and operation of the property.
  • There is no guarantee that the business plan will be successfully executed, that the property’s value will be enhanced, or that the property will be sold within the planned time period.
  • There is a large dependence on a single tenant, the Internal Revenue Service (IRS), which occupies 107,849 square feet of office space, or approximately 26 percent of the property.
  • The IRS is not expected to commence until January 2009 and, therefore, the IRS rent payments have not commenced. However, the seller will provide a rent subsidy for the IRS from the close of escrow until the projected commencement date.
  • The build-out for the IRS is to be completed prior to its commencement in January 2009. However, delays in the completion of the IRS build-out could result in an event of default under the lease and liquidated damages owed to the IRS.

Major Tenants (24 Total Tenants)

GSA – Internal Revenue Service
www.irs.gov
Square Feet: 107,849 Lease Expiration: December 2028

The IRS is a bureau of the Department of Treasury and one of the world’s most efficient tax administrators. In 2004, the IRS collected more than $2 trillion in revenue and processed more than 224 million tax returns.

The IRS is not expected to commence until January 2009 and, therefore, the IRS rent payments have not commenced. However, the seller will provide a rent subsidy for the IRS from the close of escrow until the projected commencement date.

Option to terminate at any time on or after 12/31/2018 with 90 days notice.

Phoenix International School of Law, Inc.

www.homepage.com

Square Feet: 54,822 or 13.52% of the property
Lease Expiration: September 2016

The Phoenix School of Law opened in January 2005, and received provisional approval from the American Bar Association on June 11, 2007. According to  the ABA, “A school that is provisionally approved is entitled to all the rights of a fully approved law school.

Similarly, graduates of provisionally approved law schools are entitled to the same recognition that is accorded graduates of fully approved Schools.” It is the only law school in Arizona that offers part-time and evening degree programs.

Option to terminate effective on the last day of the 72nd month of the lease term (September 24, 2012) with notice by the end of the 63rd month of the lease term (December 24, 2011) and payment three months basic rent ($333,043.65) plus unamortized leasing costs at ten percent (50 percent payable on notice date and 50 percent payable on termination date).

Location Information

Incorporated as a city in 1881, Phoenix is the capital and most populous city in the state of Arizona. The prehistoric Hohokam Indians first settled the area about 300 B.C. and dug a system of extensive irrigation canals for farming. Because the city was founded on the ruins of the ancient civilization, it was named Phoenix after the legendary bird that could regenerate itself. In the last two decades, the economy has diversified as rapidly as the population has grown. Many residents in the area are employed by the government as well as Arizona State University, which has enhanced the area’s population through education and its growing research capabilities. Numerous high-tech and telecommunications companies have recently relocated to the area.

Office Market

  • The second quarter 2007 saw another increase in the full service asking lease rates, rising to an average of $25.60 per square foot. This is $0.33 higher than the average in the first quarter, $25.27 per square foot, and $2.92 higher than the average one year ago, $22.68 per square foot.
  • Net absorption rose slightly from 379,014 square feet in the first quarter of 2007 to 383,100 square feet in the second quarter.
Economic Trends
  • According to the Arizona Department of Economic Security, the state’s unemployment rate dropped in the second quarter of 2007 to 3.6 percent from 4.1 percent at the end of the first quarter.
  • Employment is forecasted to grow 3.5 percent/66,000 jobs in 2007 and 1.9 percent/36,500 jobs in 2008.
  • Fortune magazine recently chose Phoenix as one of the top five municipalities in the nation for doing business and Torto Wheaton has predicted strong job growth for the metro area.

ABOUT Triple Net Properties, LLC

Triple Net Properties, LLC has time-tested experience in real estate syndications, acquisitions, leasing and property management. Triple Net currently manages a growing portfolio of over 39 million square feet of real estate in 29 states valued in excess of $5.4 billion. Although past performance is no guarantee of future results, Triple Net Properties, LLC has an unparalleled track record and has acquired 293 properties to date. Triple Net and affiliates have sold 107 properties for more than $2.5 billion since 2000.

Triple Net Properties, LLC is a wholly-owned subsidiary of NNN Realty Advisors, Inc., a nationwide commercial real estate asset management and services firm.