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Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp. a Texas licensed real estate broker (“HFF”) Four Class A Office Assets and Approximately 36 Acres of Residential and Commercial Land Within Austin’s Premier Mixed-Use Development
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Four Class A Office Assets and Approximately 36 Acres of ...

Dec 18, 2021

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Page 1: Four Class A Office Assets and Approximately 36 Acres of ...

THE DOMAIN INVESTMENT SUMMARY | HFF 1

Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp. a Texas licensed

real estate broker (“HFF”)

Four Class A Office Assets and Approximately 36 Acres of Residential and Commercial Land Within Austin’s Premier Mixed-Use Development

Page 2: Four Class A Office Assets and Approximately 36 Acres of ...

THE DOMAIN INVESTMENT SUMMARY | HFF2

HFF has been exclusively retained by the Owner to offer to qualified investors an opportunity to acquire a unique collection of assets and ownership interests in The Domain- Austin’s premier mixed-use development. The assets offered herein represent the remaining holdings of RREEF Domain, LP and include the following: fee simple interests in the majority of the undeveloped commercial and residential sites, fee simple interests in two 100% leased office buildings, 50% interests in the two newest office properties, and a condominium interest in the retail component of the Aloft Hotel.

AVAILABLE EXISTINGPROPERTY TYPE ACRES SF PER FAR SF

IMPROVED ASSETSDomain 2 Office 1.79 Acres NA 114,665

Domain 7 Office 4.16 Acres NA 221,973

Domain 3 Office 4.62 Acres 1,609,978 179,006

Domain 4 Office 4.16 Acres 1,449,677 152,992

Domain Aloft Retail Retail 1.00 Acres NA 8,617

SUB-TOTAL - IMPROVED ASSETS 15.73 ACRES 3,059,654 677,253

OFFICE/COMMERCIAL LANDDomain Retail Block A Retail 1.50 Acres 522,720 0

Domain Office Block B Office 6.23 Acres 2,171,030 0

Domain Office Block C Office 6.30 Acres 2,195,424 0

Domain Office Block D Office 2.80 Acres 974,002 0

Domain Office Block E Office 4.62 Acres 1,609,978 0

SUB-TOTAL - OFFICE/COMMERCIAL LAND 21.45 ACRES 7,473,154 0

RESIDENTIAL LANDDomain Residential Block G Residential 2.80 Acres 974,002 0

Domain Residential Block L Residential 2.12 Acres 738,778 0

Domain Residential Block M Residential 3.26 Acres 1,136,045 0

Domain Residential Block N Residential 3.89 Acres 1,355,587 0

Domain Residential Block Q Residential 2.14 Acres 745,747 0

SUB-TOTAL RESIDENTIAL LAND 14.21 ACRES 4,950,158 0

GRAND TOTAL THE DOMAIN 51.38 ACRES 15,482,966 677,253

*Acreages are estimates as the site is currently platted as one site and will be separately re-platted as sales are complete

NOTES:Domain 2: 50% non-controlling interest in Class AA office building completed in 2014 and 100% leased to HomeAway.Domain 7: 50% non-controlling interest in Class AA office building to be completed in first quarter 2015. The Property is 67% pre-leased to tenants including Amazon, Ottobock and Brookfield Residential.Domain 3: Fee-simple interest in a 100% leased office asset that was re-developed in 2001. Major tenants include Blackbaud, KingsIsle and XO Communications.Domain 4: Fee-simple interest in a 100% leased office asset that was re-developed in 2001. Major tenants include Electronic Arts and Texas Culinary Academy.Domain Aloft Retail: Condominium interest consisting of an 8,700 sf retail space on the ground floor of the Aloft Hotel. 100% leased to The Park, a restaurant and bar retailer.Domain Block A: Pad site for potential retail development.Domain Blocks C, D & G: Could be developed as office or residential and included in both sub-portfolios.Domain Block Q: Slated for an age-restricted, independent living development. This site is currently being marketed for sale by HFF independent of the broader offering presented herein and is also included herein.

THE ASSETS NOTED BELOW ARE OFFERED ON A PORTFOLIO, SUB-PORTFOLIO OR SINGLE-ASSET BASIS.

investment summary

Page 3: Four Class A Office Assets and Approximately 36 Acres of ...

Offering format.As noted, the assets noted herein are offered individually, as a Portfolio, or on a sub-portfolio basis. While offers on any collection of assets are encouraged, the Owner has broken the Offering down into three sub-portfolios which include 1) Improved Properties (both controlling and non-controlling interests), 2) Office Land, and 3) Residential Land. Note that certain sites, capable of being developed on a commercial or residential basis, are included in both the Office and Residential sub-portfolios.

An Offer Date to acquire any or all interests summarized herein will be established at a later date.

Austin continued.The entire Domain development consists of the interests offered herein as well as over 1.8 million square feet of retail (existing and under construction), 1.3 million square feet of office, over 1,800 multifamily units and three hotels. This Offering provides an investor a once in a lifetime opportunity to gain a significant foothold in one of the premier mixed-use developments in the United States and to control the majority of undeveloped sites therein. The approximately 36-acres of undeveloped sites are zoned for development in excess of 12 million square feet of office space or multi-family units.

The Offering represents an extraordinary covered-land opportunity, as cash flow from the existing, improved assets- leased long term to tenants including Amazon and HomeAway - is sufficient to carry the holding costs of the undeveloped acreage as those sites are developed or sold off.

Page 4: Four Class A Office Assets and Approximately 36 Acres of ...

THE DOMAIN INVESTMENT SUMMARY | HFF4

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DOMAIN 1DOMAIN 1

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Multi-Housing

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MIXED-USE DEVELOPMENTConsistent with Austin’s long-term development plan, the city rezoned the entire development and amended the zoning charter to create a Planned Development Area Combining District in 2003. Allowable uses include virtually unlimited office, retail, lodging and residential uses. Currently, the site has plans for five office properties and five residential properties; however, investors are encouraged to make their own assumptions on uses and square footage based on provided information.

PDA REQUIREMENT

FAR 8 to 1

Front Yard No Minimum

Side/Rear Yard No Minimum

Density No Minimum

Site Coverage Maximum

Page 5: Four Class A Office Assets and Approximately 36 Acres of ...

THE DOMAIN INVESTMENT SUMMARY | HFF 5

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Anchor Retail138,000 SF

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RESIDENTIAL BLOCK Q

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RESIDENTIAL BLOCK N

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RESIDENTIAL BLOCK M

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RESIDENTIAL BLOCK L

RESIDENTIAL BLOCK LOFFICE BLOCK EOFFICE BLOCK E

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DOMAIN BLOCK KDOMAIN BLOCK K

DOMAIN BLOCK PDOMAIN BLOCK P

DOMAIN BLOCK JDOMAIN BLOCK J

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Retail

Multi-Housing

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CURRENT DEVELOPMENT STATUSAll of the sites included herein are part of The Domain, an approved master planned development, and are subject to no entitlement risk. Due to the components completed in Phase I, an investor will receive the following benefits:

• Ability to develop multiple residential, lodging or office properties and more than 12 million square feet.

• Access to existing plans for the development which is currently slated to have five residential complexes and five commercial buildings.

• Inclusion in the overall Domain development including all common areas, roads and access points.

Page 6: Four Class A Office Assets and Approximately 36 Acres of ...

THE DOMAIN INVESTMENT SUMMARY | HFF6

portfolio investment highlights

STRONG CASH FLOW WITH SUBSTANTIAL UPSIDE POTENTIALThe Portfolio presents investors strong current cash flow from an 89% leased Improved Property rent roll as well as additional upside from the remaining vacant space. This cash flow covers the carrying costs associated with the vacant land sites as they are developed or sold down over time. The Improved Properties consist of:

BUILDING/TENANT SF% OF

PORTFOLIO%

LEASED EXPIR.AVG. YEARS REMAINING

YEAR BUILT/RENOV.

DOMAIN 2 114,665 SF 16.9% 100.0% 11.1 years 2014

HomeAway 114,665 SF 16.9% 100.0% Feb-26 11.1 years

DOMAIN 3 179,006 SF 26.4% 100.0% 6.3 years 1975/2001

Blackbaud 112,535 SF 16.6% 62.9% Sep-23 8.7 years

KingsIsle 35,223 SF 5.2% 19.7% Jun-17 2.5 years

XO Communications 20,041 SF 3.0% 11.2% Jul-16 1.5 years

Rodan & Fields 11,207 SF 1.7% 6.3% Jun-17 2.5 years

DOMAIN 4 152,992 SF 22.6% 100.0% 1.8 years 1975/2001

Electronic Arts 78,010 SF 11.5% 51.0% Aug-16 1.6 years

TCA Acquisition 74,982 SF 11.1% 49.0% Dec-16 2.0 years

DOMAIN 7 221,973 SF 32.8% 67.0% 4.9 years 2015

Amazon 75,556 SF 11.2% 34.0% Jun-22 7.5 years

Ottobock 37,782 SF 5.6% 17.0% May-22 7.4 years

Brookfield Residential 19,590 SF 2.9% 8.8% Nov-23 8.9 years

Lee Hayes Law Firm 9,236 SF 1.4% 4.2% Jan-22 7.0 years

ALOFT RETAIL 8,617 SF 1.3% 100.0% 8.3 years 2009

The Park 8,617 SF 1.3% 100.0% Apr-23 8.3 years

DOMAIN PORTFOLIO TOTAL/AVG

677,253 SF 100.0% 89.2% 5.6 years

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THE DOMAIN INVESTMENT SUMMARY | HFF8

THE DOMAINThe Domain is one of the premier mixed-use developments in the Southern United States. It is located at the geographic center of Austin and acts as Austin’s “second downtown” providing residential, entertainment, retail and office uses. The Domain includes best in class retailers such as Neiman Marcus, Nordstrom, Whole Foods Market, Apple, Burberry, Louis Vuitton, Tiffany & Company, Anthropologie, and H&M, in addition to 1.5 million square feet of office space, 1,856 residential units and almost 600 hotel rooms. Within the next decade, over 6,000 residents and 12,000 employees will come to live,work,shop and play in this high-quality urban community.

Existing Domain• 1.8 million square feet of retail

• 1.5 million square feet of office

• 1,856 multifamily units

• 598 hotel rooms in 3 hotels

Future Domain Plans• 1.8 million square feet of retail

• 3.5 million square feet of office

• 5,000 multifamily units

• 750 hotel rooms in 4 hotels

portfolio investment highlights

LIVE, WORK AND PLAY NEIGHBORHOODThe Portfolio provides an unparalleled opportunity to control the remaining development of a unique live, work and play community. The Domain capitalizes on the the national trend of the millenial movement, which has popularized urban infill product with walkable amenities and attracted employers to recruit and retain the top millenial talent. The success enjoyed by The Domain in this regard can be seen by the recent decisions by HomeAway and Amazon to relocate to the project as well as the and the near 100% occupancy enjoyed by retail and multi-housing developments that have been delivered in recent months.

Page 9: Four Class A Office Assets and Approximately 36 Acres of ...
Page 10: Four Class A Office Assets and Approximately 36 Acres of ...

10 MILE RADIUS OFPEOPLE WITHIN A

that is

43% of the

population

824,000

EXCELLENT TRANSPORTATION NETWORKThe Property enjoys access to major arteries such as US Highway 183 (180,000 VPD), Loop 360 (45,000 VPD), MoPac Expressway (120,000 VPD), and primary thoroughfares including Burnet Road and Braker Lane via the 13 points of access to The Domain. Just north of the Property is SH 130, a 90-mile toll way that allows easy access to The Domain for the large employee base that commutes from Williamson County. Additionally, Austin’s Capital MetroRail began in 2010 and runs 32 miles between Leander and Downtown Austin with nine stations along the way, including one at Kramer Lane adjacent to The Domain providing tenants light rail access to the MSA.

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THE ARBORETUMTHE ARBORETUM

JJ PICKLE REDEVELOPMENT

JJ PICKLE REDEVELOPMENT

SUPERIOR INFILL LOCATION The Domain is ideally positioned on 304 acres in Northwest Austin near the intersection of US Highway 183, MoPac Expressway (Loop 1) and Capital of Texas Highway (Loop 360), providing exceptional access to all areas of Austin including the infill neighborhoods of Tarrytown, West Lake Hills, Northwest Hills and Brentwood as well as the sprawling suburbs of Cedar Park, Round Rock and Georgetown. Immediate access to the major arteries also provides convenient access to the major business centers including Downtown, Northwest, Southwest as well as corporate campuses including Apple, National Instruments, IBM, the future Charles Schwab campus and the adjacent University of Texas JJ Pickle Research Campus redevelopment. Within a 10-mile radius of the property, there are over 824,000 people or approximately 43% of the population of the Austin MSA. Additionally, traffic counts on MoPac at the Domain exceed 140,000 vehicles per day.

DESCRIPTION 1 MILE 3 MILE 5 MILEPopulation 2020 Projection 7,877 121,451 308,020

2015 Estimate 7,470 114,776 287,903 2010 Census 7,063 108,144 266,414Growth 2015-2020 5.45% 5.82% 6.99%Growth 2010-2015 5.77% 6.13% 8.07%2015 Est. Average Household Income $75,719 $76,113 $77,551 2015 Est. Median Household Income $60,556 $55,714 $55,396 *Source: Claritas, Inc 2014

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THE DOMAIN INVESTMENT SUMMARY | HFF 11

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THE ARBORETUMTHE ARBORETUM

JJ PICKLE REDEVELOPMENT

JJ PICKLE REDEVELOPMENT

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THE DOMAIN INVESTMENT SUMMARY | HFF12

portfolio investment highlights

AUSTIN’S LARGEST AND MOST DYNAMIC SUBURBAN OFFICE SUBMARKETThe Northwest submarket ranks as Austin’s largest office submarket with over 16.3 million rentable square feet. It is typically Austin’s demand leader as it is home to many of Austin’s largest corporate users. The market is currently 90% occupied and boasts an average rental rate of $29.16 per square foot (gross). Since 2011, the Northwest submarket has absorbed 1,167,427 square feet and increased rental rates by 14% (nearly 5% annually).

Strong Demand for OfficeNorthwest Austin has seen tremendous growth and the demand for additional office for traditional corporate users and technology tenants has never been greater. Office tenants are drawn to Northwest Austin for the proximity to housing as well as the amenity base. The Domain specifically offers the millennial workforce the walkability factor typically seen in downtown areas, providing the live/work/play environment increasingly used as a recruiting tool for employers. The Domain is prime for additional office development.

• Rental Rates in Northwest Austin have grown rapidly, with new construction garnering rents in excess of $26.00 NNN per square foot.

• Since 2009, Northwest Austin has seen only 376,478 square feet in deliveries and has absorbed over 1,000,000 square feet in that same time period. Consequently, occupancies and rental rates have both steadily increased over that period.

• The Northwest Class A market has outperformed the Northwest market during this same time frame. Since 2009, rental rates have increased $2.24 PSF and occupancy has improved by 5.7 percentage points to 89.2%.

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THE DOMAIN INVESTMENT SUMMARY | HFF14

portfolio investment highlights

THRIVING MULTIFAMILY MARKET & BEST IN CLASS DOMAIN RESIDENCESThe Austin multifamily market continues to thrive alongside its robust economy. With over 30,000 jobs predicted for 2015 and positive net in-migration, the City has seen tremendous leasing velocity and enjoys 95% occupancy with average rents of $1.26 psf or $1,070 per month.

Comprised of over 19,000 units and consistently averaging over 95% occupancy, the Far North submarket is one of Austin’s healthiest sectors. Over the last 12 months, the submarket absorbed 995 units and maintained an average rent of $1.28 psf for Class A product.

The Domain features 1,856 units housed in five communities with an average rent of $1.55 psf, roughly 20% above market. The newest and highest priced property, The Kenzie, achieves the highest rental rates in the region at $2.00 psf or an average $1,680 per month. Excluding IMT at the Domain III & The Kenzie, which are still in lease-up, residences within The Domain are 95% occupied and boast an average lease up period of 6-9 months. Average occupancy overall is currently 85%.

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THE DOMAIN INVESTMENT SUMMARY | HFF 15

STRONG DEMAND FOR RESIDENTIAL UNITS IN AUSTINSince 2000, Austin has been the third fastest growing large city in the country with over 27% growth in that time period. Northwest Austin has benefited greatly from this growth and remains a popular destination for residents due to the superior transportation and proximity to restaurants, bars, retail and cultural attractions. The success of The Domain residences has been driven by the opportunity to live within the master planned development, which provides walkable access to all the nearby amenities creating an urban feel at affordable pricing to renters.

• Residential rental pricing in Northwest Austin, in many cases, has exceeded $1.25 PSF a month with occupancy levels of 95%. These metrics have been amply illustrated by the solid track record of existing Domain Multifamily projects which have exceeded $1.60 PSF and 95% occupancy for stabilized product.

• Absorption in Far North/Northwest Austin is very strong with 1,509 units absorbed YTD or roughly 4% of the available inventory annually. Since 2010, the submarket has exceeded Austin’s equilibrium point of 95% occupancy increasing demand and highlighting the need for additional units. This growth in construction of roughly 3,300 units in the next 12 months is required to support the continued growth of this superior residential area.

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BOOMING AUSTIN ECONOMYRanked by Forbes as the “Fastest Growing City in the Country” and one of the “Top Five Best Cities for New Jobs” for the fourth year in a row, Austin continues to expand and flourish with over 30,000 new jobs in the past 12 months and over 140 new residents per day. Fueled by numerous corporate relocations and expansions in the area, Austin is experiencing growth at twice the national pace and boasts record setting unemployment rates of 3.4% as of December 2014. Dubbed the “Silicon Hills,” Austin is one of the nation’s preeminent locations for technology, with more than 120,000 employees at 4,444 technology companies including Apple, Facebook, AMD, Freescale, Samsung, Cisco Systems, Intel, Dell, Oracle, National Instruments, and many others. Recent major nearby corporate announcements include Apple (3,000 new jobs), Charles Schwab (820 new jobs), Websense (470 new jobs), HomeAway (300 new jobs), Amazon (240 new jobs), Ottobock Healthcare (110 new jobs) and many more.

ACCOLADES

#1 City to Watch- Forbes

#1 Economy in the Country

- The Business Journal

#1 Hot City for Jobs & Culture

- U.S. News

#1 Best Performing City- Miliken Institute

AUSTIN

TOP AUSTIN EMPLOYERSState of Texas 70,074

University of Texas at Austin 24,183

Dell Inc. 14,000

Seton Healthcare Network 12,770

St. David’s HealthCare 8,100

IBM Corporation 6,000

U.S. Internal Revenue Service 5,561

Freescale Semiconductor Inc. 5,000

Texas State University – San Marcos 4,861

Flextronics 4,700

Apple Computer 4,000

Austin Community College 3,515

AT&T Inc. 2,800

Whole Foods Market Inc 2,800

Applied Materials 2,727

National Instruments 2,640

Samsung Austin Semiconductor 2,600

AMD, Inc. 2,500

Keller Williams Realty 1,989

Lower Colorado River Authority (LCRA) 1,810

Time Warner Cable 1,719

Austin Energy 1,700

Hewlett-Packard 1,669

Sears Customer Care 1,500

General Motors 1,400

Source: Greater Austin Chamber of Commerce

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THE DOMAIN INVESTMENT SUMMARY | HFF 17

1

CENTRAL BUSINESS DISTRICT

Page 18: Four Class A Office Assets and Approximately 36 Acres of ...

contact info

Austin continued.

HFF DALLAS OFFICE2323 Victory Avenue Suite 1200Dallas, Texas 75219214.265.0880

©2015 HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.

HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties] described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.

HFF AUSTIN OFFICE500 West 5th StreetSuite 1200Austin, Texas 78701512.532.1900

ANDREW LEVYSenior Managing Director(o) 469.232.1961(c) [email protected]

PATRICK MCCORDSenior Analyst(o) 512.532.1928 (c) [email protected]

SEAN SORRELLSenior Managing Director(o) 512.532.1924 (c) [email protected]

BEN BEAIRDDirector(o) 214.692.4706(c) [email protected]

TODD SAVAGEManaging Director(o) 469.232.1930(c) [email protected]

KELSEY ROOPAssociate Director(o) 512.532.1927(c) [email protected]

ADDITIONAL INFORMATION

If you have any questions or require additional information, please contact any of the individuals below.