RDU CENTER III
RALEIGH-DURHAM, NORTH CAROLINA
RDU III | 1
EXECUTIVE SUMMARY | 1
HFF IS PLEASED TO PRESENT the opportunity to acquire RDU Center III, a four-story
Class A office building that offers prospective investors exceptional returns in the
flourishing Raleigh-Durham market. Comprised of 114,528 square feet, RDU Center
III is currently 90.9% leased to a financially stable tenant roster that is highlighted by
Extreme Networks, Inc. (NASDAQ:EXTR, 47.6%) a software and service led solutions
company with advanced networking technologies and platforms. With over 5.25-years
of weighted average remaining lease term, below market rents and featured tenants
with a market cap of $6.5 billion dollars, RDU Center III offers investors long term
stability with future upside.
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E XECUTIVE SUMMARY
T HE IN V E S T ME N T OP P OR T UNI T Y
BEST IN CLASS LEED CERTIFIED OPPORTUNITY
Constructed in 2008, RDU Center III is a custom designed, four-story, Class A, Silver LEED Certified office building in the
heart of the RTP/I-40 submarket. The Property, which is comprised of 114,528 square feet, features extensive Class A
finishes including attractive landscaping, a 1,688 square foot fitness center, subterranean parking and upgraded finishes
throughout. Considered to be one of the premier buildings in the RTP/I-40 submarket, RDU Center III benefits from a
superior center-of-the-market location adjacent to Interstate 40 and within 2 miles of the Raleigh-Durham International
Airport.
S TA BI L I Z E D A S S E T W I T H I M M E DI AT E U P S I DE , A NC HO RE D B Y C RE DI T T E N A N T S
RDU Center III offers investors the opportunity to acquire
an institutionally-maintained asset featuring 5.25 years
of weighted average remaining lease term, 10,375
square feet of leasable space, and credit tenant anchors
Extreme Networks (NASDAQ: EXTR) and sub-tenant
Align Technology (NASDAQ: ALGN). Extreme Networks,
a publicly traded tech company based in Silicon Valley,
is fully committed to its RTP headquarters at RDU III,
where the company houses the bulk of its engineering
and product development divisions. Meanwhile, Align
Technology (most notably known for their industryleasing clear dental aligner Invisalign), just recently
opened an office at RDU Center III that now serves as
the East Coast headquarters for the company. Together,
Extreme Networks and Align Technology have a
combined market cap of nearly $6.5 billion dollars.
EXECUTIVE SUMMARY | 5
INVESTMENT SUMMARY
ADDRESS
2121 RDU Center Drive
Morrisville, NC 27560
RBA
114,528 SQUARE FEET
ACRES
7.21
PERCENT OCCUPIED
90.9%
MAJOR TENANTS
Extreme Networks, iContact
Align Technology (Sublessee)
YEAR 1 NOI
$2,008,052
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RESEARCH TRIANGLE PARK
AT T R A C T I V E L O C AT ION
Located in Morrisville, NC, RDU Center III is ideally positioned at the junction
of Interstate 40 and Aviation Parkway, offering tenants convenient access to
numerous surrounding amenities and excellent connectivity to Cary, Downtown
Raleigh, Downtown Durham and Chapel Hill. One of RDU Center III’s greatest
amenities is the immediate proximity to Aviation Parkway and Raleigh-Durham
International Airport (RDU) - located less than one mile away. In 2014, 9.5 million
passengers traveled through Raleigh-Durham International Airport, up nearly
4 percent compared to 2013. The airport is served by eight major airlines that
provide almost 400 daily flights to nearly 40 domestic and international non-stop
destinations.
The tenants of RDU Center III also benefit from the numerous amenities nearby,
which include over 1 million square feet of retail at Brier Creek, more than 25
hotels within a 3 mile radius and over 20 miles of hiking trails at the 6,000acre William B. Umstead State Park. The central location also offers excellent
proximity and access to some of the area’s finest residential communities,
including Brier Creek Country Club and Prestonwood Country Club.
ATIO
AVI
RK
N PA

HILTON GARDEN
40
DOWNTOWN RALEIGH:
EXECUTIVE SUMMARY | 7
13 MILES
WAY
DOWNTOWN DURHAM:
13 MILES
BRIER CREEK:
-BRIER CREEK COUNTRY CLUB
-BRIER CREEK COMMONS:
BJ’S, TARGET, DICK’S, HOME GOODS, BARNES & NOBLE
BRIXX’S, BRUEGGARS, TOTAL WINE, NOODLE & CO,
BRASA STEAKHOUSE, CARIBOU COFFEE, STARBUCKS
COFFEE, JIMMY JOHN’S, JASONS’S DELI

RDU INTERNATIONAL AIRPORT

SHEETZ

RALEIGH DURHAM AIRPORT PARK & RIDE 3

RDU CENTER III
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UNIQUE OPPORTUNITY TO PURCHASE WELL BELOW REPLACEMENT COST
Prospective investors have the opportunity to purchase a premier office building at well below replacement
cost. With an estimated replacement cost of $250 to $275 per square foot, a potential investor is presented
with an excellent opportunity to invest at an attractive basis, in turn, driving significant bottom line growth.
Purchasing RDU Center III, at a discount to replacement cost, bolstered by an epicenter location and strong
surrounding market fundamentals, is truly rare.
RDU Center III
PGSF
Per Land SF
$14
Per Parking Space
Percent of Cost
Land Costs
$4,431,847
$39
Hard Costs
$18,322,880
$160
64%
Soft Costs
$4,008,130
$35
14%
Total Building Cost
$26,762,857
$234
93%
Parking Costs
$1,866,643
$16
Total Costs
$28,629,500
$250
EXECUTIVE SUMMARY | 9
15%
$5,000
7%
100%
O U T S TA N DI N G M A R K E T
F UNDA ME N TA L S
RDU Center III is ideally located in the robust RaleighDurham office market. Currently 92% occupied, the
Raleigh-Durham office market is experiencing healthy
momentum, garnering more than 3.9 million square feet
of positive net absorption over the last 24 months (6.15%
of total), largely as a result of its exposure to Tech and
R&D based tenants. This trend is not new as the RaleighDurham office market has now recorded 19 consecutive
quarters of positive net absorption. Rental rates
continue to be the main benefactor from the underlying
fundamentals. Over the last 12 months, both the overall
market and Class A market have experienced a healthy
4.5% and 4.3% growth respectively.
Furthermore, the Property is positioned next to the
renowned Research Triangle Park. Comprised of over
12 million square feet of positive competitive inventory,
the submarket is Raleigh-Durham’s largest and has
experienced over 1.5 million square feet of positive
absorption in the last 36 months. Rental rates in the overall
RTP/I-40 submarket continue to benefit from strong
underlying fundamentals with a growth of 4.8% over the
last 12 months and an impressive 36 month growth of
13.7%. Class A fundamentals continue to outperform
the overall market realizing 6.5% growth over the last 12
months.
U N PA R A L L E L E D P O S I T I O N
IN T HE T RI A NGL E RE GION
The Triangle Region, encompassing the Raleigh-DurhamCary-Chapel Hill combined CSA, is home to more than two
million residents and has recently enjoyed the distinction
as one of the fastest growing metros in the country.
Between 2000 and 2015, the area welcomed more
than 800,000 newcomers for a 57% cumulative uptick
in population and was recently projected by the United
Nations Population Division to be the #2 Fastest Growing
Large City in the U.S. between now and 2030. RDU
Center III enjoys a prime location in one of the Triangle’s
fastest growing residential nodes, Morrisville. The rapidly
growing location is marked by immediate access to high
quality residential neighborhoods, superior amenities and
easy access to key roadways.
RDU III | 10
540

OR ACLE, LENOVO,
BASF, CREDIT SUISSE
H I GH B A R R I E R S TO E N T R Y
Not only is RDU Center III’s position advantageous from an access
standpoint, but the building is also situated in an extremely high barriers
to entry location. The Property is insulated from competitive construction
with nearly all neighboring land (10,000+ acres) owned by either RaleighDurham International Airport or state owned land designated as the William
B. Umstead State Park. With limited access to available land and assets, the
purchase of RDU Center III gives the unique opportunity to break through
these high barriers and gain access to the market.
EXECUTIVE SUMMARY | 11

BRIER CREEK COUNTRY CLUB

BRIER CREEK COMMONS: 8 0 0K SF RETAIL CENTER
RALEIGH-DURHAM INTERNATIONAL AIRPORT
70
WILLIAM B. UMSTEAD STATE PARK
(5,599 ACRES)

LAKE CRABTREE
RDU CENTER III
40

METLIFE

VERIZON

DEUTSCHE BANK

FIDELIT Y INVESTMENTS
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EXECUTIVE SUMMARY | 13
OF F E RING P RO C E DURE S
RDU Center III is being offered “free and clear” of existing financing
on a 100% fee simple interest.
Upon receipt of an executed Confidentiality Agreement, all
Potential Purchasers will be provided with this electronic
Offering Memorandum. The Argus model will also be provided.
I. Finalists will be granted access to a secure electronic Due
Diligence site containing tenant leases and other detailed
underwriting information.
II. Tours of the Property can be arranged by contacting a
member of the HFF transaction team. No unescorted tours
are allowed and advance notice is required to gain access
to several of the tenant spaces. All interested parties are
encouraged to tour the property.
III. Specific underwriting questions may be submitted to HFF in
writing. Depending on the type and frequency of questions,
HFF may elect to circulate a Frequently Asked Questions
document to all potential purchasers addressing the most
common topics.
IV. Near the conclusion of the marketing process, HFF will
notify all potential purchasers in writing of the Offering
Date. Offering instructions and buyer selection criteria
will be distributed at this time. We anticipate closing this
transaction in the third quarter of 2016.
investment advisors
SCOT HUMPHREY
Director
704.526.2828
[email protected]
RYAN CLUTTER
CHRIS LINGERFELT
Senior Managing Director
704.526.2805
[email protected]
Senior Real Estate Analyst
704.526.2808
[email protected]
ZACK DROZDA
WALKER MCLEAR
CORY FOWLER
BRENT BOWMAN
analysts
RYAN EKLUND
Real Estate Analyst
704.526.2811
[email protected]
Real Estate Analyst
704.526.2812
[email protected]
Real Estate Analyst
704.526.2817
[email protected]
financing
TRAVIS ANDERSON
Senior Managing Director
704.526.2806
[email protected]
Associate Director
704.526.2807
[email protected]
Director
704.526.2827
[email protected]
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