Highlights

• 5 Minutes to San Antonio International Airport
• 88% Leased
• Excellent Credit Tenants

• Rising Rental Rates
• 10 Percent Cash Flow
• Favorable Existing Debt to Assume

Description

Northchase 1 is a well maintained 3-story, class B multi-tenant office building located less than five minutes from San Antonio International Airport and one-half mile from the federal court house. Total rentable area is 67,161 sq. ft., and the property is currently 88% leased. The property features covered parking on the first level, a significant attraction to tenants, and one of the reasons that existing tenants continue to renew. There have been record levels of absorption in recent years, and the market is currently experiencing rising rental rates. The tenants at Northchase 1 boast excellent credit. All five tenants are agencies of the federal government. Tenants include: the Drug Enforcement Agency, the Department of Defense, the Airforce, US Customs, and the Department of Labor. These tenants all exhibit a synergy in their operational relationships and ultimately benefit from their close proximity to each other as well as their need to be close to the airport and federal courthouse.

The San Antonio office market is coming off three straight years of positive net growth and the momentum is expected to continue through 2007. In 2006, only 258,000 sq. ft. of speculative office projects (with significant prior leasing commitments) reached conclusion spread out among six projects. This was accompanied by 812,000 sq. ft. of positive absorption in 2006. Last year was second only to 1992 in positive net absorption, and that was the year that Southwestern Bell relocated from St. Louis to San Antonio. The subject property is located within the North Central submarket which accounts for more than 7.9 million sq. ft. of office space that was primarily built in the 1980's (excluding the far north submarket). According to market experts, tenants faced with renewal or relocation decisions are likely to experience "sticker shock". The average quoted rental rate now stands at $18.86 per sq. ft. on a full service basis - up 3.7 percent from a year ago. The overall vacancy rate a year ago for the North Central submarket was 14.9 percent, but it has since dropped by more than 20 percent to stand at 11.4 percent today.