Purchased in 2004 for $23.5 Million

This Class "A", 163,000 square foot high-rise office building was purchased in November 2004 by Moore&Associates just as the Austin office market was beginning to recover from an overbuilding setback. Although the acquisition market was still quiet, an in-depth study of the demographics clearly indicated a suggested a strong and sustained upward trend. At the time of purchase, the building had the following attributes:

• Below replacement cost price of $145 per square foot ($23.5 million), approximately 65% of replacement cost;
• Going-in capitalization rate of just under 10% on projected first year net operating income;
• Unsurpassed, irreplaceable location two blocks from the State Capital of Texas in the heart of the Central Business District;
• High-rise, Class A building thoughtfully designed and elegantly appointed with a polished granite façade high-end interior materials and finishes; and,
• Multi-tenanted with a wide range of office users with staggered lease expirations, but with one large tenant (30% of building) slated to vacate in late 2006.

Moore&Associates' Investment Strategy was to purchase the asset below replacement cost, renew existing tenants at higher rental rates (as such rates returned to historical rent levels), and re-tenant 30% of the building in 2007 to small and mid-size users that required prestigious offices convenient to the Capitol. A seven year hold was anticipated for the "core-plus" investment. Upon completion of the mark-to-market rent strategy, re-tenanting of one-third of the building, and staggering of the rollover profile, the property is expected to be highly appealing to core investors seeking a trophy quality asset in an irreplaceable location.

Implementation: Moore&Associates implemented an aggressive marketing campaign targeting lobbyists and law firms that conduct business with the State government. We improved property management, made capital investments, enhanced parking quality and quantity, and increased rental rates. Investments in elevator cabs, elevator lobbies, a cooling tower, and air balancing; and, attentive care by our property management team, quickly created a new identify for the property among existing and prospective tenants and the brokerage community. Operating costs were aggressively managed and Moore&Associates located its Austin headquarters in the building.

Performance: Five years into the business plan, the asset has been repositioned as a core investment. Performance to date has exceeded expectations and the building is 99% leased. Some of the most successful lobbyists, associations and boutique law firms in Austin call the building home. Capital investments continue to be made that insure the building retains its competitive edge in the market. In 2008 the property was appraised at $43 million, or $260 per square foot, an increase of $19.5 million in four years.