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Confidential offering memorandum

Houston, TexasConfidential Offering MemorandumFairway Retail Center

Location OverviewFairway Retail Center is located in Pasadena, Texas. Pasadena is located just 10 miles

southeast of downtown Houston, a city with more than 2.2 million residents within

a metro area boasting a population of nearly 6.5 million. It is also located in close

proximity to some of Houston’s most notable employment hubs, including the world-

famous Texas Medical Center, NASA’s Johnson Space Center and the Port of Houston.

Pasadena boasts a strategic geographic location, a talented workforce, and a passion

for economic progress.

Fairway Retail Center is supremely located, with frontage, on Fairmont Parkway,

Pasadena’s primary east-west thoroughfare. Additionally, the property also sits on the

hard corer of Beltway 8, one of Houston’s primary outer loops. These two prominent

thoroughfares connect Pasadena residents all over the Houston region.

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ST1409

ST1097

ST686

ST1774

ST362

ST1486

ST105

ST1008

ST321ST149

ST1488

ST787ST1725

ST1010

ST762

ST36

ST1960

ST1736

ST2025

ST2854

ST1484

ST242

ST521

ST945

ST2100

ST529

ST1485

ST6

ST8

ST8

ST8

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ST99

ST1314

ST1462

ST75

ST565

ST146

ST288

ST35ST36

ST529

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$79,187Average Household

Income

$151,753Median Home

Value

93,1372019 Population

7.1%Projected Growth

(2019-2024)

11.1%Growth 2010-2019

DEMOGRAPHICS WITHIN A 3-MILE RADIUS

Fairway Retail Center | 2

Crenshaw Grand Apartments Units: 264

Occupancy: 95%Hawthorne at Crenshaw

Units: 293 Occupancy: 94%

FAIRMONT PKWY

FAIRMONT PKWY®

Gulf Coast Educators

Fairway��


$1,500,000

$1,600,000

$1,700,000

$1,800,000

$1,900,000

$2,000,000

$2,100,000

$2,200,000

$2,300,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

5.32% 5-Year CAGR 3.32% 10-Year CAGR

Projected NOI

75.8% National

24.2% Local

Property dashboardProperty SummaryADDRESS: 5575-5769 Fairmont Pky.

Houston, TX 77505YEAR BUILT: 2002

NRA: 49,600 SF

LAND AREA: 4.63 acres

IN-PLACE OCCUPANCY: 88.3%

PARKING 162 Spaces (5.2/1000 SF)

TRAFFIC COUNTS: Fairmont Pky: 43,000+

Beltway 8: 100,000+

Financial SummaryYEAR 1 NOI: $1,637,369

MONTH 1 ANNUALIZED NOI: $1,624,927

WTD. AVERAGE TENURE: 12.8 Years

WTD. AVERAGE REMAINING LEASE TERM: 3.4 Years

ROLLOVER SUMMARY:

WITHIN 3 YEARS OF OPERATION: 54.9%

WITHIN 5 YEARS OF OPERATION: 65.3%

Tenant Summary

TENANT NRA% OF

PROPERTYRamen San 1,600 3.2%Pearle Vision 2,400 4.8%Men's T Clinic 1,300 2.6%GameStop 1,400 2.8%Chipotle 2,500 5.0%TGF Hair Salon 1,600 3.2%L&N Nails 1,600 3.2%Vitamin Shoppe 3,200 6.5%Lovett Dental 2,450 4.9%The Joint 1,150 2.3%T-Mobile 3,000 6.0%Mattress Firm 5,200 10.5%Massage Heights 4,400 8.9%Visionworks 4,000 8.1%FedEx 1,800 3.6%AMC Nails 3,000 6.0%Verizon 3,200 6.5%Total Occupied GLA 43,800 88.3%Vacant 2,800 6%Vacant 3,000 6%Total Vacant GLA 5,800 11.7%Total NRA 49,600

Tenant Mix

* Current loan can be assumed


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N O T I N C L U D E DN O T I N C L U D E D

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TGF -1,600 SFTGF -1,600 SFNails Club - 1,600 SFNails Club - 1,600 SF

MassageHeights

4,400 SF

MassageHeights

4,400 SF

MattressFirm

5,200 SF

MattressFirm

5,200 SF

Chipo

tle -

2,500

SF

Chipo

tle -

2,500

SF

Avail

able

- 3,00

0 SF

Avail

able

- 3,00

0 SF

T-Mo

bile -

3,00

0 SF

T-Mo

bile -

3,00

0 SF

The J

oint -

1,15

0 SF

The J

oint -

1,15

0 SF

Love

tt Den

tal -

2,450

SF

Love

tt Den

tal -

2,450

SF

Vitam

in Sh

oppe

- 3,2

00 S

FVi

tamin

Shop

pe -

3,200

SF

Game

Stop

- 1,4

00 S

FGa

meSt

op -

1,400

SF

Men’s

T C

enter

- 1,3

00 S

FMe

n’s T

Cen

ter -

1,300

SF

Avail

able

- 2,80

0 SF

Avail

able

- 2,80

0 SF

Pear

le Vi

sion -

2,40

0 SF

Pear

le Vi

sion -

2,40

0 SF

Rame

n San

- 1,6

00 S

FRa

men S

an -

1,600

SF

Veriz

on -

3,200

SF

Veriz

on -

3,200

SF

AMC

Nails

- 3,0

00 S

FAM

C Na

ils -

3,000

SF

FedE

x Offic

e - 1,

800 S

FFe

dEx O

ffice -

1,80

0 SF

Visio

nwor

ks -

4,000

SF

Visio

nwor

ks -

4,000

SF

Site Plan


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Tenant Overview

Chipotle

Size: 2,500 SF

Headquartered in Newport Beach, Chipotle is an American chain of fast casual restaurants with over

2,500 locations and 64,500 employees across the United States, United Kingdom, Canada, Germany,

and France. The company reported an increase in revenue from $1.41 billion in 2018 to $1.43 billion in

2019, a 13.2% premium and expects full-year same-restaurant sales to increase in the high-single digit

percentage this year. Additionally, online sales have nearly doubled in the second quarter, and accounted

for 18.2% of total revenue, up from 15.7% in the prior quarter.

T-Mobile

As America’s Un-carrier, T-Mobile US, Inc. is redefining the way consumers and businesses buy wireless

services through leading product and service innovation. The Company’s advanced nationwide 4G

LTE network delivers outstanding wireless experiences to millions of customers who are unwilling to

compromise on quality and value. Based in Bellevue, Washington, T-Mobile US provides services through

its subsidiaries and operates its flagship brands, T-Mobile and Metro by T-Mobile.

Massage Heights

Size: 4,400

Founded in San Antonio, Texas, in 2004, Massage Heights is a family owned franchise massage and

skincare company based on personalized service and built on a membership model. The model makes

regular massage and skin therapy affordable, while still providing the level of service available at a five-

star resort. In an exploding industry, the company has more than 170 operating franchise locations in the

United States and Canada and plans to open a total of 500 U.S. locations within the next five years. The

company was ranked in Entrepreneur Magazine’s Franchise 500 list for 2012 and in Franchise Times’ Next

300 list for 2013 and is a member of the International Franchise Association (IFA).


Pearle Vision

Size: 2,400

Acquired by Luxottica in 2004, Pearle Vision is one of the largest franchised optical retailers in North

America. Built around the neighborhood doctor, Pearle Vision allows local business operators to provide

trusted eye care to their patients with the support and resources of the Pearle Vision brand. As of

December 31, 2018, Pearle Vision operated 110 corporate stores and had 419 franchises throughout North

America.

The Vitamin Shoppe

What began as a single store in 1977 has evolved into more than 700 locations in 42 states, the District

of Columbia and Puerto Rico. The Vitamin Shoppe is a specialty retailer and contract manufacturer

of nutritional products ranging from vitamins and minerals to nutritional supplements, herbs, sports

nutrition formulas, homeopathic remedies, and health and beauty aids. In the United States, more than

150 million people take a dietary supplement every day. The Vitamin Shoppe is the first and only choice

for people seeking to fulfill their health and wellness needs.

Mattress Firm

Founded in 1986, Mattress Firm strives to help customers find the best bed at the price that fits their

budget. With more than 2,500 neighborhood stores in nearly every state across the country, Mattress

Firm has grown to be America’s largest specialty mattress retailer. Headquartered in Houston, Mattress

Firm has over 8,500 employees across the country.

New owner (Steinhoff 51%) reduced store count from 3,500 locations to 2,500 locations due to

cannibalization. New stores EBIDA expected to go from loss in 2018 to a profit of $214 million in 2020.

Tenant Overview


Investment highlights

STRONG TENANCY WITH STABLE CASH FLOW

Shadow anchored by Target, Kohl’s and Hobby

Lobby, Fairway Center offers a stable income

stream featuring a mix of highly recognizable,

internet resistant, local and national retail tenants.

The Property is currently 88.3% leased with healthy

cash-on-cash returns and a stout CAGR. In-place

rental rates are below market providing value-

enhancement opportunity as tenants roll.

ACCRETIVE FINANCIAL RETURNS

Healthy cash-on-cash returns supported by

healthy occupancy levels and an e-commerce/

internet resistant tenant mix (Chipotle, Massage

Heights, The Joint and TGF Haircutters)

FIRST CLASS RETAIL SUBMARKET

One of Houston’s best performing retail

submarkets solidified by 95.1% occupancy,

rising rental rates and positive annual net

absorption for the last decade.

FAVORABLE DEMOGRAPHICS UNDERPINNED BY AFFLUENT RESIDENTIAL EXPANSION

Affluent, well-educated surrounding residential

population with average household incomes

north of $100,000 within a 1-mile radius.


Location Highlights

Excellent location in an established retail corridor with quick highway access to the Sam Houston Tollway (Texas Beltway 8 - Houston’s primary outer loop)

Direct access to some of Houston’s primary economic engines; The Port of Houston, Bush Intercontinental Airport, The Energy Corridor and Ellington Airport, the nation’s 10th licensed commercial spaceport

Fairway Center is located at the northeast corner of Fairmont Parkway and the Sam Houston Tollway which has a combined total traffic count of 254,244 VPD

The Fairmont & Beltway 8 retail trade area has led the southeast region with 97% average occupancy and +2% market rent growth over the past five years.

Surrounded by national retailers with a proven track record: Lowe’s, Walmart, Ross Dress for Less, 24 Hour Fitness, HEB and The Home Depot

Diverse surrounding economic population with an average household income of $100,276 in a three-mile radius

Investment highlights

Asset Highlights

Exceptional 10-Year CAGR of 3.80%

Shadow anchored by prominent traffic generators: Target, Kohl’s and Hobby Lobby

58% of of tenants expiring without options

Income stability & sticky tenant base: The property is nearly 90% occupied with a weighted average lease term 11.2 years

Offered free and clear of debt


Houston Retail Market

INVENTORY/ABSORPTION

◉ The Houston retail market is comprised of over 364 million square

feet of retail space with vacancy levels 5.5%.

◉ The market continues to see healthy absorption, since 2015,

there has been an average of 3.6 million square feet of positive

absorption per year.

◉ Increased population and job growth over the past few years have

further improved the overall retail market .

◉ Year to date, over 3.9 million SF of retail product have been

delivered to the market and 3.2 million SF has been absorbed.

OCCUPANCY

◉ Today’s occupancy rate of 96.2% highlights the demand from

local and national retailers driven by strong population growth.

◉ Since 2010, occupancy rates have averaged 95%, while never

dropping below 93% over that same time period.

RENTAL RATES

◉ Market wide rental rates are the highest they have ever been at

$21.00 per square foot NNN.

◉ Since 2017, the Houston market rental rates have increased

approximately 10%.

◉ Among the largest retail markets, Houston’s annual rent growth

of 1.3% is comparable to Orange County and trails metros like

Atlanta, Miami, and Dallas-Fort Worth.

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

2013 2014 2015 2016 2017 2018 YTD

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2013 2014 2015 2016 2017 2018 YTD

ABSORPTION DELIVERIES

ASKING RENTAL RATES

ABSORPTION & DELIVERIES

11% increase

since 2017


Port of Houston

Port Houston, one of the busiest ports in the country and the largest on the Gulf Coast, is a

25-mile-long complex of nearly 200 private and public terminals. Port Houston’s flagship container

terminals, Turning Basin, Jacintoport, Care, Bayport, Care and Barbours Cut, highlight the eight

public terminals responsible for servicing the more than 8,200 vessels and 215,000 barges

that visit the port each year. The port is consistently ranked 1st in the United States in foreign

waterborne tonnage; 1st in U.S. imports; 1st in U.S. export tonnage and 2nd in the U.S. in total

tonnage. It is also the nation’s leading breakbulk port, handling 52 percent of project cargo at Gulf

Coast ports. Carrier services on all major trade lanes link Houston to international markets around

the globe.

Southeast Houston Overview

Port Traffic on the Rise

Container traffic is increasing at the Port of Houston, propelled in large part by a booming

plastics industry that has benefited from the cheap oil and natural gas it uses to manufacture

small plastic pellets. The Port Commission’s second quarter report stated that it handled

almost 20 million tons of cargo this year, an increase of 13% from the same period last year. In

addition, container volumes increased by 14% year-over-year, and more than 1.7 million tons of

steel crossed Port of Houston wharves, reflecting a year-to date increase of nearly 50%.

Nearly

200Private & Public

Industrial Terminals

247+Million Tons of Cargo Annually

8,200+Vessel Calls and

215,000Barges Pass

ThroughEach Year

1stIn foreign

Waterborne Tonnage,

Import and ExportCombined

152+ Million Consumers within 1,000 miles

The cheap feedstock used to produce the resin pellets spurred a slew of new and expanded

chemical plants in Southeast Houston and along the Gulf Coast making the area home to the

largest U.S. petrochemical port and second only to Rotterdam in the world. The American

Chemistry Council, a trade group, estimated the Texas Gulf Coast accounts for about $87 billion

of the $205 billion in petrochemical plants completed since 2010 or planned through 2025. All

told, about half a dozen new polyethylene plants have begun operations in Texas this year,

adding millions of tons of polyethylene pellets to Port of Houston’s chart-topping exports.

Houston is the top US crude oil exporter, shipping out about 2.5 million b/d. The port also is the

top U.S. polyethylene (PE) resin exporter, according to trade data. Nearly 14 million tons of PE

capacity is expected to be added from 2017-2027, and more than 75% of which will be in Texas

and Louisiana.


The Port’s Tremendous Growth

In 2018, all public and private terminals in the Port of Houston District handled 263.9 million tons

of international and domestic cargo for exporters and importers located within the state of Texas,

as well as throughout the United States.

Highlighted as the country’s No. 1 region for exports, The Houston Ship Channel is home to the

largest petrochemical manufacturing complex in the Americas. Energy production and the export

of crude oil, along with the increasing global demand for chemicals produced in the region, are

major drivers of this success.

Largely because of petrochemical activity along the 52-mile ship channel, the nearly 200 private

companies that make up the Greater Port of Houston have helped make the port the No. 1 U.S. port in foreign waterborne tonnage. Petroleum and petroleum products are leading import and

export commodities. More than 200 million short tons of international cargo were handled in 2018

alone. The economic impact of the greater port nationally includes 3.2 million jobs, $801.9 billion in economic value and more than $38.1 billion in tax revenue.

Infrastructure Investments

To keep pace with the increased traffic, Port Houston infrastructure projects continue at a

substantial pace. Port Houston investing $333M in capital projects through 2018, including

new Post-Panamax cranes, construction of Bayport Wharf No. 4 and the reconstruction

of the Barbours Cut Wharf No. 2. Additional funds will be put toward new technology and

infrastructure at the Port, as well as routine maintenance and security.

Notable Projects and Additions:

◉ Maintenance dredging was completed on the Bayport channel, fully opening the

Bayport Container Terminal to receive 45-foot draft vessels.

◉ Improvement of existing drainage system tied to IH-610 feeder road at the

Volkswagen yard at the Turning Basin terminal.

◉ 9 additional rubber-tired gantry cranes (RTGs) were recently ordered for Barbours Cut,

adding to the 14 ship-to-shore wharf cranes and 44 RTGs currently in operation.

◉ 3 new Super Post-Panamax cranes for Barbours Cut have departed Shanghai are

expected to arrive in early October. These 400-foot-tall, $11 million cranes are slated

to replace three older units at the terminal.

◉ In addition to Port improvements, hours of operation at the Bayport Container

Terminal have expanded to 7:00 a.m. to 11:00 p.m., adding 4 hours of daily service

from current operations. The US Army Corps of Engineers and the Port of Houston

Authority are working on a $10 million, four-year study to determine the best way to

increase future capacity and safe channel navigation.

In addition to Port improvements, hours of operation at the Bayport Container Terminal have

expanded to 7:00 a.m. to 11:00 p.m., adding 4 hours of daily service from current operations.

The US Army Corps of Engineers and the Port of Houston Authority are working on a $10

million, four-year study to determine the best way to increase future capacity and safe channel

navigation.

Southeast Houston Overview

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2019-Jul��

PORT HOUSTON - HISTORICAL TEU VOLUME

Source: PHA Marketing and External Communications based on raw, unaudited, data from PHA AccountingTEU Volume includes loaded and empty imports and exportsNote: Only includes containers handled at Port of Houston Authority - owned facilities (including Bayport Terminal, Barbours Cut Terminal, APM Houston)

11.2% CAGR

+17% from1H ‘18


Liberty

Chambers

Galveston

Brazoria

Fort Bend

Harris

HOUSTONAustin

Montgomery

Waller

BILLION GDP (2017)

Houston MSA Economic Overview September '19

G E O G R A P H Y

COUNTIES9 in the Houston MSA

10,000 SQUAREMILES

larger than the state of New Jersey>

P O P U L AT I O N & D E M O G R A P H I C S

MILLION7 residents in the Houston MSA

MILLION2.3 residents in theCity of Houston

E M P L O Y M E N T

3.2MILLIONjobs in theHouston MSA

more jobs than 35 states

73,30071,000forecasted to be created in 2019

NEW JOBSJOBS created

in 2018

OF TEXAS’Sentire employment base

5th most populous MSA in the nation • 4th most populous city in the nation

nearly 1 in 4Houstonians areforeign-born

QUARTER

2ndnumber of jobs created in 2018 ouf of any MSA in the nation

LARGEST

‘16 ‘17 ‘18 ‘19 YTD

3,200,000

3,150,000

3,100,000

3,050,000

2,950,000

2,900,000

C L U T C H C I T Y

E C O N O M Y

nearly a

E N E R G Y C A P I T A L O F T H E W O R L D G L O B A L T R A D E C I T Y

T H E T E X A S M E D I C A L C E N T E R

4,600+energy-related firms

650+ exploration andproduction firms

800 oil field

3rd LARGESTnumber of engineers of any U.S. metro

service companies 25%employs

of the nation’s

extraction jobsOIL & GAS

$25 BILLIONin local GDP

8th LARGESTbusiness district in the US

50 MILLIONdeveloped SF

10 MILLION PATIENTencounters per year

106,000+employees at TMC

26th LARGESTeconomy in the world if Houston were an independent nation

7th LARGESTUS metro economy in the nation

$490

2.9% EXPECTED REAL GDPannual growth from ‘20-45

30 ACRE TMC3Innovation Campusslated to open in ‘22

C O R P O R AT E H E A D Q U A R T E R S

22 FORTUNE 500

3rdnumber of FORTUNE 1000 companies in the nation

LARGEST 4thnumber of FORTUNE 500 companies in the nation

LARGESTcompanies call Houston home

Houston has the LARGEST EXPORT MARKET in the nation

1st in FOREIGN TONNAGEfor 22 straight years

2nd in TOTAL TONNAGEfor 26 straight years

+ T H E L A R G E S T G U L F C O S T C O N T A I N E R P O R T

15 foreign gov’t tradeand commerce offices

35 active foreignchambers ofcommerce

90 nations with consularrepresentation

58.3 MILLION Houston airport passengers in 2018

ACCOLADESHome of

#1 Nation’s Best City for Millenials

The Langston Co. 2019

#1 Top Metros Where Young Adults are Moving

The Brookings Institute 2019

#1 Most Diverse City in US WalletHub 2019

#2 Corporate HQ Location Business Facilities 2019

#2 Best US Metro Area for STEM Workers

American Enterprise Institute’s Housing Center

2019

#3 Most Affordable Top Metro in the USGreater Houston Partnership 2019

#4 Economic Growth Potential

Business Facilities 2019

#4 Best Startup Ecosystem Business Facilities 2019

The LARGEST medical complex in the world

GDP expected to more than double between ‘20 and ‘45

HOUSTON EMPLOYMEN T


Contact information

ADVISORS Ryan West Senior Managing DirectorJLL Capital Markets+1 713 852 [email protected] TX License #478560

Rusty Tamlyn Senior Managing DirectorJLL Capital Markets+1 713 852 [email protected] Lic. #225187

Bryan StrodeAnalystJLL Capital Markets+1 713 212 [email protected]

Marcus MoodyAnalystJLL Capital Markets+1 713 852 3484marcus [email protected]

DEBT AND FINANCE James BrolanSenior Vice PresidentJLL Capital Markets+1 832 623 [email protected]

9 Greenway Plaza, Suite 700 | Houston, Texas 77046

www.us.jll.com/capitalmarkets

Copyright © Jones Lang LaSalle IP, Inc. 2019This publication is the sole property of Jones Lang LaSalle and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle.The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. Jones Lang LaSalle Americas, Inc., California license # 01223413. Jones Lang LaSalle Americas, Inc. License # 19262.Any opinion or estimate of value of any asset in this presentation is based upon the high-level preliminary review by JLL. It is not the same as the opinion of value in an appraisal developed by a licensed appraiser under the Uniform Standards of Professional Appraisal Practice. JLL expressly disclaims any liability for any reliance on any opinion or estimate of value in this presentation by any party.

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