ADT SECURITY SERVICES, INC. ZERO CASH FLOW TRANSACTION Crosspoint Boulevard Fishers (Indianapolis), Indiana 46256

Transcription

1 ADT SECURITY SERVICES, INC. ZERO CASH FLOW TRANSACTION Crosspoint Boulevard Fishers (Indianapolis), Indiana Actual Property OFFERING MEMORANDUM

2 Stan Johnson Company is pleased to offer for sale to qualified investors a Class A call/data center located in Fishers (Indianapolis), Indiana. INVESTMENT HIGHLIGHTS The property serves as the National Accounts Center for ADT Security all national commercial accounts are serviced and monitored from this facility ADT, an operating segment of Tyco International Ltd., is one of the world s largest providers of electronic security systems and services, serving over 9 million customers worldwide The lease is guaranteed by Tyco International Ltd., which reported 2010 revenues of $17 billion and carries an S&P rating of A-/Stable Corporate-backed, absolute net lease with approximately 11.5 years remaining on base lease term Zero cash flow structure with fully-amortizing, nonrecourse loan in place Strategically located in Crosspoint Business Park in Fishers, Indiana just 5 miles northeast of Indianapolis The investment is ideal for tax-deferred 1031 or 1033 exchange buyers or non-exchange buyers seeking passive losses that may be used to offset income from other real estate investments Asking Price: $20,886,275 (17.35% Equity Investment) David Clary Director dclary@stanjohnsonco.com In cooperation with Brad Feller, an Indiana licensed broker, license #PB Stan Johnson Company 6120 South Yale Avenue Suite 813 Tulsa, Oklahoma P: F: STANJOHNSONCO.COM

3 TENANT OVERVIEW ADT Worldwide, an operating segment of Tyco International Ltd., designs, sells, installs, services and monitors electronic security systems for residential, commercial, industrial and governmental customers. In addition, ADT Worldwide manufactures certain products related to retailer anti-theft systems. ADT Worldwide is one of the world s largest providers of electronic security systems and services. ADT Worldwide operates through a network of offices and service facilities located in North America, Central America, South America, Europe, the Middle East, the Asia-Pacific region and South Africa. The group occupies approximately 7 million square feet, of which 1 million square feet are owned and 6 million square feet are leased. With 2010 net revenue of $7.4 billion, the ADT Worldwide segment comprises 44% of Tyco s total consolidated net revenue. ADT is the largest single provider of electronic security services throughout the U.S. ADT provides security solutions to 90% of Fortune 500 companies, more than 80% of the largest retailers in the U.S., half of the country's top 50 national and regional bank holding companies, 72 of the nation s mid and large-size airports, all federal courthouses nationwide and the homes of over 6 million residential customers. ADT's total security solutions include intrusion detection, fire detection, video surveillance, access control, critical condition monitoring, health and elder care monitoring, electronic article surveillance, radio frequency identification and integrated systems. ADT employs 20,800 associates at more than 180 sales and service offices around the United States. GUARANTOR OVERVIEW Tyco International Ltd. (NYSE: TYC) is a diversified, global company that provides vital products and services to customers around the world. Tyco is a leading provider of security products and services, fire protection and detection products and services, valves and controls, and other industrial products. The company operates in five segments: ADT Worldwide, Flow Control, Fire Protection Services, Electrical and Metal Products, and Safety Products. The company was founded in 1960 and is based in Schaffhausen, Switzerland. Tyco reported 2010 net revenue of more than $17 billion and has more than 100,000 employees worldwide. BUSINESS SEGMENTS ADT Worldwide: designs, sells, installs, services, and monitors electronic security systems for residential, commercial, education, governmental and industrial customers. Flow Control: designs, manufactures, sells, and services valves, pipes, fittings, valve automation, and heat tracing products for the oil, gas, and other energy markets along with general process industries and the water and wastewater markets. Fire Protection Services: designs, sells, installs, and services fire detection and fire suppression systems for commercial, industrial and governmental customers. Safety Products: designs, manufactures, and sells fire suppression, electronic, security, and life safety products, including fire suppression products, breathing apparatus, intrusion security, access control and video management systems. Key Financial Metrics - Tyco International Ltd. FY 2010 Net Revenue $17 Billion Operating Income $1.6 Billion Net Income $1.13 Billion EBITDA $3.2 Billion Net Worth $13.9 Billion (as of March 2011) S&P Rated A-/Stable

4 TENANT/GUARANTOR OVERVIEW ADT CUSTOMER MONITORING CENTERS ADT has six Customer Monitoring Centers (CMC s) strategically located throughout the United States, linked to create one virtual nationwide monitoring platform The centers are located in Denver, CO; Indianapolis, IN; Jacksonville, FL; Kansas City, MO; Knoxville, TN; and Rochester, NY The CMC s act on more than 29 million alarm signals each year and handle more than 19 million customer calls per year 93,000+ alarms daily 200,000+ total calls daily (inbound and outbound) 8,000+ customer contacts an hour; 24/7 operations Handle 3.3 customer transactions every second With the virtual capability of ADT s CMCs, if one monitoring center receives excessive alarm signal traffic or, in a worst-case scenario, becomes nonoperational, all alarm signals are automatically rerouted to another of ADT s five centers, with no interruption in service

5 NATIONAL ACCOUNTS CENTER PROPERTY OVERVIEW This property serves as the National Accounts Center for ADT Security. As the only National Accounts Center in the U.S., this facility is an integral part of ADT s operations and future growth. ADT has integrated all if their national corporate accounts into this location all commercial accounts are serviced and monitored at this facility. Being located in Fishers, Indiana provides a strategic advantage to ADT. Fishers offers residents a low cost of living, which results in a lower cost of doing business to ADT. For ADT to re-hire and train employees in another location would be too costly. The building is a 55,837 SF Class A single story office building situated on 8.9 acres at the northwestern intersection of Centerpoint Drive and Crosspoint Boulevard within the Crosspoint Business Park. The building is serviced by two separate power supplies from the street as well as back up generation and two separate telecom entries to the building with two separate providers. BUILDING SPECIFICATIONS Building Size: Coverage Ratio: 55,837 SF Year Built: 2001/ :1 (14.25%) Land to Building Ratio Due to its proximity to Indianapolis International Airport and extensive interstate system, Fishers is easily accessible from across the country. This is key because when ADT retains a new corporate account, they bring in representatives from the company to the facility for orientation and to tour the operations. Building Use: Construction: Exterior: Call Center / Data Center Structural steel with a concrete tilt wall system Simulated lime stone accented by pewter and brushed stainless window framing system and blue grey glazing The building was constructed to ADT s specifications to function as a critical facility. As such, the cost for ADT to replicate the infrastructure at this facility would be extremely high. Roof: Ceiling Height: HVAC & Plumbing: Concrete deck; EPDM Vary between 14, 16 and 22 above the finish floor Rooftop package HVAC units; Copper supply and PVC sanitary The property can also facilitate future expansion of operations. The dining area was designed so that it can be converted to work areas if needed, providing 25% more workspace. The building to land coverage ratio is also low (14.25%), which allows for potential future development on the site. Electrical Service: piping 480/277 VAC, 1200 Amp switchboard, 750 kw diesel generator, 1000 gallon diesel fuel storage tank, 240 kw static UPS Module and 400 Amp load bank Parking: 8.5: spaces, 9 of which are handicap Special Features: A 580 SF server room with raised flooring is connected to the work floors and IDF closets in the office quadrants via a 12 inch deep trench with raised flooring and conduit. Systems furniture was coordinated with power and voice/data cabling beneath the floor without the use of power poles.

6 FLOOR PLANS INTERIOR FINISH & FURNITURE FLOOR PLAN FLOOR PLAN

7 LOCATION OVERVIEW With a population of 76,794 as of the 2010 census, Fishers, Indiana is a growing community with a strong history of family values and successful businesses. Located in Southeastern Hamilton County, just 20 miles north and east of downtown Indianapolis, with convenient access to major transportation routes such as I-465, I-69, I-70, I-74, and I-65, make Fishers a very convenient place to live and do business. Cincinnati, Louisville, and Chicago are all within 180 miles of Fishers, and are easily accessed by nearby interstate roadways. In 2009, Fishers was named America's best affordable suburb by BusinessWeek and was ranked eighth in the best places to live according to Money Magazine in Indianapolis is the state capital of Indiana and the county seat of Marion County. As of the 2010 United States Census, the city's population was 829,718, making it Indiana's largest city and the 12th largest city in the U.S. The population of the Indianapolis metropolitan statistical area is estimated at 1,834,672, making it the 33rd-largest MSA in the U.S. Forbes recently named Indianapolis as one of the fastest growing regions in the United States citing a business-friendly attitude, inexpensive housing and a strong cultural community as factors leading to a population increase at a rate that is 50% higher than the national average. For much of its history, Indianapolis has oriented itself around government and industry, particularly manufacturing. Today, Indianapolis has a much more diversified economy, contributing to the fields of education, health care and finance. Consistently ranked as one of the most affordable large cities in the U.S., Indianapolis offers lowest sales and use tax in the Midwest and one of the most competitive real estate markets in the country. Tourism is also a vital part of the economy of Indianapolis and the city plays host to numerous conventions and sporting events. Many of Indiana's largest and most recognized companies are headquartered in Indianapolis, including pharmaceutical manufacturer Eli Lilly and Company, wireless distribution & logistics provider Brightpoint, health insurance provider Wellpoint, Republic Airways Holdings (including Chautauqua Airlines, Republic Airlines, Frontier Airlines and Shuttle America), REIT Simon Property Group, and retailer Finish Line, Inc. The U.S. headquarters of Roche Diagnostics, Technicolor SA, Conseco, Dow AgroSciences, Emmis Communications, and Steak 'n Shake are also located in Indianapolis. Other major Indianapolis area employers include Indiana University Health, Sallie Mae, Cook Group, Rolls-Royce, Delta Faucet Company and General Motors. Indianapolis is also a prime center for logistics and distribution facilities. The city has been named the Crossroads of America because of its superior accessibility. It has the most interstate coverage of any city in the nation (accessible via routes 65, 70, 69 and 74), allowing 75 percent of the U.S. and Canadian populations to be reached within a one-day drive. Indianapolis is home distribution centers for companies such as Amazon.com, Foxconn, Finish Line, Target and CVS/pharmacy. Indianapolis International Airport, which opened a new $1 billion terminal in 2008, is home to the second largest FedEx operation in the world (after the Memphis headquarters) and the United States Postal Service Eagle Network Hub. Indianapolis is home to several higher education institutions, including Indiana University-Purdue University Indianapolis, Butler University, the University of Indianapolis and Ivy Tech Community College. In addition to a strong education base, businesses benefit from the close proximity of nationally recognized schools such as Indiana University, the University of Notre Dame, Purdue University and Rose-Hulman Institute of Technology.

8 LOCATION MAPS

9 LOCATION MAPS NORTH COMMERCE EXIT 5 SALLIE MAE LOAN SERVICING CENTER CROSSPOINT INDIANAPOLIS METROPOLITAN AIRFIELD NORTH BY NORTHEAST THE PRECEDENT 37 CASTLETON PARK COMMUNITY HOSPITAL NORTH

10 LOCATION MAPS INDIANAPOLIS METROPOLITAN AIRFIELD CROSSPOINT BANK ONE OFFICE BUILDING OFFICE 37 NORTH BY NORTHEAST E 96TH ST E 96TH ST FAIRFIELDS

11 PROPERTY PHOTOS

12 LEASE ABSTRACT Tenant: ADT Security Services, Inc. LOAN ABSTRACT Original Loan Amount: $19,571,641 Guarantor: Tyco International Ltd. (NYSE: TYC) Current Loan Balance: $17,261,386 (as of August 2011 payment) Term: 20 Years Loan Commencement: August 10, 2001 Lease Commencement: February 10, 2003 Interest Rate: 7.06% fixed for the entire term Land Area: +/- 8.9 Acres Term: 21.5 Years Building Size: 55,837 SF Amortization: 20 Years; first 18 months payments interest only Year Built: 2001 / 2002 Current Annual Payment: $1,846,464 (includes annual trustee fee) Current Annual Rent: $1,846,464 Loan Maturity: January 10, 2023 Rent Increases: 3.5% annually. Incremental rent associated with rental increases go to service the underlying loan, consistent with the zero cash flow structure. Balloon Balance: $0, fully amortizing loan Renewal Options: None Expenses: Absolute Net Lease - No Landlord Responsibilities Property Rendering The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notice.

13 DEMOGRAPHICS CROSSPOINT BLVD, INDIANAPOLIS, IN Miles % 0-3 Miles % 0-5 Miles % Population 2016 Projection 7,026 77, , Estimate 6,037 69, , Census 3,884 50, , Census 1,799 31,541 77,081 Growth % 59.46% 63.52% Households 2016 Projection 2,731 31,127 73, Estimate 2,356 28,115 66, Census 1,484 20,564 48, Census ,846 30,242 Growth % 60.08% 60.91% 2011 Est. Population by Single Classification Race 6,037 69, ,976 White Alone 5, , , Black or African American Alone , , American Indian and Alaska Native Alone Asian Alone , , Native Hawaiian and Other Pacific Islander Alone Some Other Race Alone , , Two or More Races , , Est. Average Household Income $85,910 $86,476 $103, Est. Median Household Income $76,317 $70,931 $81, Est. Per Capita Income $33,533 $35,144 $39,351

14 PAYDOWN/READVANCE FEATURE A 1031 exchange investor in the ADT Security property has the ability to utilize the paydown/readvance feature provided in the existing loan to cover any debt and equity requirements associated with the trade, while extracting maximum cash from the transaction. Following is an example scenario whereby the paydown/readvance feature may be used: Example: 1031 Exchange investor on $20.8MM trade comprised of $10MM equity and $10.8MM debt. Assume: $20.8MM purchase of the ADT Security property with $17.2MM debt assumption and $3.6MM equity investment. Step 1: $10MM cash is applied to the purchase, covering the equity requirement of the 1031 exchange. Step 2: $6.4MM of the cash (excess of $10MM equity from downleg over $3.6MM equity required for purchase of the ADT Security property) is used to pay down the debt balance. Interim debt balance is $10.8MM, covering the debt requirement of the 1031 exchange. Step 3: After closing, the debt is readvanced from $10.8MM interim level to original $17.2MM level, with non-taxable loan proceeds of $6.4MM going to investor. Result: 1031 investor has accomplished 100% of trade while retaining $6.4MM of non-taxable cash proceeds for investment in other assets. $3.6MM remains in the investment.

15 FOR MORE INFORMATION CONTACT: David Clary Director In cooperation with Brad Feller, an Indiana licensed broker, license #PB Stan Johnson Company 6120 South Yale Avenue Suite 813 Tulsa, Oklahoma P: F: Actual Property STANJOHNSONCO.COM