The Homestead Professional Center3 Village Road, Horsham, PA

Confidential Offering Memorandum

3 Village Road, Horsham, PA Offering Memorandum

EXECUTIVE SUMMARYTHE OFFERINGAvison Young is pleased to offer to interested investors the opportunity to acquire The Homestead Professional Center, a 16,363 square foot office building in the Horsham/Willow Grove submarket of Philadelphia. Renovated in 2009, the multi-tenant property offers a charming balance between its modernized functionality and rustic, aesthetic appeal.

As a proud recipient of BOMA’s Outstanding Building of the Year Award in 2010, MRA Group redeveloped an outdated farm building, with origins to the 19th century, into a thriving office building while maintaining parts of the original fieldstone structure that gives the property its unique character. Some of the key features of MRA’s development plan included the modernization of the building’s electrical system, the installation of a new, energy-efficient HVAC and lighting systems and the addition of state-of-the-art IT infrastructure.

The building is available for sale at a price of $3.4 million and could be delivered 100% vacant upon sale, or alternatively as a lease arrangement with existing tenants. The opportunity is to own an irreplaceable asset in an ultra-desirable Philadelphia submarket. Additionally, the property comes with the opportunity to develop an additional 20,000 SF of office capacity.

Property Details

Gross Square Feet 16,363 SF

Rentable Square Feet / Common Size Area 14,956 / 1,407

Property Type Corporate Office or Medical Office

Property Submarket Horsham / Willow Grove, PA

Metro Area Philadelphia, PA

Lot Size 4.40 acres

Year Built 1800’s / Renovated 2009

Number of Suites 4

Zoning Business Campus District, allowing for corporate office or medical office uses

Elevators 1

Parking / Ratio 142 space / 8.16 per 1,000 SF

Expansion Capability 20,000 SF

Suite RentableSF

CurrentTenant

MarketRent

Use AvailableUpon Sale

1 3,373 Abington Endocrinology $23.00 Medical Negotiable

100 5,266 Suburban Urological PC $23.00 Medical Yes

101 1,563 Vacant $23.00 Office Yes

200 6,161 MRA Group $19.00 Office Yes

SUITE LAYOUT

INVESTMENT HIGHLIGHTSThe Homestead Professional Center currently houses three tenants, with a total gross leasable area of 16,363 SF located on a picturesque setting of 4.4 acres. The building was meticulously rehabilitated in 2009 and represents a best-in-class asset.

FLEXIBLE FLOOR PLANSThe property lends itself especially to established and growing office and medical users in the

Horsham Market. The property is already occupied by medical and office tenants at suite sizes ranging from 1,563 SF – 6,161 SF. The pristine condition of the suites creates an opportunity for a future owner to re-tenant the suites at low turnover costs relative to comparable medical office product.

SIGNAGE & VISIBILITYThe property has dual signage along Dresher and Welsh Roads resulting in supreme exposure and

access for the tenants’ customers.

THE “IT” FACTORThe Homestead Professional Center’s charm equates to a value that cannot be quantified. A new

owner will find an elevated perception of their business from their customer’s perspective as well as increased productivity from employees that enjoy its character on a daily basis.

STRONG MARKET DEMAND FOR MEDICAL OFFICEThe Horsham / Willow Grove market hosts one of the strongest medical office environments in

the Philadelphia metro area with consistently high occupancy levels and a credible base of office users. The Homestead Professional Center includes three separate units that are currently fit out for medical use and can be acutely transformed to fit a variety of health care services.

LOCATED PROXIMATE TO A GROWING RESIDENTIAL AND RETAIL MARKETThe property is located within walking distance to the Promenade at Upper Dublin which is currently

under construction at a cost of over $120 million. Upon completion in 2020, the 25 acre development will have over 400 high-end apartment units and 120,000 SF of retail space.

3 Village Road, Horsham, PA Offering Memorandum

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2011 2012 2013 2014 2015 2016 2017 2018 YTD

MARKET CHARACTERISTICS

The Homestead Professional Center sits within the Horsham / Willow Grove submarket of Philadelphia. The strong commercial real estate metrics within a 3-mile radius of the property further support the migration of health care service providers into the market. The latest metrics for medical office properties within the area represent a vacancy rate of approximately 8.4% as well as market rental rates that have grown consistently over the past decade up to $24.10 PSF.

The demographic statistics within the same 3-mile radius of the property demonstrate a population that is growing both in volume and in age. Experiencing just under 10% population growth over the past decade, the local market surrounding the property has a median age of 42.3 years and a median household income of around $82,057. Both metrics are above that of the Philadelphia Metropolitan Area, with 2019 demographics reporting a median age of 38.7 years and a median household income of approximately $68,572. By comparison, the Horsham market’s aging population and high-income base create strong support for continued medical office demand.

MEDICAL OFFICE MARKET DEMOGRAPHICS

MEDICAL/OFFICE VACANCY

MEDICAL/OFFICE MARKET RENT GROWTH

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

$17.00

$18.00

$19.00

$20.00

$21.00

$22.00

$23.00

2011 2012 2013 2014 2015 2016 2017 2018 YTD

Rent PSF Rent Growth YOY

POPULATION BY AGE

0

5,000

10,000

15,000

20,000

25,000

0-9 10-19 20-29 30-39 40-49 50-59 60+

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

<$25,000

$25,000 - $50,000

$50,000 - $75,000

$75,000 - $100,000

$100,000 - $125,000

$125,000 - $150,000

$150,000 - $200,000

$200,000+

HOUSEHOLD INCOME BRACKETS

MARKET AMENITIES

Mixed-use community designed for luxury living with lifestyle retail components. The 2.7-acre park will feature over 400 high end apartments along with a Sprouts grocery store, an REI outdoor retailer, full-service restaurant options and boutique fitness and personal care options. Additional park aspects will include green roofs, bike sharing stations and alternative energy sources.

THE PROMENADE AT UPPER DUBLIN

Regency at Upper Dublin is an upscale, active adult community in Dresher, Pennsylvania developed by Toll Brothers in 2016. This 55+ complex sits on a 25-acre tract and hosts 105 luxurious single-family homes. Seniors living within the facility have access to a range of amenities not limited to a swimming pool, an outdoor patio, a bocce ball court, exercise rooms and a 6,200 square-foot clubhouse that plays host to weekly recreational activities. Regency is conveniently located down the street from a large shopping center and less than a mile from The Homestead Professional Center.

REGENCY AT UPPER DUBLIN

The Fresh Market is a gourmet supermarket that connects the community to locally based produce cultivators. Located on Welsh road, only a short walk from the Homestead Professional Center, the Fresh Market is one of many premier amenities that has catalyzed an influx of residents to the Horsham market.

THE FRESH MARKET

• MaGerks Pub• Miller’s Ale House • Brick House Tavern • Corner Bakery, MOD Pizza, QDOBA Mexican Eats

LOCAL RESTAURANTS

BET Investments is currently in the midst of their development at the intersection of Witmer Road and Dresher Road. The project, which was an existing office/flex building, is under construction and set to have a new 300+ unit apartment complex.

100 WITMER ROAD

3 Village Road, Horsham, PA Offering Memorandum

AREA AMENITIES

REGENCY AT UPPER DUBLIN

� Candlewood Suites Willow Grove � Courtyard by Marriott Willow Grove � Days Inn Horsham � Extended Stay America Dresher Rd. � Extended Stay America Welsh Rd. � Fairfield Inn & Suites Willow Grove � Hampton Inn Willow Grove � Homewood Suites Willow Grove � Residence Inn Willow Grove � SpringHill Suites Willow Grove � TownePlace Suites Horsham

MAPLE GLENSHOPPING CENTER

Finance: � Wells Fargo Bank

Fitness, Health & Beauty: � Dublin Cleaners

Restaurants & Bars: � Gio’s Pizza Rustica

Shopping: � Giant � Wine & Spirits

Finance: � Bank of America

Fitness, Health & Beauty: � European Wax Center � Floris NailS � Great Clips � Ulta Beauty

Restaurants & Bars: � Anthony’s Coal Fired Pizza � Corner Bakery Cafe � Qdoba Mexican Grill

Shopping: � The Fresh Market

HORSHAMGATE

Finance: � Citizens Bank

Fitness, Health & Beauty: � European Wax Center � Floris Nail � Great Clips � Ulta Beauty

Restaurants & Bars: � Cold Stone Creamery � Elevation Burger � Jamba Juice � MOD Pizza � The Sweet Taco � Qdoba Mexican Grill

Shopping: � Lowe’s � Pet Smart � Sam’s Club � T-Mobile � Walmart

WILLOW GROVEPOINT

LODGING

Residential: � 403 Luxury Apartments

Restaurants & Bars: � Redstone Grill

Shopping: � REI

Overview: � 128,000 SF of Retail � 25 Acre Site

PROMENADE ATUPPER DUBLIN

Residential: � 55+ Community � 105 Single Family Homes

Fitness, Health & Beauty: � Bocce Ball Courts � Clubhouse � Exercise Rooms

REGENCY ATUPPER DUBLIN

Fitness, Health & Beauty: � Remix Fitness � Sola Salon Studios

Shopping: � AT&T

WESTGATE

Fitness, Health & Beauty: � Commonwealth National Golf Club � LA Fitness � Lifetime Fitness � Old York Road Country Club

Restaurants & Bars: � Bonefish Grill � Brick House Tavern & Tap � Carrabba’s Italian Grill � Mad Mex � MaGerks Pub & Grill � Miller’s Ale House � Ooka Sushi Hibachi Steakhouse � P.J. Whelihans Pub (Opening Soon)

Shopping: � The Home Depot � Verizon Wireless

NON-ANCHOREDAMENITIES

Welsh Road

63

3 VILLAGE ROAD

HORSHAM GATE

PROMENADE AT UPPER DUBLIN

WILLOW GROVE POINTE

WEST GATE

276

EXIT 343

611

611

Blair

Mill

Road

Dresh

er R

oad

Witmer Road

611

HOME DEPOT

MILLER’S ALE HOUSE

BRICK HOUSE TAVERN

COURTYARD BY MARRIOTT

SPRINGHILL SUITES CARRABBA’S

HAMPTON INN

OOKA SUSHI HIBACHI

RESIDENCE INN

EXTENDED STAY AMERICA

EXTENDED STAY AMERICA

P.J. WHELIHAN’S PUB

CANDLEWOOD SUITES

FAIRFIELD INN & SUITES

WILLOW POINTE APARTMENTS

JEFFERSON-ABINGTON MEDICAL CAMPUS

WILLOW POINTE APARTMENTS

100 WITMER RD DEVELOPMENT

3 Village Road, Horsham, PA Offering Memorandum

SALE COMPSThe following six regional commercial office properties sold at a price range between $185 - $254 PSF. Each of these properties contained a similar square footage footprint to that of 3 Village and were sold to owner/user investors who still hold tenancy within the respective buildings. 3 Village is positioned to generate a price at the high end of this range due to its comparable market presence with the expansion capability to develop an additional 20,000 SF.

Address

Sale DateSellerBuyer Sale Price Size (SF) Price Per SF Notes

146 Montgomery Avenue Bala Cynwyd, PA 19004

� 10/10/2017 � JPH Realty � Hms Associates

$3,300,000 16,188 $203.85 � Sold to corporate owner/user � Office/Medical Tenants

401 E Elm Street Conshohocken, PA 19428

� 8/15/2018 � Shaffer Builders � Urbane Partners

$2,400,000 13,000 $184.62 � 33% occupied at sale � Sold to owner/user

9432 Roosevelt Boulevard Philadelphia, PA 19115

� 1/23/2019 � Mehdi Nikparvar � Law Enforcement

Health Benefits Inc.

$3,000,000 15,014 $199.81 � 0% occupied at sale � Sold to owner/user

1030 Continental Drive King of Prussia, PA 19406

� 9/24/2018 � Irwin & Leighton � BlackTree Healthcare

Consulting

$4,325,000 21,339 $202.68 � Sold to corporate owner/user

166 E Levering Mill Road - WWDB Bldg Bala Cynwyd, PA 19004

� 9/15/2016 � Belmont Dev Ltd � 166 Levering Mill, LLC

$4,000,000 19,190 $208.44 � Sold to owner/user

1036 Easton Road - Frenius Med. Group Willow Grove, PA 19090

� 2/1/2016 � StbWell, LLC � TriStar Drexel Hill LP

$2,700,000 10,631 $254.00 � Leased to Frenius Medical Group

LEASE COMPSThe following lease comparables represent office properties located around the Horsham and Fort Washington market who are currently charging between $18 - $35 PSF to a mixed tenant group of both office and medical occupants. The Homestead Professional Center will be able to execute leases at a rental rate of approximately $19.00 PSF within the office suite and $23.00 PSF NNN within the medical office suites. The premium rate within the medical office units is attributable to the spaces already being fit out for medical use.

AddressSize (SF)Avg. Rent Per SF

ExpenseRecoveries

Number ofTenants

YearBuilt

ParkingRatio

1021-1031 Old York Road Abington, PA 19001

� 14,000 � $19.00

Net5

� Robert Carber Dentist (3,000 sf) � Limberakis Family Dentistry (3,000 sf)

2007 2.93/1,000 SF

1055 Virginia Drive Fort Washington, PA 19034

� 16,000 � $18.00

Net3

� Korea Week (1,200 sf) � Clean All USA (8,000 sf)

1969 3.12/1,000 SF

300 Welsh Road - Building 2 Horsham, PA 19002

� 17,750 � $25.00

MG Electric3

� Center for Interventional Pain & Spine (3,529 sf) � Center for Vein Restoration (3,456 sf)

1980 6.67/1,000 SF

Old York & Susquehanna Roads Abington, PA 19001

� 35,000 � $35.00

Net1

� CHOP (Turnkey Fitout) � Build-to-suit delivery February 2021

2021 N/A

3 Village Road, Horsham, PA Offering Memorandum

FINANCIAL ANALYSISOWN VS. LEASE

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Notes

Own Option

Revenue

Suite SF Rent (NNN)

1 3,373 $23.00 $77,579 $79,131 $80,713 $82,327 $83,974 $85,653 $87,367 $89,114 Abington Endo / Garden Suite

100 5,266 $23.00 $121,118 $123,540 $126,011 $128,531 $131,102 $133,724 $136,399 $139,127 $141,909 $144,747 Suburban Urology

101 1,563 $23.00 $35,949 $36,668 $37,401 $38,149 $38,912 $39,691 $40,484 $41,294 $42,120 Vacant Unit

200 6,161 $19.00 *Assumes unit stays occupied by buyer

Potential Gross Revenue $121,118 $159,489 $240,258 $245,063 $249,965 $254,964 $260,063 $265,264 $270,570 $275,981

Costs to Owner

Turnover / Downtime $(40,117) $(11,907) $(25,696) 30% of revenue in roll over years

Tenant Improvements* $(105,320) $(46,890) $(67,460) $(31,596) $(14,067) $(20,238) New TI: $20 PSF; Renewal TI: $30*

Leasing Commissions $(52,660) $(15,630) $(33,730) $(15,798) $(4,689) $(10,119) $10 PSF for new; $5 PSF for renewals

Owner Expenses $8.00 PSF $(39,488) $(26,984) $(11,846) $(8,095) $(12,638)Only for vacancies as they are net even vs. leasing option; Assumes 30% expense margin during rollover years

Debt Service $(176,422) $(176,422) $(176,422) (176,422) $(176,422) $(176,422) $(176,422) $(176,422) $(176,422) $(176,422) See Acquisition Assumptions

Cash Flow After Debt $(131,654) $53,053 $202,904 $313,705 $323,507 $234,148 $304,946 $285,415 $364,717 $375,540

Replacement Reserve $0.40 PSF $(6,545) $(6,676) $(6,810) $(6,946) $(7,085) $(7,226) $(7,371) $(7,518) $(7,669) $(7,822)

Cash Flow After Reserves $(850,000) $(138,199) $46,377 $196,095 $306,759 $316,422 $226,922 $297,575 $277,897 $357,049 $367,718

Net Cash Flows

Sale Price at Exit $4,144,581 Purchase Price inflated 2% per year

Loan Balance at Sale $(1,862,542)

Net Cash Flow $(850,000) $(138,199) $46,377 $196,095 $306,759 $316,422 $226,922 $297,575 $277,897 $357,049 $2,649,757

Lease Option

SF Rent (NNN)

6,161 $23.00

$(141,703) $(145,954) $(150,333) $(154,843) $(159,488) $(164,273) $(169,201) $(174,277) $(179,505) $(184,890)

NPV of Owning The Homestead Professional Center $1,417,617

NPV of Leasing The Homestead Professional Center $(1,069,877)

ACQUISITION ASSUMPTIONS

PURCHASE PRICE$3,400,000

LTV75%

INTEREST RATE4.75%

AMORTIZATION25

INFLATION2%

NPV DISCOUNT RATE8%

The below analysis highlights quantified the pretax advantages of owning vs. leasing. This assumes a 6,161 SF tenant owns 3 Village and leases the remaining three suites at market rates over a two year period. It assumes market assumptions for turnover, tenant improvements, lease commissions and operating expenses over a 10 year period. Compared to leasing the same square footage in the market, over $2,000,000 can be saved by owning 3 Village over the 10 year span.

DEBT INFORMATIONAvison Young will identify local banks and SBA lenders that will be aggressive in placing a loan on the property. Because the Homestead Professional Center is an ideal purchase for an owner/user, an SBA loan could be a solution for a company that lacks the down payment necessary with a traditional bank.

Local Bank SBA Loan

LTV 75% 90% plus improvement and moving costs

Interest Rate 4.75% 7%+ floating

Amortization 25 25

Term 10 Years Fully Amortizing

Information contained herein from sources deemed reliable. We have no reason to doubt its accuracy but make no warranty or representation. All information is submitted subject to errors, omissions, change, withdrawal without notice and any special listing conditions of the owner.

© Avison Young - Philadelphia LLC. All rights reserved.

For More Information, Please Contact:

Michael Sweeney, Vice PresidentD 610 557 0504C 610 724 1941michael.sweeney@avisonyoung.com

Adam Gillespie, PrincipalD 610 276.3153C 215 384 6040adam.gillespie@avisonyoung.com

Jim Pasquarella, CCIM, Senior Vice PresidentD 610 557 0501C 215 654 3300james.pasquarella@avisonyoung.com

Avison Young - Philadelphia300 Barr Harbor Drive, Suite 150West Conshohocken, PA 19428T 610 276 1080

3 Village Road, Horsham, PA Offering Memorandum

Suburban Philadelphia Office300 Barr Harbor Drive

Suite 150West Conshohocken, PA 19428

T 610 276 1080 | F 610 276 1079

Center City Philadelphia Office1835 Market Street

Suite 1010Philadelphia, PA 19103

T 215 383 2690 | F 610 276 1079

ArizonaPhoenix

CaliforniaInland EmpireLos AngelesOaklandOrange CountySacramentoSan DiegoSan FranciscoSan Jose - Silicon ValleySan Mateo

ColoradoDenver

ConnecticutFairfieldHartford

FloridaBoca RatonFort LauderdaleGainesvilleJacksonvilleMiamiOrlandoTampaWest Palm Beach

GeorgiaAtlantaSavannah

IllinoisChicagoChicago Suburban

IndianaIndianapolis

MassachusettsBoston

MichiganDetroit

MinnesotaMinneapolis

MissouriSt. Louis

NevadaLas VegasReno

New JerseyNorthern New JerseyCentral New Jersey

New YorkLong IslandNew York

North CarolinaCharlotteRaleigh-Durham

OhioClevelandColumbus

PennsylvaniaPhiladelphia - Center CityPhiladelphia - SuburbanPittsburgh

South CarolinaCharlestonGreenville

TennesseeKnoxvilleMemphisNashville

TexasAustinDallasHouston

Washington D.C. MetroSuburban MarylandTysons, VAWashington D.C.

CanadaCalgaryEdmontonHalifaxLethbridgeMonctonMontrealOttawaReginaTorontoVancouverWaterloo RegionWinnipeg

GermanyBerlinDuesseldorfFrankfurtHamburgMunich

IrelandDublin

MexicoMexico City

PolandWarsaw

RomaniaBucharest

South KoreaSeoul

United KingdomBirminghamBristolCardiffCoventryEdinburghGlasgowLeedsLiverpoolLondon - Ganton StreetLondon - Gresham StreetManchester - Norfolk StreetNew CastleThames Valley

United States Global