Capital Commercial Development, Inc. (CCD) is pleased to offer this long-term investment opportunity, 16900 Texas Avenue Ltd. (Texas Avenue).  The 0.905 acre subject property is located in Southeast Houston in the Clear Lake submarket.  The subject property is approximately 1 mile east of Interstate-45 and Bay Area Boulevard.  This 39,447 SF site has 152.72’ of frontage along North Texas Avenue.  CCD purchased the site in 1999. CCD plans to develop this site over a 5 month period encompassing one light industrial tilt-wall building with approximately 9,500 SF of rentable area. 

TEXAS AVENUE FACILITY

Development:  Capital Commercial Development (CCD) has developed over 400,000 SF since it’s inception in 1996.  CCD’s recent developments include the 263,000 SF Bammel Industrial Park, the partially completed 37.89 acre Willowbrook Industrial Park, as well as the Cranemann Industrial build to suit which totals 49,000 SF.  Our experience and research indicates that a Light Industrial Park in Northwest Houston catering to smaller users will be highly profitable.  CCD intends to pass through the actual development cost for Texas Avenue Facility without adding normal construction management or development overhead fees.  The following is a brief description of the subject location, planned improvements, and basic construction features of this development. 

Location:  The property has excellent visibility from Bay Area Boulevard and the frontage along North Texas Avenue.  The parcel can be accessed by either North Texas Avenue or through the adjacent 711 Bay Area Parking Lot.  The parcel has 152.72 feet of frontage along the North Texas Avenue road and is approximately 258.3 feet deep.  As of Fourth Quarter 2004, Bay Area Blvd, at the intersection of North Texas Avenue, has traffic counts of 52,330 cars per day.  Heading South at this intersection North Texas Avenue has 9,370 cars per day.  This compares to Bay Area Blvd and Interstate-45 which has traffic counts of 123,310 cars per day. 

Site / Infrastructure: Electrical service to the property will be provided by Houston Lighting & Power, with Entex providing gas service.  The property is located outside the city limits of Houston, in Webster City.  This increases the expected cost of water and wastewater utilities which are provided by the City of Houston.  On the south side of the site there is a 10’ utility easement to HL&P, and a 5’ aerial easement. The frontage along North Texas Avenue has a 25’ building line setback leaving approximately 32,130 SF or 0.737 acres for development.

According to the flood hazard maps published by FEMA Panel 48201C1070, dated April 20, 2000, the tract is located in Zone X. 

Project / Construction:  Phase I of construction including the site work and paving is estimated to take 5 month upon receipt of the building permit from the City of Webster.  Once completed and leased, construction will begin on Phase II of the project consisting of finish-out of the building shell.  Phase II of construction may be completed between five to ten weeks depending on the complexity of the interiors.  The warehouse will have clear-heights of 18’ unless a higher warehouse height is desired by the initial tenants.  The space is designed to be divided, contingent upon the leasing demands, to a single tenant or up to four tenants.  Each suite will have one 10’ by 10’ overhead door dock to allow loading.  The industrial facility will utilize 40 parking spaces giving it a 1:1000 parking ratio.  Three-phase power will service each rentable unit and will be separately metered.  The 152.72’ of frontage space along North Texas Avenue will be finished with a brick façade.

PROJECTED AS-BUILT SITE PLAN

Lease Absorption:  There will be approximately 9,500 SF of net rentable space among one office/warehouse building designed for non retail tenants as small as 2,250 SF.  Tenants will be offered terms of five to seven year leases.  All leases are triple-net and may include annual CPI rent adjustments, although we have not included rent bumps in the pro-forma model.  A large tenant leasing the entire suite of 9,500 SF will be offered a rental rate of $0.75 PSF NNN.  If the space is divided to accommodate smaller suites a higher rental rate of $0.825 PSF NNN will be estimated.  Projected lease up assumes 7-10 year lease terms, tenant renewal of 75%, and an expected rollover cost of $2.00 PSF in structuring tenant renewals.

Operational Expenses:  Operational expenses at the Texas Avenue Facility are projected at $4,800 for the first year, and $4,200 ($0.64 PSF)for each year thereafter once the construction is finalized.  A 4% management fee will be utilized as the project is expected to be management intensive during the development and leasing phases.  Another $0.31 PSF in expenses has been allocated for Insurance, common area charges, accounting and travel costs.  Once the project is leased, CCD will oversee the cost of the accounting and overall management issues.

Financial:  The total expected capitalization for the project is expected to be $850,000 including a projected loan amount of $500,000.  Investor funds will be used to pay for the land costs, site preparation, and slab floor plate as well as to provide the partnership with working capital.  The building’s shell cost is anticipated to be around $40 PSF.  The General Partner’s equity portion is derived from the reduced land acquisition cost and our development experienced teams in place.  Loan dollars will be used primarily for the construction and office space finish out of the tilt-wall building.  We project the office space finish to cost approximately $25 PSF compared to $15 PSF for the warehouse space.  We anticipate the project will return a 14% Internal Rate of Return (IRR) over the expected hold period of 10-15 years.  Given a shorter holding period for the property, the pro-forma cash flow still projects an annual IRR of 12%.  Distributions to investors are anticipated to begin during the second year.  Below you will find the eight year pro-forma cash flows.  Once completed, the project is capable of paying a 10% annual distribution as evidenced by the increasing reserve balance.  Capital Commercial reserves the right to pay down the investor’s capital during this time.

This opportunity represents an excellent investment to an investor for the following reasons: 
• Investor may participate in a private development opportunity located in the growing Clear Lake region.
• Light industrial real estate asset is in high growth corridor of Houston along major traffic loop of the city.
• Partnership development cost does not include developers mark-up and supervision costs.
• Investors expected to receive better than 14% IRR over 15 year holding period.

Please contact us if you are interested in obtaining a full offering memorandum. 
CONTACT: Derek George (512) 472-6990 ext.222 or Email: Dgeorge@capitalcommercial.com

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AERIAL LOCATION MAPS

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THE CONFIDENTIAL PRIVATE OFFERING MEMORANDUM CONTAINS DETAILED INFORMATION ABOUT THE PROJECT AND THE HIGH DEGREE OF RISK ASSOCIATED WITH THE PROJECT.  NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AUTHORITY HAS PASSED ON THE MERITS OF OR GIVEN ITS APPROVAL TO THE POTENTIAL INVESTMENT DESCRIBED IN THE CONFIDENTIAL PRIVATE OFFERING MEMORANDUM, NOR HAS IT PASSED ON THE ACCURACY OR COMPLETENESS OF ANY OFFERING MEMORANDUM OR OTHER SELLING LITERATURE.