JPMORGAN ChAsE
JPMOrgan Chase Ground lease Little Elm, Texas
CONFIDENTIAL OFFERING MEMORANDUM
Holliday Fenoglio Fowler 1
CONFIDENTIAL OFFERING MEMORANDUM
JPMorgan Chase Little Elm, TX
Presented Exclusively by
Coler Yoakam Director
jace hinderland Real Estate Analyst
Holliday Fenoglio Fowler 2
Table of Contents EXECUTIVE SUMMARY Executive Summary TENANT PROFILE Tenant Overview Business Segment Organization Retail Banking Segment Income Statement Balance Sheet Statement of Cash Flows LEASE ABSTRACT LOCATION OVERVIEW Area Map Regional Map Site Plan Demographics
Holliday Fenoglio Fowler 3
Disclaimer This Offering Memorandum has been prepared by Holliday Fenoglio Fowler, L.P. for use by a limited number of parties and has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it, and make no guarantee, warranty or representation about it. It is your responsibility to confirm, independently, its accuracy and completeness. All projections have been developed by Holliday Fenoglio Fowler, L.P., Owner and designated sources, are based upon assumptions relating to the general economy, competition, and other factors beyond the control of Owner, and therefore are subject to variation. No representation is made by Holliday Fenoglio Fowler, L.P. or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied on as a promise or representation as to the future performance of the property. Although the information contained herein is believed to be correct, Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, Holliday Fenoglio Fowler, L.P., Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from, the Offering Memorandum or any other written or oral communication transmitted or made available to the recipient. The Offering Memorandum does not constitute a representation that there has been no change in the business or affairs of the property or Owner since the date of preparation of the Offering Memorandum. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser. Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified prospective investors. Owner and Holliday Fenoglio Fowler, L.P. each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations to any entity reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel, and any obligations set by Owner thereunder have been satisfied or waived. This Offering Memorandum and the contents, except such information, which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting this Offering Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not photocopy or duplicate it, that you will not disclose this Offering Memorandum or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Owner or Holliday Fenoglio Fowler, L.P. and that you will use the information in this Offering Memorandum for the sole purpose of evaluating your interest in the property and you will not use the Offering Memorandum or any of the contents in any fashion or manner detrimental to the interest of Owner or Holliday Fenoglio Fowler, L.P. If you have no interest in the property, please return the Offering Memorandum forthwith.
8401 North Central Expressway, Suite 700 Dallas, Texas 75225 USA T: 214.265.0880 F: 214.265.1686 www.hfflp.com
Holliday Fenoglio Fowler 4
Executive Summary Holliday Fenoglio Fowler is pleased to exclusively offer for sale a Ground Lease interest in JPMorgan Chase Bank located in Little Elm, TX. The Subject Property has a Thirty year NNN lease with no Landlord responsibilities. The Premises consists of an 1.53 acre site, improved by a 4,100 square foot retail bank branch leased to JPMorgan Chase Bank N.A. (the “Tenant). This offering represents an incredible opportunity to acquire a well-located investment secured by an industryleading “Fortress” bank.
in ve st m e n t hi g hli g hts Long Term Net Lease In addition to the rare 30-year primary term, the Landlord-friendly net lease provides an investor with passive income secured by an investment-grade tenant for the remaining 24 years of the lease.
Investment Grade Tenancy JPMorgan Chase Bank is an industry-leading financial institution backed by a fantastic balance sheet and an efficient operating platform. Moody’s and S&P have assigned an Aa1 and AAcorporate credit rating, respectively.
Strong Rent Growth over Primary Term Over the course of the asset’s primary term, an investor will experience 4 additional rental escalations resulting in over $942,000 of additional rent over the Year 1 rental rate.
Fantastic Location The Subject Property is well situated in a growing suburb of the Dallas/Fort Worth Metroplex. The MSA’s historic resilience to economic downturns combined with its strong employment base make it one of the best real estate investment markets in the country.
Assumable Financing Available Assumable, in-place financing exists providing a potential investor with the ability to control a quality asset leased to an investment grade tenant at a relatively low price-point.
in v e st m e n t ov e rv i ew
Pricin g overview
Offering:
JPMorgan Chase Bank Ground Lease
Purchase Price:
$2,965,000*
Location:
2701 FM 423, Little Elm, Texas NWC of FM 423 & Eldorado Pkwy.
Cap Rate:
5.75%
NOI:
$170,500
Tenant:
JPMorgan Chase Bank N.A.
Credit Rating:
Aa1 (Moody’s), AA- (S&P)
Building Size:
4,100 SF
Land Area:
1.531 acres (66,690 SF)
Lease Commencement:
5/1/2005
Years
Monthly
Annually
PSF
Lease Expiration:
4/30/2035
1-5
$12,917
$155,000
$2.32
Options:
Four, 5-year renewal options
6 - 10
$14,208
$170,500
Lease Structure:
NNN
11 - 15
$15,629
$187,550
16 - 20
$17,192
$206,305
*Offers may be made in a format that either includes or excludes in-place assumable financing
Ren t schedule
21 - 25
$18,911
$226,936
$2.56 $2.81 $3.09 $3.40
Lender:
American United Life
26 - 30
$20,802
$249,629
$3.74
Original Loan Amount:
$1,750,000 (January 2008)
31 - 35 (Opt. 1)
$22,883
$274,592
Balance:
$1,638,945 (at 5/31/11)
36 - 40 (Opt. 2)
Interest Rate:
6.03%
41 - 45 (Opt. 3)
Term:
10 years
46 - 50 (Opt. 4)
$25,171 $27,688 $30,457
$302,051 $332,256 $365,482
$4.12 $4.53 $4.98 $5.48
Maturity:
February 2018
Amortization:
25 years
I n - Pl ac e Loa n ov e rv i ew
Holliday Fenoglio Fowler 5
Tenant Overview JPM’s underlying fundamentals remain extremely strong. Excellent individual business segments combine to provide JPM with a solid foundation. Each segment holds a top 1, 2, or 3 position in its respective industry. The Company possesses significant earnings power through continued investment across JPM’s business segments along with a constant record of operating efficiency. Finally, JPMorgan Chase maintains a “fortress” balance sheet.
R e ta i l F i na nc i a l Se rv i ce s 5,268 Chase branches in 23 states served nearly 31mm US consumers and small businesses in 4Q10 •
23mm Retail Banking households served
•
18mm active online Retail Banking customers
•
2.2mm Business Banking customers
•
8.5mm mortgage loans serviced
•
3.3mm Auto accounts serviced
Retail Financial Services (“RFS”) serves consumers and businesses through personal service at bank branches and through ATMs, online banking and telephone banking, as well as through auto dealerships and school financial-aid offices. Customers can use more than 5,200 bank branches (third-largest nationally) and 16,100 ATMs (second-largest nationally), as well as online and mobile banking around the clock. More than 28,900 branch salespeople assist customers with checking and savings accounts, mortgages, home equity and business loans, and investments across the 23-state footprint from New York and Florida to California. Consumers also can obtain loans through more than 6,200 auto dealerships and 2,200 schools and universities nationwide.
T h e I mp o rta nc e o f JP M’ s Retail Ban k Net work Commercial Banking Business unlikely to exist without retail presence ~17mm transactions done by CB clients in 2010 at branches $650-800mm of projected long-term CB pretax income opportunity from buildout in the WaMu footprint (West and Southeast)
Card Services 1.5mm +/- cards sold through branches in 2010 35% of Card Services cards sold through the retail bank branch network >40% of revenue from new merchants is being sourced through the retail branches
Asset Management ~25% of JPM IM US Retail AUM comes from retail bank branches $31B of JPM investment product AUM $1B +/- incremental pretax income opportunity fro Chase Private Client Services ~50% of Private Banking clients use the branch network
Treasury & Securities Use of core banking services (e.g., deposits and change orders) Check Cashing Agreements: cashing of employee payroll checks without a fee across the branch network Chase At Work: better payroll management, convenient banking & discounts to employees Source: JPMorgan Chase Investor Presentation (2.15.11), JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 6
Business Segment Organization BUSINESS SEGMENT RESULTS The Firm is managed on a line of business basis. The business segment financial results presented reflect the current organization of JPMorgan Chase. There are six major reportable business segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury & Securities Services and Asset Management, as well as a Corporate/Private Equity segment.
The business segments are determined based on the products and services provided, or the type of customer served, and reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis.
JPMorgan Chase
Investment Bank Businesses: • Investment Banking - Advisory - Debt and equity underwriting • Market-making and trading - Fixed income - Equities • Corporate lending • Prime Services • Research
Retail Financial Services Businesses: • Retail Banking - Consumer and Business Banking (including Business Banking loans) • Mortgage Banking, Auto & Other Consumer Lending: - Mortgage production and servicing - Auto, student and other loan originations and balances • Real Estate Portfolios: - Residential mortgage loans - Home equity loans and originations
Card Services
Commercial Banking
Businesses: • Credit Card • Merchant Acquiring
Businesses: • Middle Market Banking • Commercial Term Lending • Mid-Corporate Banking • Real Estate Banking
Description of business segment reporting methodology Results of the business segments are intended to reflect each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results allocates income and expense using market-based methodologies. Business segment reporting methodologies used by the Firm are discussed below. The Firm continues to assess the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.
Revenue sharing When business segments join efforts to sell products and services to the Firm’s clients, the participating business segments agree to share revenue from those transactions. The segment results reflect these revenue-sharing agreements.
Treasury & Securities Services Businesses: • Treasury Services • Worldwide Securities Services
Asset Management Businesses: • Private Banking • Investment Management: - Institutional - Retail • Highbridge
Funds transfer pricing Funds transfer pricing is used to allocate interest income and expense to each business and transfer the primary interest rate risk exposures to the Treasury group within the Corporate/Private Equity business segment. The allocation process is unique to each business segment and considers the interest rate risk, liquidity risk and regulatory requirements of that segment’s stand-alone peers. This process is overseen by senior management and reviewed by the Firm’s Asset-Liability Committee (“ALCO”). Business segments may be permitted to retain certain interest rate exposures subject to management approval.
Source: JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 7
Average deposits: Checking Savings Time and other Total average deposits Deposit margin Average assets Credit data and quality statistics (in millions, except ratios) Net charge-offs Net charge-off rate Nonperforming assets
Retail Banking Segment Management’s discussion and analysis Retail Banking Selected income statement data Year ended December 31, (in millions, except ratios) Noninterest revenue Net interest income Total net revenue
2010 $ 6,792 10,785 17,577
2009 $ 7,169 10,781 17,950
2008 $ 4,951 7,659 12,610
Provision for credit losses
607
1,142
449
Noninterest expense 10,657 10,357 7,232 Income before income tax expense 6,313 6,451 4,929 Net income $ 3,614 $ 3,903 $ 2,982 Overhead ratio 61% 58% 57% Retail Banking Overhead ratio excluding core 56 54 deposit intangibles 59 Selected income (a) statement data Year ended December 31, (a) Retail Banking uses the overhead ratio (excluding the amortization of CDI), a (in non-GAAP millions, except ratios) 2010 2009 trends 2008 financial measure, to evaluate the underlying expense of $ overhead 7,169 ratio $ 4,951 $ expense 6,792 in the Noninterest revenue the business. Including CDI amortization Netcalculation interest income 10,781 10,785 would result in a higher overhead ratio in the earlier years 7,659 and a lower overhead ratio in later years; this method would therefore in an 17,950 result 12,610 Total net revenue 17,577
Management’s discussion and analysis
improving overhead ratio over time, all things remaining equal. The nonProvision for credit losses 1,142 449 607 GAAP ratio excludes Retail Banking’s CDI amortization expense related to Noninterest expense prior business combination transactions of10,657 $276 million,10,357 $328 million 7,232 and $394 million the years ended December 31, 2010, 2009 and 2008, Income beforeforincome respectively. tax expense 6,313 6,451 4,929
Net income Selected metrics Overhead ratio As of or for the year ended Overhead ratio excluding core December 31, (in billions, except (a) deposit intangibles ratios and where otherwise noted)
$ 3,614 $ 3,903 $ 2,982 58% 57% 61% 59 2010
56 2009
54 2008
Business metrics (a) Retail Banking uses the overhead ratio (excluding the amortization of CDI), a Business banking origination volume non-GAAP financial measure, to evaluate the underlying expense trends of (in millions) 4,688 $ 2,299 ratio$ 5,531 the business. Including CDI amortization $expense in the overhead calculation would End-of-period loans result ownedin a higher overhead ratio 16.8in the earlier 17.0years and a18.4 lower overhead ratio in later years; this method would therefore result in an End-of-period deposits: improving remaining $ equal. The nonChecking overhead ratio over time, all things $ 131.7 121.9 $ 109.2 GAAP Savingsratio excludes Retail Banking’s CDI amortization 166.6 expense 153.4related to144.0 prior business combination transactions of $276 million, $328 million and Time and other 45.9 58.0 89.1 $394 million for the years ended December 31, 2010, 2009 and 2008, 344.2 333.3 342.3 Total end-of-period deposits respectively.
Average loans owned Average deposits: Selected metrics As Checking of or for the year ended Savings31, (in billions, except December Time and otherotherwise noted) ratios and where Total average deposits Business metrics Deposit margin Business banking origination volume (in millions) Average assets End-of-period loans ownedstatistics Credit data and quality End-of-period (in millions,deposits: except ratios) NetChecking charge-offs NetSavings charge-off rate Time and other Nonperforming assets Total end-of-period deposits Average branch loans owned Retail business metrics Average deposits: Year ended December 31, Checking Investment sales volume (in millions) Savings Time and Number of:other Total average deposits Branches ATMsmargin Deposit Personal bankers Average assets Salesdata specialists Credit and quality statistics Active onlineexcept customers (in millions, ratios) (in thousands) Net charge-offs accounts NetChecking charge-off rate (in thousands) Nonperforming assets
$
16.7
$ 17.8
$
$ 123.4 $ 113.5 $ 162.1 150.9 76.4 51.0 2010 2009 340.8 336.5 2.96 % 3.03 % $ 4,688 $ 2,299 28.3 28.9 $ 17.0 16.8
16.7
77.1 114.3 53.2 2008 244.6 2.89 % 5,531 26.3 18.4
$ 131.7 707 $ 121.9 842 $ 109.2 346 153.4 144.0 166.6 4.73 % 2.07 % 4.23 % $ 45.9 846 $ 58.0 839 $ 89.1 424 333.3 342.3 344.2 $ 17.8 $ 16.7 $ 16.7 2010 2009 2008 $ 123.4 $ 113.5 $ 77.1 $ 21,784 $17,640 $ 23,579 162.1 150.9 114.3 76.4 53.2 51.0 340.8 244.6 336.5 5,154 5,474 5,268 15,406 16,145 2.96 % 14,568 2.89 % 3.03 % $ 21,715 28.3 $ 17,991 28.9 $ 15,825 26.3 5,912 5,661 7,196 $ 17,744 707 $ 15,424 842 $ 11,710 346 25,712 27,252 4.73 % 24,499 2.07 % 4.23 % $ 839 $ 424 $ 846
Retail branch business metrics Year ended December 31,
2010
2009
2008
$ 113.5 $ 77.1 $ 123.4 150.9 114.3 162.1 76.4 53.2 51.0 336.5 340.8 244.6 2.96 % 2.89 % 3.03 % $ 28.3 $ 28.9 $ 26.3
$ $
707 $ 842 $ 4.73 % 4.23 % 846 $ 839 $
346 2.07 % 424
2010 branch compared with 2009 Retail business metrics Retail Banking net income of2010 $3.6 billion,2009 a decrease2008 of Year ended Decemberreported 31, $ 21,784 Investment sales or volume millions) with$ the 23,579 $289 million, 7%, (in compared prior year. Total net$17,640 revenueof: was $17.6 billion, down 2% compared with the prior year. Number The decrease was driven by lower deposit-related fees, largely 5,474 5,154 Branches 5,268 15,406 14,568 ATMsby higher debit card income and16,145 offset a shift to wider-spread 17,991 15,825 Personal bankers 21,715 deposit products. The provision for credit losses was $607 million, 5,912 5,661 Sales specialists 7,196 down compared with the prior year. The current-year Active$535 onlinemillion customers (in thousands) 17,744 15,424 of $100 11,710 provision reflected lower net charge-offs and a reduction Checking accounts (in thousands) 25,712 24,499 27,252 million to the allowance for loan losses due to lower estimated losses, compared with a $300 million addition to the allowance for loan in the prior Retail Banking net charge-offs were 2010losses compared withyear. 2009 $707 compared with million in the priorayear. Retailmillion, Banking reported net$842 income of $3.6 billion, decrease of Noninterest expense was $10.7 with billion, upprior 3%year. compared with the $289 million, or 7%, compared the Total net 74 prior year, resulting from sales force Business Banking revenue was $17.6 billion, down 2%increases comparedin with the prior year. and bank branches. The decrease was driven by lower deposit-related fees, largely
Year ended Decembe (in millions, except ra Noninterest revenue Net interest income Total net revenue
Provision for credit lo Noninterest expense Income before inc tax expense Net income Overhead ratio
2010 compared Mortgage Banki reported net incom 14%, from the prio
Net revenue was $ prior year. Mortgag the prior year. Othe Auto and Student L predominantly as a
Mortgage Banking interest income, $3
offset by higher debit card income and a shift to wider-spread 2009 compared with 2008 deposit products. The provision for credit lossesbillion, was $607 Retail Banking reported net income of $3.9 up bymillion, $921 down $535 million compared with the prior year. The million, or 31%, from the prior year. Total net revenuecurrent-year was $18.0 provision lower net charge-offs andprior a reduction of increase $100 billion, upreflected by $5.3 billion, or 42%, from the year. The million to the allowance for loan losses due to lower estimated reflected the impact of the Washington Mutual transaction, wider losses, compared with aaverage $300 million addition to the for deposit spreads, higher deposit balances andallowance higher debit loan losses in the prior year. Retail Banking net charge-offs were card income. The provision for credit losses was $1.1 billion, $707 million, within$842 million in the prior year. compared withcompared $449 million the prior year, reflecting higher Noninterest expense was $10.7 billion, up 3% compared with the estimated losses in the Business Banking portfolio. Noninterest prior year, resulting from sales force increases in Business expense was $10.4 billion, up by $3.1 billion, or 43%. TheBanking increase and bankthe branches. reflected impact of the Washington Mutual transaction, higher FDIC premiums and higher headcount-related expense. 2009insurance compared with 2008 Retail Banking reported net income of $3.9 billion, up by $921
Mortgage & Other Consumer million, or 31%,Banking, from the priorAuto year. Total net revenue was $18.0 Lending billion, up by $5.3 billion, or 42%, from the prior year. The increase reflected impactstatement of the Washington Selectedthe income data Mutual transaction, wider Year ended December 31, average deposit balances and higher debit deposit spreads, higher (in millions, except ratios) 2010 2009 card income. The provision for credit losses was $1.1 billion, 2008 $ 5,321 $ 5,057 $ 4,689 Noninterest revenue compared $449 million in the prior year, reflecting Net interest with income 3,311 3,165 higher 2,279 estimated losses in the Business Banking Noninterest 8,222 6,968 Total net revenue 8,632portfolio. expense for wascredit $10.4 billion, up by $3.1 614 billion, or 43%. Provision losses 1,235 The increase 895 reflected the impact of the Washington Mutual transaction, higher Noninterest expense 5,580 4,544 3,956 FDIC insurance premiums and higher headcount-related expense. Income before income tax expense
2,438
2,443
2,117
$ 1,643 $ 1,286 Net income $ 1,405 Mortgage Banking, Auto & Other Consumer 65% 55 % 57 % Overhead ratio Lending
2010 compared 2009 data Selected incomewith statement Mortgage Banking, Year ended December 31,Auto & Other Consumer Lending (in millions,net except ratios) 2008 reported income of $1.4 billion, a 2010 decrease of 2009 $238 million, or $ 5,321 $ 5,057 $ 4,689 Noninterest 14%, from revenue the prior year.
Net interest income 3,165 2,279 3,311 Net was $8.6 billion, up by $410 or 5%, from the 6,968 Totalrevenue net revenue 8,632million,8,222
prior year. billion, flat895 to Provision forMortgage credit lossesBanking net revenue 614was $5.2 1,235 the prior year. Other Consumer Lending net revenue, Noninterest expense 5,580 4,544comprising 3,956 Auto andbefore Student Lending, was $3.5 billion, up by $447 million, Income income tax expenseas a result of higher auto 2,438 2,117 predominantly loan and2,443 lease balances. $ 1,643 $ 1,286 Net income $ 1,405 Mortgage Banking net revenue included $904 million of net 55 % 2010 Annual 57 % Report Overhead ratio Source: 65% JPMorgan Chase
interest income, $3.9 billion of mortgage fees and related income, 2010 compared with 2009 Holliday Fenoglio Fowler 8 Mortgage Banking, Auto & Other Consumer Lending reported net income of $1.4 billion, a decrease of $238 million, or
Income Statement Consolidated statements of income
2010
2009
2008
6,190 10,894 6,340 13,499 2,965 3,870 5,891 2,044
$ 7,087 9,796 7,045 12,540 1,110 3,678 7,110 916
$ 5,526 (10,699 ) 5,088 13,943 1,560 3,467 7,419 2,169
Noninterest revenue
51,693
49,282
28,473
Interest income Interest expense
63,782 12,781
66,350 15,198
73,018 34,239
Net interest income
51,001
51,152
38,779
102,694
100,434
67,252
Provision for credit losses
16,639
32,015
20,979
Noninterest expense Compensation expense Occupancy expense Technology, communications and equipment expense Professional and outside services Marketing Other expense Amortization of intangibles Merger costs
28,124 3,681 4,684 6,767 2,446 14,558 936 —
26,928 3,666 4,624 6,232 1,777 7,594 1,050 481
22,746 3,038 4,315 6,053 1,913 3,740 1,263 432
Total noninterest expense
61,196
52,352
43,500
Income before income tax expense/(benefit) and extraordinary gain Income tax expense/(benefit)
24,859 7,489
16,067 4,415
2,773 (926 )
Income before extraordinary gain Extraordinary gain
17,370 —
11,652 76
3,699 1,906
Year ended December 31, (in millions, except per share data) Revenue Investment banking fees Principal transactions Lending- and deposit-related fees Asset management, administration and commissions Securities gains(a) Mortgage fees and related income Credit card income Other income
$
Total net revenue
Net income
$
17,370
$ 11,728
$ 5,605
Net income applicable to common stockholders
$
15,764
$ 8,774
$ 4,742
$
3.98 3.98
$
$
Per common share data Basic earnings per share Income before extraordinary gain Net income Diluted earnings per share Income before extraordinary gain Net income Weighted-average basic shares Weighted-average diluted shares Cash dividends declared per common share
$
2.25 2.27
0.81 1.35
3.96 3.96
2.24 2.26
0.81 1.35
3,956 3,977
3,863 3,880
3,501 3,522
0.20
$
0.20
$
1.52
(a) The following other-than-temporary impairment losses are included in securities gains for the periods presented. Year ended December 31,(in millions) Total other-than-temporary impairment losses Losses recorded in/(reclassified from) other comprehensive income Total credit losses recognized in income
$ $
2010 (94) (6) (100)
$ $
2009 (946) 368 (578)
The Notes to Consolidated Financial Statements are an integral part of these statements. Source: JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 9
Balance Sheet Consolidated balance sheets
2010
December 31, (in millions, except share data) Assets Cash and due from banks Deposits with banks Federal funds sold and securities purchased under resale agreements (included $20,299 and $20,536 at fair value) Securities borrowed (included $13,961 and $7,032 at fair value) Trading assets (included assets pledged of $73,056 and $38,315) Securities (included $316,318 and $360,365 at fair value and assets pledged of $86,891 and $140,631) Loans (included $1,976 and $1,364 at fair value) Allowance for loan losses Loans, net of allowance for loan losses Accrued interest and accounts receivable (included zero and $5,012 at fair value) Premises and equipment Goodwill Mortgage servicing rights Other intangible assets Other assets (included $18,201 and $19,165 at fair value and assets pledged of $1,485 and $1,762) Total assets(a) Liabilities Deposits (included $4,369 and $4,455 at fair value) Federal funds purchased and securities loaned or sold under repurchase agreements (included $4,060 and $3,396 at fair value) Commercial paper Other borrowed funds (included $9,931 and $5,637 at fair value) Trading liabilities Accounts payable and other liabilities (included the allowance for lending-related commitments of $717 and $939 and $236 and $357 at fair value) Beneficial interests issued by consolidated variable interest entities (included $1,495 and $1,410 at fair value) Long-term debt (included $38,839 and $48,972 at fair value) Total liabilities(a)
$
27,567 21,673 222,554 123,587 489,892 316,336 692,927 (32,266) 660,661
2009 $
26,206 63,230 195,404 119,630 411,128 360,390 633,458 (31,602) 601,856
70,147 13,355 48,854 13,649 4,039 105,291 $ 2,117,605
67,427 11,118 48,357 15,531 4,621 107,091 $ 2,031,989
$
930,369
$ 938,367
276,644 35,363 57,309 146,166
261,413 41,794 55,740 125,071
170,330 77,649 247,669 1,941,499
162,696 15,225 266,318 1,866,624
7,800 4,105 97,415 73,998 1,001 (53) (8,160)
8,152 4,105 97,982 62,481 (91) (68) (7,196)
Commitments and contingencies (see Note 31 on pages 280–281 of this Annual Report) Stockholders’ equity Preferred stock ($1 par value; authorized 200,000,000 shares; issued 780,000 and 2,538,107 shares) Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares) Capital surplus Retained earnings Accumulated other comprehensive income/(loss) Shares held in RSU Trust, at cost (1,192,712 shares and 1,526,944 shares) Treasury stock, at cost (194,639,785 shares and 162,974,783 shares) Total stockholders’ equity Total liabilities and stockholders’ equity
176,106
165,365
$ 2,117,605
$ 2,031,989
(a) The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2010 and 2009. The difference between total VIE assets and liabilities represents the Firm’s interests in those entities, which were eliminated in consolidation. December 31, (in millions) Assets Trading assets Loans All other assets Total assets Liabilities Beneficial interests issued by consolidated variable interest entities All other liabilities Total liabilities
2009
2010 $
$ $ $
9,837 95,587 3,494 108,918
$
77,649 1,922 79,571
$
$
$
6,347 13,004 5,043 24,394 15,225 2,197 17,422
The assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests do not have recourse to the general credit of JPMorgan Chase. At December 31, 2010, the Firm provided limited program-wide credit enhancement of $2.0 billion related to its Firm-administered multi-seller conduits. For further discussion, see Note 16 on pages 244–259 of this Annual Report.
The Notes to Consolidated Financial Statements are an integral part of these statements. Source: JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 10 JPMorgan Chase & Co./2010 Annual Report
161
Statement of Cash Flows Consolidated statements of cash flows Year ended December 31, (in millions) Operating activities Net income Adjustments to reconcile net income to net cash (used in)/provided by operating activities: Provision for credit losses Depreciation and amortization Amortization of intangibles Deferred tax benefit Investment securities gains Proceeds on sale of investment Stock-based compensation Originations and purchases of loans held-for-sale Proceeds from sales, securitizations and paydowns of loans held-for-sale Net change in: Trading assets Securities borrowed Accrued interest and accounts receivable Other assets Trading liabilities Accounts payable and other liabilities Other operating adjustments Net cash (used in)/provided by operating activities Investing activities Net change in: Deposits with banks Federal funds sold and securities purchased under resale agreements Held-to-maturity securities: Proceeds Available-for-sale securities: Proceeds from maturities Proceeds from sales Purchases Proceeds from sales and securitizations of loans held-for-investment Other changes in loans, net Net cash (used)/received in business acquisitions or dispositions Proceeds from assets sale to the FRBNY Net maturities/(purchases) of asset-backed commercial paper guaranteed by the FRBB All other investing activities, net Net cash provided by/(used in) investing activities Financing activities Net change in: Deposits Federal funds purchased and securities loaned or sold under repurchase agreements Commercial paper and other borrowed funds Beneficial interests issued by consolidated variable interest entities Proceeds from long-term borrowings and trust preferred capital debt securities Payments of long-term borrowings and trust preferred capital debt securities Excess tax benefits related to stock-based compensation Proceeds from issuance of preferred stock and Warrant to the U.S. Treasury Proceeds from issuance of other preferred stock Redemption of preferred stock issued to the U.S. Treasury Redemption of other preferred stock Proceeds from issuance of common stock Treasury stock purchased Dividends paid All other financing activities, net Net cash (used in)/provided by financing activities Effect of exchange rate changes on cash and due from banks Net increase/(decrease) in cash and due from banks Cash and due from banks at the beginning of the year Cash and due from banks at the end of the year Cash interest paid Cash income taxes paid, net
2010 $ 17,370
2009 $
2008
11,728
$
5,605
16,639 4,029 936 (968) (2,965) — 3,251 (37,085) 40,155
32,015 3,308 1,050 (3,622) (1,110) — 3,355 (22,417) 33,902
20,979 3,265 1,263 (2,637 ) (1,560 ) (1,540 ) 2,637 (34,902 ) 38,036
(72,082) (3,926) 443 (12,452) 19,344 17,325 6,234 (3,752)
133,488 4,452 (6,312) 32,557 (79,314) (26,450) 6,167 122,797
(12,787 ) 15,408 10,221 (32,919 ) 24,061 1,012 (12,212 ) 23,930
41,625 (26,957)
74,829 7,082
(118,929 ) (44,597 )
7
9
10
92,740 118,600 (179,487) 8,853 3,645 (4,910) — — (114) 54,002
87,712 114,041 (346,372) 30,434 51,251 (97) — 11,228 (762) 29,355
44,414 96,806 (248,599 ) 27,531 (59,123 ) 2,128 28,850 (11,228 ) (934 ) (283,671 )
(9,637) 15,202 (6,869) 2,426 55,181 (99,043) 26 — — — (352) — (2,999) (1,486) (1,666) (49,217) 328 1,361 26,206 $ 27,567 $ 12,404 9,747
(107,700) 67,785 (67,198) (4,076) 51,324 (68,441) 17 — — (25,000) — 5,756 — (3,422) (2,124) (153,079) 238 (689) 26,895 $ 26,206 $ 16,875 5,434
177,331 15,250 9,219 (55) 72,407 (65,344 ) 148 25,000 7,746 — — 11,500 — (5,911 ) (292 ) 246,999 (507 ) (13,249 ) 40,144 $ 26,895 $ 37,267 2,280
Note: Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon adoption of the guidance, the Firm consolidated noncash assets and liabilities of $87.7 billion and $92.2 billion, respectively. In 2008, the fair values of noncash assets acquired and liabilities assumed in: (1) the merger with Bear Stearns were $288.2 billion and $287.7 billion, respectively (approximately 26 million shares of common stock valued at approximately $1.2 billion were issued in connection with the Bear Stearns merger); and (2) the Washington Mutual transaction were $260.3 billion and $260.1 billion, respectively. Source: JPMorgan Chase 2010 Annual Report
The Notes to Consolidated Financial Statements are an integral part of these statements.
Holliday Fenoglio Fowler 11
Lease Abstract Tenant Name:
JPMorgan Chase Bank, N.A., a national banking association
Premises:
Approximately 1.531 acres of land, Denton County, Texas, being Lot 5, Block A, of Loews Addition, an addition to the City of Little Elm, Denton County, Texas; together with rights in and to Easements, covenants, Conditions and Restrictions (“ECCR) dated August 24, 2004, recorded in Document 2004114098, Real Property Records, Dallas County, Texas
Lease Commencement:
May 1st, 2005
Lease Expiration:
April 30th, 2035
Primary Term:
Thirty (30) years
Renewal Terms:
Four (4) five (5) year terms
Rent Abatement:
No abatement rights
Impositions:
Tenant is responsible for impositions (taxes, water, sewer charges, utilities, etc.) as and when they become due (no escrow for taxes)
Maintenance:
Tenant is responsible for the repair and maintenance of the Premises: Landlord has no obligation to maintain or repair the Premises.
Insurance:
Tenant to provide commercial general liability insurance ($3,000,000.00 for property insurance), worker’s compensation and other insurance. Tenant may self-insure so long as Tenant exceeds $200,000,000.00 in minimum net worth. Insurance limits to be adjusted every five years. AAA arbitration, if parties cannot agree on insurance limit adjustments. Mutual waivers of subrogation.
Casualty:
Tenant is required to promptly repair, replace or restore any casualty; provided, if casualty (a) during the last five (5) years of the original term or thirty (30) months of renewal term, and (b) damage exceeds fifty percent (50%), Tenant may elect to terminate; provided Tenant shall, at the option of Landlord, raze the improvements and pay present value of remaining rent.
Assignment:
a. Tenant may assign to any state or national banking association, state or federal saving and loan or affiliate, subsidiary or successor of Tenant or JPMorgan Chase & Company. b. Sublease. Tenant may not sublease the Premises without the Landlord’s prior written approval, which approval shall not be unreasonably with held; provided, further, no sublease for the less than the entire Premises and the net worth of sublessee shall be equal to or greater than $500,000,000.00. Notwithstanding any assignment or subletting, Tenant remains ‘directly and primarily liable under the Lease.
Holliday Fenoglio Fowler 12
Loan Abstract Lender:
American United Life
Loan Origination:
January 2008
Original Loan Amount:
$1,750,000
Balance at 5/31/2011
$1,638,945
Term:
Ten (10) years
Interest Rate:
6.03%
Maturity:
February 2018
Amortization:
25 years
Prepayment Fee:
Greater of Yield Maintenance or 1%
Monthly P&I:
$11,307
Annual P&I:
$135,689
Loan Constant:
7.75%
Recourse Provisions:
Non-recourse carve out with Borrower
Assumability:
The Grantor named herein and the first subsequent owner of the Conveyed Property (but not a subsequent owner) shall have a one-time right, during the term of this Deed of Trust to sell or transfer its entire ownership interest in the Conveyed Property, without any changes to the terms and conditions hereof or to the Note or the Assignment of Leases or any of the other Loan Documents.
Holliday Fenoglio Fowler 13
Location Overview Dal l as / Fort Wo rt h, Te x as
Texas and Dallas/Fort Worth continue to outperform the rest of the nation in employment and population growth, as well as other key measures of economic activity. North Texas may not be totally immune from national trends, but it is resilient thanks to a favorable business climate and diversified economy. While economic conditions in most metro areas across the U.S. have deteriorated sharply over the past two years, the Dallas/Fort Worth market has fared better than most as it has an unemployment level far below the national average and positive job growth projections. The Dallas/Fort Worth Metropolitan Statistical Area (MSA) is comprised of two Metropolitan Divisions; Dallas on the east encompassing eight counties (Collin, Dallas, Delta, Denton, Ellis, Hunt, Kaufman, and Rockwall) and Fort Worth on the west encompassing four counties (Johnson, Parker, Tarrant, and Wise). The local economy is one of the most diverse in the country with major players in key long-term growth industries including aerospace/defense, transportation, healthcare, financial services, high technology, distribution and trade. The Metroplex, as the Dallas/Fort Worth area is referred to locally, ranks at or near the top of all U.S. metros for business relocations and single-family housing construction. According to Site Selection magazine, DFW ranked third in the nation in 2009 for expansion or construction of new corporate facilities, including companies such as Advanced H2O, Alcon, Cisco, Coaire Corp., Kohler and Q-Edge. Dallas/Fort Worth’s economic structure has two predominant characteristics that provide the foundation for its strength. First, Dallas/Fort Worth’s economy is well diversified, thereby minimizing the market risk against a downturn in any particular industry. Second, most of the Metroplex’s principal industries are well positioned for expansion in the near future. The long-term outlook suggests the health and expansion of the DFW economy will continue for years to come, as the metro is projected to lead the nation in population growth and rank second in job growth during the five-year period ending 2015.
Eco n omi c Out lo o k Strong demographics, along with stronger than average employment growth, has positioned the Dallas/Fort Worth Metroplex as one of the top regional economies in the US, not only today, but into the future. DFW’s diversified economic base and proactive business climate continue to attract both people and businesses to the area. DFW is expected to remain on its long-term growth trends for the near and extended future, outpacing the state and the nation on most major measures. Moody’s Economy. com projects that Dallas/Fort Worth will be the top population and second-best job growth market in the country for the period from 2010 to 2015. DFW is forecast to create 483,200 new jobs during the period while adding 724,300 new residents. The most critical asset this region offers, historically and going forward, is people. DFW has a large, young, educated and growing workforce. The resilient local economy, access to skilled workers and relatively low costs of living and doing business should continue to drive business startups, expansions and relocations to the area, allowing DFW to remain one of the strongest economies in the nation.
Holliday Fenoglio Fowler 14
Location Overview L i t t l e E l m , Te x as The community of Little Elm is located on land that was part of the original Peters Colony and Empresario Grant by the Republic of Texas in 1841. Named for a nearby creek, the community of Little Elm was formed by the consolidation of several small settlements including Lloyd, Hackberry, Dickson and Hilltown. The creation of Lake Dallas in 1925 and the Garza—Little Elm Reservoir in the mid-1950’s encouraged further growth of the community. The Town of Little Elm was incorporated in 1966. Residential growth in Little Elm has been fueled by low costs for new housing. For the past decade, large scale suburban development has been approaching from the south and east. As land prices in the adjacent cities of The Colony and Frisco climbed, development in Little Elm has soared.
L i t t l e E l m Ag g r egat e P r o pert y Value s Little Elm has grown by over 600% since early 2000. Current projections estimate that the population of Little Elm will exceed 70,000 residents by 2020, rivaling sister cities like Flower Mound, Southlake, The Colony and Frisco. Little Elm has two main arteries that run though the middle of the town - FM 720 (Eldorado Parkway) going east towards Frisco, TX and north/northwest to US 380, and FM 423 going north to US 380 and south to Texas 121 in The Colony, TX. Little Elm also retains a small-town atmosphere providing close access to fishing and watersports on Lake Lewisville with one of the few free boat ramp access points on the Lake.
Holliday Fenoglio Fowler 15
Site Plan
Chase Bank
Eldorado Pkwy
FM 423
Holliday Fenoglio Fowler 16
Area Map DENTON ISD
PROSPER ISD
DENTON ISD AUBR E Y ISD
FISHTRAP ROAD Paloma Creek Elementary NAVO ROAD
Navo Middle School
ROVIDENCE PALOMA CREEK NORTH
SAVANNAH
PROSPER US 380
FM 423
PALOMA CREEK SOUTH FRISCO HILLS
S
DENTON ISD
FRISCO RANCH
THE PRESERVE VALENCIA
FRISCO ISD
LITTLE ELM ISD
Robertson Elementary SUNSET POINTE
ISD
PANTHER CREEK PKWY
Lakeview Elementary
Dri
ve
LAKEWOOD ESTATES
Little Elm Village One Elm Place
Brent Intermediate
D
ISVILLE LAKE
LOBO LANE
SHELL BEACH
Zellars Elementary Lakeside Junior High ISD Administration Building Powell lntermediate
Cottonwood Creek Marina
HACKBERRY
KINGS CROSSING
Hackberry Elementary
THE TRAILS
FRISCO KING ROAD MAIN STREET
Elm Ridge Crossing
ST
ON
EB
O RO
KP
Frisco Lakes Golf Club
KW
Y
FRISCO LAKES
LONESTAR RANCH
FM 423
Fire Station #1 LITTLE ELM TOWN HALL Lakeshore Crossing
Cottonwood Park
The Trails of Frisco Golf Club
King Academy
Little Elm Little Elm Center Park
LAKES OF LITTLE ELM
MARINA VISTA ESTATES
GLENCOVE
Little Elm Town Center Beard Park
AY
ELDORADO PKWY The Villages at Eldorado
ELDORADO ESTATES
FM 720
WYNDFIELD FARMS
WITT ROAD
Community Rec. Ctr./Sr. Ctr.
Narrow Lake Park
k
re
Dallas North To l l w a y
TEEL ROAD
La
o esh
HART ROAD
LITTLE ELM
GRAYHAWK
SUNFLOWER DRIVE
Eldorado Crossing Little Elm Fire Station #2 High School ROBINSON VILLAGES Little Elm RIDGE OF Towne Crossing WOODLAKE ELDORADO Chavez Elementary ESTATES LEISD Athletic Complex
WALKER LANE STARDUST RANCH
WOODLAKE PKWY
Doe Branch Park
Elementary
WATERSIDE DRIVE
M ISD
LAKEVIEW
SCALE 1" = 1697' 10.30.08 Aerial Focus Aubrey, Frisco, Denton, Prosper ISD Little Elm ISD Little Elm City Limit Extraterritorial Jurisdiction
Holliday Fenoglio Fowler 17
Regional Map JPMorgan Chase - Little Elm ,TX
Lake Lewisville
THE COLONY
FLOWER MOUND
OPHY CLUB Grapevine Lake
KE
COPPELL SOUTHLAKE
GRAPEVINE
CARROLLTON
COLLEYVILLE Lake Ray Hubbard
BEDFORD
EULESS
30
White Rock Lake
HURST 30 30
MESQUITE 30
ARLINGTON
WORTHINGTON GARDENS
BALCH SPRINGS
45
GRAND PRAIRIE 20
20
20
45
MANSFIELD
Holliday Fenoglio Fowler 18
Demographics Summary
1 Mile
3 Mile
5 Mile
2015 Projection
6,332
55,974
100,779
2010 Estimate
5,473
48,255
86,160
2000 Census
576
6,848
20,438
2015 Projection
2,137
18,544
33,752
2010 Estimate
1,827
15,852
28,617
2000 Census
195
2,283
6,823
$85,219
$94,443
$95,911
$67,184
$78,925
$77,323
Population
Households
Average HH Income 2010 Estimate Median HH Income 2010 Estimate 2010 HH by Income
1,827
%
15,852
%
28,617
%
Income Less than $15,000
126
6.90
933
5.89
1,582
5.53
Income $15,000 - $24,999
97
5.31
666
4.20
1,255
4.39
Income $25,000 - $34,999
146
7.99
1,069
6.74
2,045
7.15
Income $35,000 - $49,999
262
14.34
1,753
11.06
3,447
12.05
Income $50,000 - $74,999
410
22.44
3,085
19.46
5,546
19.38
Income $75,000 - $99,999
311
17.02
2,674
16.87
4,669
16.32
Income $100,000 - $124,999
168
9.20
2,154
13.59
3,630
12.68
Income $125,000 - $149,999
119
6.51
1,449
9.14
2,398
8.38
Income $150,000 - $199,999
102
5.58
1,192
7.52
2,197
7.68
Income $200,000 - $499,999
59
3.23
743
4.69
1,549
5.41
Income $500,000 and more
26
1.42
133
0.84
299
1.04
5,473
%
48,255
%
86,160
%
4,203
76.80
36,297
75.22
66,504
77.19
Black or African American Alone
140
2.56
2,434
5.04
4,362
5.06
American Indian and Alaska Native Alone
54
0.99
384
0.80
662
0.77
Asian Alone
16
0.29
1,118
2.32
1,629
1.89
Native Hawaiian and Other Pacific Islander Alone
1
0.02
21
0.04
59
0.07
Some Other Race Alone
912
16.66
6,514
13.50
10,382
12.05
Two or More Races
146
2.67
1,487
3.08
2,562
2.97
2010 Est. Population by Single Race Classification White Alone
Holliday Fenoglio Fowler 19
Brokerage Services Approved by the Texas Real Estate Commission for Voluntary Use Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords.
Information About Brokerage Services
B
efore working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License
Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties’ consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker’s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding.
Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensee’s records.
Buyer, Seller, Landlord or Tenant
Date
Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a question or complaint regarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas 78711-2188 or 512-465-3960.
EQUAL HOUSING OP P O RT U N I T Y
01A TREC No. OP-K20 Holliday Fenoglio Fowler
This Offering Memorandum has been prepared by HFF, L.P. for use by a limited number of parties and has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it, and make no guarantee, warranty or representation about it. It is your responsibility to confirm, independently, its accuracy and completeness. All projections have been developed by HFF, L.P., Owner and designated sources, are based upon assumptions relating to the general economy, competition, and other factors beyond the control of Owner, and therefore are subject to variation. No representation is made by HFF, L.P. or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied on as a promise or representation as to the future performance of the property. Although the information contained herein is believed to be correct, Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, HFF, L.P., Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from, the Offering Memorandum or any other written or oral communication transmitted or made available to the recipient.
Presented Exclusively By: COLER YOAKAM Director [email protected] 469.232.1982 JACE HINDERLAND Real Estate Analyst [email protected] 469.232.1925
The Offering Memorandum does not constitute a representation that there has been no change in the business or affairs of the property or Owner since the date of preparation of the Offering Memorandum. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser. Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified prospective investors. Owner and HFF, L.P. each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations to any entity reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel, and any obligations set by Owner thereunder have been satisfied or waived. This Offering Memorandum and the contents, except such information, which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting this Offering Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not photocopy or duplicate it, that you will not disclose this Offering Memorandum or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Owner or HFF, L.P. and that you will use the information in this Offering Memorandum for the sole purpose of evaluating your interest in the property and you will not use the Offering Memorandum or any of the contents in any fashion or manner detrimental to the interest of Owner or HFF, L.P. If you have no interest in the property, please return the Offering Memorandum forthwith.
8401 N. Central Expressway, Suite 700 Dallas, Texas 75225 | USA T. 214.265.0880 | F. 214.265.9564 www.hfflp.com
Holliday Fenoglio Fowler 21
CONFIDENTIAL OFFERING MEMORANDUM
Holliday Fenoglio Fowler 1
CONFIDENTIAL OFFERING MEMORANDUM
JPMorgan Chase Little Elm, TX
Presented Exclusively by
Coler Yoakam Director
jace hinderland Real Estate Analyst
Holliday Fenoglio Fowler 2
Table of Contents EXECUTIVE SUMMARY Executive Summary TENANT PROFILE Tenant Overview Business Segment Organization Retail Banking Segment Income Statement Balance Sheet Statement of Cash Flows LEASE ABSTRACT LOCATION OVERVIEW Area Map Regional Map Site Plan Demographics
Holliday Fenoglio Fowler 3
Disclaimer This Offering Memorandum has been prepared by Holliday Fenoglio Fowler, L.P. for use by a limited number of parties and has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it, and make no guarantee, warranty or representation about it. It is your responsibility to confirm, independently, its accuracy and completeness. All projections have been developed by Holliday Fenoglio Fowler, L.P., Owner and designated sources, are based upon assumptions relating to the general economy, competition, and other factors beyond the control of Owner, and therefore are subject to variation. No representation is made by Holliday Fenoglio Fowler, L.P. or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied on as a promise or representation as to the future performance of the property. Although the information contained herein is believed to be correct, Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, Holliday Fenoglio Fowler, L.P., Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from, the Offering Memorandum or any other written or oral communication transmitted or made available to the recipient. The Offering Memorandum does not constitute a representation that there has been no change in the business or affairs of the property or Owner since the date of preparation of the Offering Memorandum. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser. Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified prospective investors. Owner and Holliday Fenoglio Fowler, L.P. each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations to any entity reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel, and any obligations set by Owner thereunder have been satisfied or waived. This Offering Memorandum and the contents, except such information, which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting this Offering Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not photocopy or duplicate it, that you will not disclose this Offering Memorandum or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Owner or Holliday Fenoglio Fowler, L.P. and that you will use the information in this Offering Memorandum for the sole purpose of evaluating your interest in the property and you will not use the Offering Memorandum or any of the contents in any fashion or manner detrimental to the interest of Owner or Holliday Fenoglio Fowler, L.P. If you have no interest in the property, please return the Offering Memorandum forthwith.
8401 North Central Expressway, Suite 700 Dallas, Texas 75225 USA T: 214.265.0880 F: 214.265.1686 www.hfflp.com
Holliday Fenoglio Fowler 4
Executive Summary Holliday Fenoglio Fowler is pleased to exclusively offer for sale a Ground Lease interest in JPMorgan Chase Bank located in Little Elm, TX. The Subject Property has a Thirty year NNN lease with no Landlord responsibilities. The Premises consists of an 1.53 acre site, improved by a 4,100 square foot retail bank branch leased to JPMorgan Chase Bank N.A. (the “Tenant). This offering represents an incredible opportunity to acquire a well-located investment secured by an industryleading “Fortress” bank.
in ve st m e n t hi g hli g hts Long Term Net Lease In addition to the rare 30-year primary term, the Landlord-friendly net lease provides an investor with passive income secured by an investment-grade tenant for the remaining 24 years of the lease.
Investment Grade Tenancy JPMorgan Chase Bank is an industry-leading financial institution backed by a fantastic balance sheet and an efficient operating platform. Moody’s and S&P have assigned an Aa1 and AAcorporate credit rating, respectively.
Strong Rent Growth over Primary Term Over the course of the asset’s primary term, an investor will experience 4 additional rental escalations resulting in over $942,000 of additional rent over the Year 1 rental rate.
Fantastic Location The Subject Property is well situated in a growing suburb of the Dallas/Fort Worth Metroplex. The MSA’s historic resilience to economic downturns combined with its strong employment base make it one of the best real estate investment markets in the country.
Assumable Financing Available Assumable, in-place financing exists providing a potential investor with the ability to control a quality asset leased to an investment grade tenant at a relatively low price-point.
in v e st m e n t ov e rv i ew
Pricin g overview
Offering:
JPMorgan Chase Bank Ground Lease
Purchase Price:
$2,965,000*
Location:
2701 FM 423, Little Elm, Texas NWC of FM 423 & Eldorado Pkwy.
Cap Rate:
5.75%
NOI:
$170,500
Tenant:
JPMorgan Chase Bank N.A.
Credit Rating:
Aa1 (Moody’s), AA- (S&P)
Building Size:
4,100 SF
Land Area:
1.531 acres (66,690 SF)
Lease Commencement:
5/1/2005
Years
Monthly
Annually
PSF
Lease Expiration:
4/30/2035
1-5
$12,917
$155,000
$2.32
Options:
Four, 5-year renewal options
6 - 10
$14,208
$170,500
Lease Structure:
NNN
11 - 15
$15,629
$187,550
16 - 20
$17,192
$206,305
*Offers may be made in a format that either includes or excludes in-place assumable financing
Ren t schedule
21 - 25
$18,911
$226,936
$2.56 $2.81 $3.09 $3.40
Lender:
American United Life
26 - 30
$20,802
$249,629
$3.74
Original Loan Amount:
$1,750,000 (January 2008)
31 - 35 (Opt. 1)
$22,883
$274,592
Balance:
$1,638,945 (at 5/31/11)
36 - 40 (Opt. 2)
Interest Rate:
6.03%
41 - 45 (Opt. 3)
Term:
10 years
46 - 50 (Opt. 4)
$25,171 $27,688 $30,457
$302,051 $332,256 $365,482
$4.12 $4.53 $4.98 $5.48
Maturity:
February 2018
Amortization:
25 years
I n - Pl ac e Loa n ov e rv i ew
Holliday Fenoglio Fowler 5
Tenant Overview JPM’s underlying fundamentals remain extremely strong. Excellent individual business segments combine to provide JPM with a solid foundation. Each segment holds a top 1, 2, or 3 position in its respective industry. The Company possesses significant earnings power through continued investment across JPM’s business segments along with a constant record of operating efficiency. Finally, JPMorgan Chase maintains a “fortress” balance sheet.
R e ta i l F i na nc i a l Se rv i ce s 5,268 Chase branches in 23 states served nearly 31mm US consumers and small businesses in 4Q10 •
23mm Retail Banking households served
•
18mm active online Retail Banking customers
•
2.2mm Business Banking customers
•
8.5mm mortgage loans serviced
•
3.3mm Auto accounts serviced
Retail Financial Services (“RFS”) serves consumers and businesses through personal service at bank branches and through ATMs, online banking and telephone banking, as well as through auto dealerships and school financial-aid offices. Customers can use more than 5,200 bank branches (third-largest nationally) and 16,100 ATMs (second-largest nationally), as well as online and mobile banking around the clock. More than 28,900 branch salespeople assist customers with checking and savings accounts, mortgages, home equity and business loans, and investments across the 23-state footprint from New York and Florida to California. Consumers also can obtain loans through more than 6,200 auto dealerships and 2,200 schools and universities nationwide.
T h e I mp o rta nc e o f JP M’ s Retail Ban k Net work Commercial Banking Business unlikely to exist without retail presence ~17mm transactions done by CB clients in 2010 at branches $650-800mm of projected long-term CB pretax income opportunity from buildout in the WaMu footprint (West and Southeast)
Card Services 1.5mm +/- cards sold through branches in 2010 35% of Card Services cards sold through the retail bank branch network >40% of revenue from new merchants is being sourced through the retail branches
Asset Management ~25% of JPM IM US Retail AUM comes from retail bank branches $31B of JPM investment product AUM $1B +/- incremental pretax income opportunity fro Chase Private Client Services ~50% of Private Banking clients use the branch network
Treasury & Securities Use of core banking services (e.g., deposits and change orders) Check Cashing Agreements: cashing of employee payroll checks without a fee across the branch network Chase At Work: better payroll management, convenient banking & discounts to employees Source: JPMorgan Chase Investor Presentation (2.15.11), JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 6
Business Segment Organization BUSINESS SEGMENT RESULTS The Firm is managed on a line of business basis. The business segment financial results presented reflect the current organization of JPMorgan Chase. There are six major reportable business segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury & Securities Services and Asset Management, as well as a Corporate/Private Equity segment.
The business segments are determined based on the products and services provided, or the type of customer served, and reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis.
JPMorgan Chase
Investment Bank Businesses: • Investment Banking - Advisory - Debt and equity underwriting • Market-making and trading - Fixed income - Equities • Corporate lending • Prime Services • Research
Retail Financial Services Businesses: • Retail Banking - Consumer and Business Banking (including Business Banking loans) • Mortgage Banking, Auto & Other Consumer Lending: - Mortgage production and servicing - Auto, student and other loan originations and balances • Real Estate Portfolios: - Residential mortgage loans - Home equity loans and originations
Card Services
Commercial Banking
Businesses: • Credit Card • Merchant Acquiring
Businesses: • Middle Market Banking • Commercial Term Lending • Mid-Corporate Banking • Real Estate Banking
Description of business segment reporting methodology Results of the business segments are intended to reflect each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results allocates income and expense using market-based methodologies. Business segment reporting methodologies used by the Firm are discussed below. The Firm continues to assess the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.
Revenue sharing When business segments join efforts to sell products and services to the Firm’s clients, the participating business segments agree to share revenue from those transactions. The segment results reflect these revenue-sharing agreements.
Treasury & Securities Services Businesses: • Treasury Services • Worldwide Securities Services
Asset Management Businesses: • Private Banking • Investment Management: - Institutional - Retail • Highbridge
Funds transfer pricing Funds transfer pricing is used to allocate interest income and expense to each business and transfer the primary interest rate risk exposures to the Treasury group within the Corporate/Private Equity business segment. The allocation process is unique to each business segment and considers the interest rate risk, liquidity risk and regulatory requirements of that segment’s stand-alone peers. This process is overseen by senior management and reviewed by the Firm’s Asset-Liability Committee (“ALCO”). Business segments may be permitted to retain certain interest rate exposures subject to management approval.
Source: JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 7
Average deposits: Checking Savings Time and other Total average deposits Deposit margin Average assets Credit data and quality statistics (in millions, except ratios) Net charge-offs Net charge-off rate Nonperforming assets
Retail Banking Segment Management’s discussion and analysis Retail Banking Selected income statement data Year ended December 31, (in millions, except ratios) Noninterest revenue Net interest income Total net revenue
2010 $ 6,792 10,785 17,577
2009 $ 7,169 10,781 17,950
2008 $ 4,951 7,659 12,610
Provision for credit losses
607
1,142
449
Noninterest expense 10,657 10,357 7,232 Income before income tax expense 6,313 6,451 4,929 Net income $ 3,614 $ 3,903 $ 2,982 Overhead ratio 61% 58% 57% Retail Banking Overhead ratio excluding core 56 54 deposit intangibles 59 Selected income (a) statement data Year ended December 31, (a) Retail Banking uses the overhead ratio (excluding the amortization of CDI), a (in non-GAAP millions, except ratios) 2010 2009 trends 2008 financial measure, to evaluate the underlying expense of $ overhead 7,169 ratio $ 4,951 $ expense 6,792 in the Noninterest revenue the business. Including CDI amortization Netcalculation interest income 10,781 10,785 would result in a higher overhead ratio in the earlier years 7,659 and a lower overhead ratio in later years; this method would therefore in an 17,950 result 12,610 Total net revenue 17,577
Management’s discussion and analysis
improving overhead ratio over time, all things remaining equal. The nonProvision for credit losses 1,142 449 607 GAAP ratio excludes Retail Banking’s CDI amortization expense related to Noninterest expense prior business combination transactions of10,657 $276 million,10,357 $328 million 7,232 and $394 million the years ended December 31, 2010, 2009 and 2008, Income beforeforincome respectively. tax expense 6,313 6,451 4,929
Net income Selected metrics Overhead ratio As of or for the year ended Overhead ratio excluding core December 31, (in billions, except (a) deposit intangibles ratios and where otherwise noted)
$ 3,614 $ 3,903 $ 2,982 58% 57% 61% 59 2010
56 2009
54 2008
Business metrics (a) Retail Banking uses the overhead ratio (excluding the amortization of CDI), a Business banking origination volume non-GAAP financial measure, to evaluate the underlying expense trends of (in millions) 4,688 $ 2,299 ratio$ 5,531 the business. Including CDI amortization $expense in the overhead calculation would End-of-period loans result ownedin a higher overhead ratio 16.8in the earlier 17.0years and a18.4 lower overhead ratio in later years; this method would therefore result in an End-of-period deposits: improving remaining $ equal. The nonChecking overhead ratio over time, all things $ 131.7 121.9 $ 109.2 GAAP Savingsratio excludes Retail Banking’s CDI amortization 166.6 expense 153.4related to144.0 prior business combination transactions of $276 million, $328 million and Time and other 45.9 58.0 89.1 $394 million for the years ended December 31, 2010, 2009 and 2008, 344.2 333.3 342.3 Total end-of-period deposits respectively.
Average loans owned Average deposits: Selected metrics As Checking of or for the year ended Savings31, (in billions, except December Time and otherotherwise noted) ratios and where Total average deposits Business metrics Deposit margin Business banking origination volume (in millions) Average assets End-of-period loans ownedstatistics Credit data and quality End-of-period (in millions,deposits: except ratios) NetChecking charge-offs NetSavings charge-off rate Time and other Nonperforming assets Total end-of-period deposits Average branch loans owned Retail business metrics Average deposits: Year ended December 31, Checking Investment sales volume (in millions) Savings Time and Number of:other Total average deposits Branches ATMsmargin Deposit Personal bankers Average assets Salesdata specialists Credit and quality statistics Active onlineexcept customers (in millions, ratios) (in thousands) Net charge-offs accounts NetChecking charge-off rate (in thousands) Nonperforming assets
$
16.7
$ 17.8
$
$ 123.4 $ 113.5 $ 162.1 150.9 76.4 51.0 2010 2009 340.8 336.5 2.96 % 3.03 % $ 4,688 $ 2,299 28.3 28.9 $ 17.0 16.8
16.7
77.1 114.3 53.2 2008 244.6 2.89 % 5,531 26.3 18.4
$ 131.7 707 $ 121.9 842 $ 109.2 346 153.4 144.0 166.6 4.73 % 2.07 % 4.23 % $ 45.9 846 $ 58.0 839 $ 89.1 424 333.3 342.3 344.2 $ 17.8 $ 16.7 $ 16.7 2010 2009 2008 $ 123.4 $ 113.5 $ 77.1 $ 21,784 $17,640 $ 23,579 162.1 150.9 114.3 76.4 53.2 51.0 340.8 244.6 336.5 5,154 5,474 5,268 15,406 16,145 2.96 % 14,568 2.89 % 3.03 % $ 21,715 28.3 $ 17,991 28.9 $ 15,825 26.3 5,912 5,661 7,196 $ 17,744 707 $ 15,424 842 $ 11,710 346 25,712 27,252 4.73 % 24,499 2.07 % 4.23 % $ 839 $ 424 $ 846
Retail branch business metrics Year ended December 31,
2010
2009
2008
$ 113.5 $ 77.1 $ 123.4 150.9 114.3 162.1 76.4 53.2 51.0 336.5 340.8 244.6 2.96 % 2.89 % 3.03 % $ 28.3 $ 28.9 $ 26.3
$ $
707 $ 842 $ 4.73 % 4.23 % 846 $ 839 $
346 2.07 % 424
2010 branch compared with 2009 Retail business metrics Retail Banking net income of2010 $3.6 billion,2009 a decrease2008 of Year ended Decemberreported 31, $ 21,784 Investment sales or volume millions) with$ the 23,579 $289 million, 7%, (in compared prior year. Total net$17,640 revenueof: was $17.6 billion, down 2% compared with the prior year. Number The decrease was driven by lower deposit-related fees, largely 5,474 5,154 Branches 5,268 15,406 14,568 ATMsby higher debit card income and16,145 offset a shift to wider-spread 17,991 15,825 Personal bankers 21,715 deposit products. The provision for credit losses was $607 million, 5,912 5,661 Sales specialists 7,196 down compared with the prior year. The current-year Active$535 onlinemillion customers (in thousands) 17,744 15,424 of $100 11,710 provision reflected lower net charge-offs and a reduction Checking accounts (in thousands) 25,712 24,499 27,252 million to the allowance for loan losses due to lower estimated losses, compared with a $300 million addition to the allowance for loan in the prior Retail Banking net charge-offs were 2010losses compared withyear. 2009 $707 compared with million in the priorayear. Retailmillion, Banking reported net$842 income of $3.6 billion, decrease of Noninterest expense was $10.7 with billion, upprior 3%year. compared with the $289 million, or 7%, compared the Total net 74 prior year, resulting from sales force Business Banking revenue was $17.6 billion, down 2%increases comparedin with the prior year. and bank branches. The decrease was driven by lower deposit-related fees, largely
Year ended Decembe (in millions, except ra Noninterest revenue Net interest income Total net revenue
Provision for credit lo Noninterest expense Income before inc tax expense Net income Overhead ratio
2010 compared Mortgage Banki reported net incom 14%, from the prio
Net revenue was $ prior year. Mortgag the prior year. Othe Auto and Student L predominantly as a
Mortgage Banking interest income, $3
offset by higher debit card income and a shift to wider-spread 2009 compared with 2008 deposit products. The provision for credit lossesbillion, was $607 Retail Banking reported net income of $3.9 up bymillion, $921 down $535 million compared with the prior year. The million, or 31%, from the prior year. Total net revenuecurrent-year was $18.0 provision lower net charge-offs andprior a reduction of increase $100 billion, upreflected by $5.3 billion, or 42%, from the year. The million to the allowance for loan losses due to lower estimated reflected the impact of the Washington Mutual transaction, wider losses, compared with aaverage $300 million addition to the for deposit spreads, higher deposit balances andallowance higher debit loan losses in the prior year. Retail Banking net charge-offs were card income. The provision for credit losses was $1.1 billion, $707 million, within$842 million in the prior year. compared withcompared $449 million the prior year, reflecting higher Noninterest expense was $10.7 billion, up 3% compared with the estimated losses in the Business Banking portfolio. Noninterest prior year, resulting from sales force increases in Business expense was $10.4 billion, up by $3.1 billion, or 43%. TheBanking increase and bankthe branches. reflected impact of the Washington Mutual transaction, higher FDIC premiums and higher headcount-related expense. 2009insurance compared with 2008 Retail Banking reported net income of $3.9 billion, up by $921
Mortgage & Other Consumer million, or 31%,Banking, from the priorAuto year. Total net revenue was $18.0 Lending billion, up by $5.3 billion, or 42%, from the prior year. The increase reflected impactstatement of the Washington Selectedthe income data Mutual transaction, wider Year ended December 31, average deposit balances and higher debit deposit spreads, higher (in millions, except ratios) 2010 2009 card income. The provision for credit losses was $1.1 billion, 2008 $ 5,321 $ 5,057 $ 4,689 Noninterest revenue compared $449 million in the prior year, reflecting Net interest with income 3,311 3,165 higher 2,279 estimated losses in the Business Banking Noninterest 8,222 6,968 Total net revenue 8,632portfolio. expense for wascredit $10.4 billion, up by $3.1 614 billion, or 43%. Provision losses 1,235 The increase 895 reflected the impact of the Washington Mutual transaction, higher Noninterest expense 5,580 4,544 3,956 FDIC insurance premiums and higher headcount-related expense. Income before income tax expense
2,438
2,443
2,117
$ 1,643 $ 1,286 Net income $ 1,405 Mortgage Banking, Auto & Other Consumer 65% 55 % 57 % Overhead ratio Lending
2010 compared 2009 data Selected incomewith statement Mortgage Banking, Year ended December 31,Auto & Other Consumer Lending (in millions,net except ratios) 2008 reported income of $1.4 billion, a 2010 decrease of 2009 $238 million, or $ 5,321 $ 5,057 $ 4,689 Noninterest 14%, from revenue the prior year.
Net interest income 3,165 2,279 3,311 Net was $8.6 billion, up by $410 or 5%, from the 6,968 Totalrevenue net revenue 8,632million,8,222
prior year. billion, flat895 to Provision forMortgage credit lossesBanking net revenue 614was $5.2 1,235 the prior year. Other Consumer Lending net revenue, Noninterest expense 5,580 4,544comprising 3,956 Auto andbefore Student Lending, was $3.5 billion, up by $447 million, Income income tax expenseas a result of higher auto 2,438 2,117 predominantly loan and2,443 lease balances. $ 1,643 $ 1,286 Net income $ 1,405 Mortgage Banking net revenue included $904 million of net 55 % 2010 Annual 57 % Report Overhead ratio Source: 65% JPMorgan Chase
interest income, $3.9 billion of mortgage fees and related income, 2010 compared with 2009 Holliday Fenoglio Fowler 8 Mortgage Banking, Auto & Other Consumer Lending reported net income of $1.4 billion, a decrease of $238 million, or
Income Statement Consolidated statements of income
2010
2009
2008
6,190 10,894 6,340 13,499 2,965 3,870 5,891 2,044
$ 7,087 9,796 7,045 12,540 1,110 3,678 7,110 916
$ 5,526 (10,699 ) 5,088 13,943 1,560 3,467 7,419 2,169
Noninterest revenue
51,693
49,282
28,473
Interest income Interest expense
63,782 12,781
66,350 15,198
73,018 34,239
Net interest income
51,001
51,152
38,779
102,694
100,434
67,252
Provision for credit losses
16,639
32,015
20,979
Noninterest expense Compensation expense Occupancy expense Technology, communications and equipment expense Professional and outside services Marketing Other expense Amortization of intangibles Merger costs
28,124 3,681 4,684 6,767 2,446 14,558 936 —
26,928 3,666 4,624 6,232 1,777 7,594 1,050 481
22,746 3,038 4,315 6,053 1,913 3,740 1,263 432
Total noninterest expense
61,196
52,352
43,500
Income before income tax expense/(benefit) and extraordinary gain Income tax expense/(benefit)
24,859 7,489
16,067 4,415
2,773 (926 )
Income before extraordinary gain Extraordinary gain
17,370 —
11,652 76
3,699 1,906
Year ended December 31, (in millions, except per share data) Revenue Investment banking fees Principal transactions Lending- and deposit-related fees Asset management, administration and commissions Securities gains(a) Mortgage fees and related income Credit card income Other income
$
Total net revenue
Net income
$
17,370
$ 11,728
$ 5,605
Net income applicable to common stockholders
$
15,764
$ 8,774
$ 4,742
$
3.98 3.98
$
$
Per common share data Basic earnings per share Income before extraordinary gain Net income Diluted earnings per share Income before extraordinary gain Net income Weighted-average basic shares Weighted-average diluted shares Cash dividends declared per common share
$
2.25 2.27
0.81 1.35
3.96 3.96
2.24 2.26
0.81 1.35
3,956 3,977
3,863 3,880
3,501 3,522
0.20
$
0.20
$
1.52
(a) The following other-than-temporary impairment losses are included in securities gains for the periods presented. Year ended December 31,(in millions) Total other-than-temporary impairment losses Losses recorded in/(reclassified from) other comprehensive income Total credit losses recognized in income
$ $
2010 (94) (6) (100)
$ $
2009 (946) 368 (578)
The Notes to Consolidated Financial Statements are an integral part of these statements. Source: JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 9
Balance Sheet Consolidated balance sheets
2010
December 31, (in millions, except share data) Assets Cash and due from banks Deposits with banks Federal funds sold and securities purchased under resale agreements (included $20,299 and $20,536 at fair value) Securities borrowed (included $13,961 and $7,032 at fair value) Trading assets (included assets pledged of $73,056 and $38,315) Securities (included $316,318 and $360,365 at fair value and assets pledged of $86,891 and $140,631) Loans (included $1,976 and $1,364 at fair value) Allowance for loan losses Loans, net of allowance for loan losses Accrued interest and accounts receivable (included zero and $5,012 at fair value) Premises and equipment Goodwill Mortgage servicing rights Other intangible assets Other assets (included $18,201 and $19,165 at fair value and assets pledged of $1,485 and $1,762) Total assets(a) Liabilities Deposits (included $4,369 and $4,455 at fair value) Federal funds purchased and securities loaned or sold under repurchase agreements (included $4,060 and $3,396 at fair value) Commercial paper Other borrowed funds (included $9,931 and $5,637 at fair value) Trading liabilities Accounts payable and other liabilities (included the allowance for lending-related commitments of $717 and $939 and $236 and $357 at fair value) Beneficial interests issued by consolidated variable interest entities (included $1,495 and $1,410 at fair value) Long-term debt (included $38,839 and $48,972 at fair value) Total liabilities(a)
$
27,567 21,673 222,554 123,587 489,892 316,336 692,927 (32,266) 660,661
2009 $
26,206 63,230 195,404 119,630 411,128 360,390 633,458 (31,602) 601,856
70,147 13,355 48,854 13,649 4,039 105,291 $ 2,117,605
67,427 11,118 48,357 15,531 4,621 107,091 $ 2,031,989
$
930,369
$ 938,367
276,644 35,363 57,309 146,166
261,413 41,794 55,740 125,071
170,330 77,649 247,669 1,941,499
162,696 15,225 266,318 1,866,624
7,800 4,105 97,415 73,998 1,001 (53) (8,160)
8,152 4,105 97,982 62,481 (91) (68) (7,196)
Commitments and contingencies (see Note 31 on pages 280–281 of this Annual Report) Stockholders’ equity Preferred stock ($1 par value; authorized 200,000,000 shares; issued 780,000 and 2,538,107 shares) Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares) Capital surplus Retained earnings Accumulated other comprehensive income/(loss) Shares held in RSU Trust, at cost (1,192,712 shares and 1,526,944 shares) Treasury stock, at cost (194,639,785 shares and 162,974,783 shares) Total stockholders’ equity Total liabilities and stockholders’ equity
176,106
165,365
$ 2,117,605
$ 2,031,989
(a) The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2010 and 2009. The difference between total VIE assets and liabilities represents the Firm’s interests in those entities, which were eliminated in consolidation. December 31, (in millions) Assets Trading assets Loans All other assets Total assets Liabilities Beneficial interests issued by consolidated variable interest entities All other liabilities Total liabilities
2009
2010 $
$ $ $
9,837 95,587 3,494 108,918
$
77,649 1,922 79,571
$
$
$
6,347 13,004 5,043 24,394 15,225 2,197 17,422
The assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests do not have recourse to the general credit of JPMorgan Chase. At December 31, 2010, the Firm provided limited program-wide credit enhancement of $2.0 billion related to its Firm-administered multi-seller conduits. For further discussion, see Note 16 on pages 244–259 of this Annual Report.
The Notes to Consolidated Financial Statements are an integral part of these statements. Source: JPMorgan Chase 2010 Annual Report
Holliday Fenoglio Fowler 10 JPMorgan Chase & Co./2010 Annual Report
161
Statement of Cash Flows Consolidated statements of cash flows Year ended December 31, (in millions) Operating activities Net income Adjustments to reconcile net income to net cash (used in)/provided by operating activities: Provision for credit losses Depreciation and amortization Amortization of intangibles Deferred tax benefit Investment securities gains Proceeds on sale of investment Stock-based compensation Originations and purchases of loans held-for-sale Proceeds from sales, securitizations and paydowns of loans held-for-sale Net change in: Trading assets Securities borrowed Accrued interest and accounts receivable Other assets Trading liabilities Accounts payable and other liabilities Other operating adjustments Net cash (used in)/provided by operating activities Investing activities Net change in: Deposits with banks Federal funds sold and securities purchased under resale agreements Held-to-maturity securities: Proceeds Available-for-sale securities: Proceeds from maturities Proceeds from sales Purchases Proceeds from sales and securitizations of loans held-for-investment Other changes in loans, net Net cash (used)/received in business acquisitions or dispositions Proceeds from assets sale to the FRBNY Net maturities/(purchases) of asset-backed commercial paper guaranteed by the FRBB All other investing activities, net Net cash provided by/(used in) investing activities Financing activities Net change in: Deposits Federal funds purchased and securities loaned or sold under repurchase agreements Commercial paper and other borrowed funds Beneficial interests issued by consolidated variable interest entities Proceeds from long-term borrowings and trust preferred capital debt securities Payments of long-term borrowings and trust preferred capital debt securities Excess tax benefits related to stock-based compensation Proceeds from issuance of preferred stock and Warrant to the U.S. Treasury Proceeds from issuance of other preferred stock Redemption of preferred stock issued to the U.S. Treasury Redemption of other preferred stock Proceeds from issuance of common stock Treasury stock purchased Dividends paid All other financing activities, net Net cash (used in)/provided by financing activities Effect of exchange rate changes on cash and due from banks Net increase/(decrease) in cash and due from banks Cash and due from banks at the beginning of the year Cash and due from banks at the end of the year Cash interest paid Cash income taxes paid, net
2010 $ 17,370
2009 $
2008
11,728
$
5,605
16,639 4,029 936 (968) (2,965) — 3,251 (37,085) 40,155
32,015 3,308 1,050 (3,622) (1,110) — 3,355 (22,417) 33,902
20,979 3,265 1,263 (2,637 ) (1,560 ) (1,540 ) 2,637 (34,902 ) 38,036
(72,082) (3,926) 443 (12,452) 19,344 17,325 6,234 (3,752)
133,488 4,452 (6,312) 32,557 (79,314) (26,450) 6,167 122,797
(12,787 ) 15,408 10,221 (32,919 ) 24,061 1,012 (12,212 ) 23,930
41,625 (26,957)
74,829 7,082
(118,929 ) (44,597 )
7
9
10
92,740 118,600 (179,487) 8,853 3,645 (4,910) — — (114) 54,002
87,712 114,041 (346,372) 30,434 51,251 (97) — 11,228 (762) 29,355
44,414 96,806 (248,599 ) 27,531 (59,123 ) 2,128 28,850 (11,228 ) (934 ) (283,671 )
(9,637) 15,202 (6,869) 2,426 55,181 (99,043) 26 — — — (352) — (2,999) (1,486) (1,666) (49,217) 328 1,361 26,206 $ 27,567 $ 12,404 9,747
(107,700) 67,785 (67,198) (4,076) 51,324 (68,441) 17 — — (25,000) — 5,756 — (3,422) (2,124) (153,079) 238 (689) 26,895 $ 26,206 $ 16,875 5,434
177,331 15,250 9,219 (55) 72,407 (65,344 ) 148 25,000 7,746 — — 11,500 — (5,911 ) (292 ) 246,999 (507 ) (13,249 ) 40,144 $ 26,895 $ 37,267 2,280
Note: Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon adoption of the guidance, the Firm consolidated noncash assets and liabilities of $87.7 billion and $92.2 billion, respectively. In 2008, the fair values of noncash assets acquired and liabilities assumed in: (1) the merger with Bear Stearns were $288.2 billion and $287.7 billion, respectively (approximately 26 million shares of common stock valued at approximately $1.2 billion were issued in connection with the Bear Stearns merger); and (2) the Washington Mutual transaction were $260.3 billion and $260.1 billion, respectively. Source: JPMorgan Chase 2010 Annual Report
The Notes to Consolidated Financial Statements are an integral part of these statements.
Holliday Fenoglio Fowler 11
Lease Abstract Tenant Name:
JPMorgan Chase Bank, N.A., a national banking association
Premises:
Approximately 1.531 acres of land, Denton County, Texas, being Lot 5, Block A, of Loews Addition, an addition to the City of Little Elm, Denton County, Texas; together with rights in and to Easements, covenants, Conditions and Restrictions (“ECCR) dated August 24, 2004, recorded in Document 2004114098, Real Property Records, Dallas County, Texas
Lease Commencement:
May 1st, 2005
Lease Expiration:
April 30th, 2035
Primary Term:
Thirty (30) years
Renewal Terms:
Four (4) five (5) year terms
Rent Abatement:
No abatement rights
Impositions:
Tenant is responsible for impositions (taxes, water, sewer charges, utilities, etc.) as and when they become due (no escrow for taxes)
Maintenance:
Tenant is responsible for the repair and maintenance of the Premises: Landlord has no obligation to maintain or repair the Premises.
Insurance:
Tenant to provide commercial general liability insurance ($3,000,000.00 for property insurance), worker’s compensation and other insurance. Tenant may self-insure so long as Tenant exceeds $200,000,000.00 in minimum net worth. Insurance limits to be adjusted every five years. AAA arbitration, if parties cannot agree on insurance limit adjustments. Mutual waivers of subrogation.
Casualty:
Tenant is required to promptly repair, replace or restore any casualty; provided, if casualty (a) during the last five (5) years of the original term or thirty (30) months of renewal term, and (b) damage exceeds fifty percent (50%), Tenant may elect to terminate; provided Tenant shall, at the option of Landlord, raze the improvements and pay present value of remaining rent.
Assignment:
a. Tenant may assign to any state or national banking association, state or federal saving and loan or affiliate, subsidiary or successor of Tenant or JPMorgan Chase & Company. b. Sublease. Tenant may not sublease the Premises without the Landlord’s prior written approval, which approval shall not be unreasonably with held; provided, further, no sublease for the less than the entire Premises and the net worth of sublessee shall be equal to or greater than $500,000,000.00. Notwithstanding any assignment or subletting, Tenant remains ‘directly and primarily liable under the Lease.
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Loan Abstract Lender:
American United Life
Loan Origination:
January 2008
Original Loan Amount:
$1,750,000
Balance at 5/31/2011
$1,638,945
Term:
Ten (10) years
Interest Rate:
6.03%
Maturity:
February 2018
Amortization:
25 years
Prepayment Fee:
Greater of Yield Maintenance or 1%
Monthly P&I:
$11,307
Annual P&I:
$135,689
Loan Constant:
7.75%
Recourse Provisions:
Non-recourse carve out with Borrower
Assumability:
The Grantor named herein and the first subsequent owner of the Conveyed Property (but not a subsequent owner) shall have a one-time right, during the term of this Deed of Trust to sell or transfer its entire ownership interest in the Conveyed Property, without any changes to the terms and conditions hereof or to the Note or the Assignment of Leases or any of the other Loan Documents.
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Location Overview Dal l as / Fort Wo rt h, Te x as
Texas and Dallas/Fort Worth continue to outperform the rest of the nation in employment and population growth, as well as other key measures of economic activity. North Texas may not be totally immune from national trends, but it is resilient thanks to a favorable business climate and diversified economy. While economic conditions in most metro areas across the U.S. have deteriorated sharply over the past two years, the Dallas/Fort Worth market has fared better than most as it has an unemployment level far below the national average and positive job growth projections. The Dallas/Fort Worth Metropolitan Statistical Area (MSA) is comprised of two Metropolitan Divisions; Dallas on the east encompassing eight counties (Collin, Dallas, Delta, Denton, Ellis, Hunt, Kaufman, and Rockwall) and Fort Worth on the west encompassing four counties (Johnson, Parker, Tarrant, and Wise). The local economy is one of the most diverse in the country with major players in key long-term growth industries including aerospace/defense, transportation, healthcare, financial services, high technology, distribution and trade. The Metroplex, as the Dallas/Fort Worth area is referred to locally, ranks at or near the top of all U.S. metros for business relocations and single-family housing construction. According to Site Selection magazine, DFW ranked third in the nation in 2009 for expansion or construction of new corporate facilities, including companies such as Advanced H2O, Alcon, Cisco, Coaire Corp., Kohler and Q-Edge. Dallas/Fort Worth’s economic structure has two predominant characteristics that provide the foundation for its strength. First, Dallas/Fort Worth’s economy is well diversified, thereby minimizing the market risk against a downturn in any particular industry. Second, most of the Metroplex’s principal industries are well positioned for expansion in the near future. The long-term outlook suggests the health and expansion of the DFW economy will continue for years to come, as the metro is projected to lead the nation in population growth and rank second in job growth during the five-year period ending 2015.
Eco n omi c Out lo o k Strong demographics, along with stronger than average employment growth, has positioned the Dallas/Fort Worth Metroplex as one of the top regional economies in the US, not only today, but into the future. DFW’s diversified economic base and proactive business climate continue to attract both people and businesses to the area. DFW is expected to remain on its long-term growth trends for the near and extended future, outpacing the state and the nation on most major measures. Moody’s Economy. com projects that Dallas/Fort Worth will be the top population and second-best job growth market in the country for the period from 2010 to 2015. DFW is forecast to create 483,200 new jobs during the period while adding 724,300 new residents. The most critical asset this region offers, historically and going forward, is people. DFW has a large, young, educated and growing workforce. The resilient local economy, access to skilled workers and relatively low costs of living and doing business should continue to drive business startups, expansions and relocations to the area, allowing DFW to remain one of the strongest economies in the nation.
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Location Overview L i t t l e E l m , Te x as The community of Little Elm is located on land that was part of the original Peters Colony and Empresario Grant by the Republic of Texas in 1841. Named for a nearby creek, the community of Little Elm was formed by the consolidation of several small settlements including Lloyd, Hackberry, Dickson and Hilltown. The creation of Lake Dallas in 1925 and the Garza—Little Elm Reservoir in the mid-1950’s encouraged further growth of the community. The Town of Little Elm was incorporated in 1966. Residential growth in Little Elm has been fueled by low costs for new housing. For the past decade, large scale suburban development has been approaching from the south and east. As land prices in the adjacent cities of The Colony and Frisco climbed, development in Little Elm has soared.
L i t t l e E l m Ag g r egat e P r o pert y Value s Little Elm has grown by over 600% since early 2000. Current projections estimate that the population of Little Elm will exceed 70,000 residents by 2020, rivaling sister cities like Flower Mound, Southlake, The Colony and Frisco. Little Elm has two main arteries that run though the middle of the town - FM 720 (Eldorado Parkway) going east towards Frisco, TX and north/northwest to US 380, and FM 423 going north to US 380 and south to Texas 121 in The Colony, TX. Little Elm also retains a small-town atmosphere providing close access to fishing and watersports on Lake Lewisville with one of the few free boat ramp access points on the Lake.
Holliday Fenoglio Fowler 15
Site Plan
Chase Bank
Eldorado Pkwy
FM 423
Holliday Fenoglio Fowler 16
Area Map DENTON ISD
PROSPER ISD
DENTON ISD AUBR E Y ISD
FISHTRAP ROAD Paloma Creek Elementary NAVO ROAD
Navo Middle School
ROVIDENCE PALOMA CREEK NORTH
SAVANNAH
PROSPER US 380
FM 423
PALOMA CREEK SOUTH FRISCO HILLS
S
DENTON ISD
FRISCO RANCH
THE PRESERVE VALENCIA
FRISCO ISD
LITTLE ELM ISD
Robertson Elementary SUNSET POINTE
ISD
PANTHER CREEK PKWY
Lakeview Elementary
Dri
ve
LAKEWOOD ESTATES
Little Elm Village One Elm Place
Brent Intermediate
D
ISVILLE LAKE
LOBO LANE
SHELL BEACH
Zellars Elementary Lakeside Junior High ISD Administration Building Powell lntermediate
Cottonwood Creek Marina
HACKBERRY
KINGS CROSSING
Hackberry Elementary
THE TRAILS
FRISCO KING ROAD MAIN STREET
Elm Ridge Crossing
ST
ON
EB
O RO
KP
Frisco Lakes Golf Club
KW
Y
FRISCO LAKES
LONESTAR RANCH
FM 423
Fire Station #1 LITTLE ELM TOWN HALL Lakeshore Crossing
Cottonwood Park
The Trails of Frisco Golf Club
King Academy
Little Elm Little Elm Center Park
LAKES OF LITTLE ELM
MARINA VISTA ESTATES
GLENCOVE
Little Elm Town Center Beard Park
AY
ELDORADO PKWY The Villages at Eldorado
ELDORADO ESTATES
FM 720
WYNDFIELD FARMS
WITT ROAD
Community Rec. Ctr./Sr. Ctr.
Narrow Lake Park
k
re
Dallas North To l l w a y
TEEL ROAD
La
o esh
HART ROAD
LITTLE ELM
GRAYHAWK
SUNFLOWER DRIVE
Eldorado Crossing Little Elm Fire Station #2 High School ROBINSON VILLAGES Little Elm RIDGE OF Towne Crossing WOODLAKE ELDORADO Chavez Elementary ESTATES LEISD Athletic Complex
WALKER LANE STARDUST RANCH
WOODLAKE PKWY
Doe Branch Park
Elementary
WATERSIDE DRIVE
M ISD
LAKEVIEW
SCALE 1" = 1697' 10.30.08 Aerial Focus Aubrey, Frisco, Denton, Prosper ISD Little Elm ISD Little Elm City Limit Extraterritorial Jurisdiction
Holliday Fenoglio Fowler 17
Regional Map JPMorgan Chase - Little Elm ,TX
Lake Lewisville
THE COLONY
FLOWER MOUND
OPHY CLUB Grapevine Lake
KE
COPPELL SOUTHLAKE
GRAPEVINE
CARROLLTON
COLLEYVILLE Lake Ray Hubbard
BEDFORD
EULESS
30
White Rock Lake
HURST 30 30
MESQUITE 30
ARLINGTON
WORTHINGTON GARDENS
BALCH SPRINGS
45
GRAND PRAIRIE 20
20
20
45
MANSFIELD
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Demographics Summary
1 Mile
3 Mile
5 Mile
2015 Projection
6,332
55,974
100,779
2010 Estimate
5,473
48,255
86,160
2000 Census
576
6,848
20,438
2015 Projection
2,137
18,544
33,752
2010 Estimate
1,827
15,852
28,617
2000 Census
195
2,283
6,823
$85,219
$94,443
$95,911
$67,184
$78,925
$77,323
Population
Households
Average HH Income 2010 Estimate Median HH Income 2010 Estimate 2010 HH by Income
1,827
%
15,852
%
28,617
%
Income Less than $15,000
126
6.90
933
5.89
1,582
5.53
Income $15,000 - $24,999
97
5.31
666
4.20
1,255
4.39
Income $25,000 - $34,999
146
7.99
1,069
6.74
2,045
7.15
Income $35,000 - $49,999
262
14.34
1,753
11.06
3,447
12.05
Income $50,000 - $74,999
410
22.44
3,085
19.46
5,546
19.38
Income $75,000 - $99,999
311
17.02
2,674
16.87
4,669
16.32
Income $100,000 - $124,999
168
9.20
2,154
13.59
3,630
12.68
Income $125,000 - $149,999
119
6.51
1,449
9.14
2,398
8.38
Income $150,000 - $199,999
102
5.58
1,192
7.52
2,197
7.68
Income $200,000 - $499,999
59
3.23
743
4.69
1,549
5.41
Income $500,000 and more
26
1.42
133
0.84
299
1.04
5,473
%
48,255
%
86,160
%
4,203
76.80
36,297
75.22
66,504
77.19
Black or African American Alone
140
2.56
2,434
5.04
4,362
5.06
American Indian and Alaska Native Alone
54
0.99
384
0.80
662
0.77
Asian Alone
16
0.29
1,118
2.32
1,629
1.89
Native Hawaiian and Other Pacific Islander Alone
1
0.02
21
0.04
59
0.07
Some Other Race Alone
912
16.66
6,514
13.50
10,382
12.05
Two or More Races
146
2.67
1,487
3.08
2,562
2.97
2010 Est. Population by Single Race Classification White Alone
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Brokerage Services Approved by the Texas Real Estate Commission for Voluntary Use Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords.
Information About Brokerage Services
B
efore working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License
Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties’ consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker’s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding.
Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensee’s records.
Buyer, Seller, Landlord or Tenant
Date
Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a question or complaint regarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas 78711-2188 or 512-465-3960.
EQUAL HOUSING OP P O RT U N I T Y
01A TREC No. OP-K20 Holliday Fenoglio Fowler
This Offering Memorandum has been prepared by HFF, L.P. for use by a limited number of parties and has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it, and make no guarantee, warranty or representation about it. It is your responsibility to confirm, independently, its accuracy and completeness. All projections have been developed by HFF, L.P., Owner and designated sources, are based upon assumptions relating to the general economy, competition, and other factors beyond the control of Owner, and therefore are subject to variation. No representation is made by HFF, L.P. or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied on as a promise or representation as to the future performance of the property. Although the information contained herein is believed to be correct, Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, HFF, L.P., Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from, the Offering Memorandum or any other written or oral communication transmitted or made available to the recipient.
Presented Exclusively By: COLER YOAKAM Director [email protected] 469.232.1982 JACE HINDERLAND Real Estate Analyst [email protected] 469.232.1925
The Offering Memorandum does not constitute a representation that there has been no change in the business or affairs of the property or Owner since the date of preparation of the Offering Memorandum. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser. Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified prospective investors. Owner and HFF, L.P. each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations to any entity reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel, and any obligations set by Owner thereunder have been satisfied or waived. This Offering Memorandum and the contents, except such information, which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting this Offering Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not photocopy or duplicate it, that you will not disclose this Offering Memorandum or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Owner or HFF, L.P. and that you will use the information in this Offering Memorandum for the sole purpose of evaluating your interest in the property and you will not use the Offering Memorandum or any of the contents in any fashion or manner detrimental to the interest of Owner or HFF, L.P. If you have no interest in the property, please return the Offering Memorandum forthwith.
8401 N. Central Expressway, Suite 700 Dallas, Texas 75225 | USA T. 214.265.0880 | F. 214.265.9564 www.hfflp.com
Holliday Fenoglio Fowler 21
