CHERRY CREEK’S NATIONALLY RECOGNIZED MARKET FUNDAMENTALS

Cherry Creek’s overall office market has averaged 92%+ in occupancy over the last five years and 2024 concluded with an 6.75% vacancy rate. Furthermore, Cherry Creek’s rental rates have increased 80% since 2021 and averaged $72.50/SF FSG at the conclusion of 2024. The Citadel’s current $40.00 /SF net rent is attractively priced especially when considering our $21.00 /SF in CAM and taxes making total occupancy costs 22.9% more affordable than Cherry Creek’s average.

TENANTS WANT TO BE HERE

Averaging 94% occupancy since 2020, the Property withstood the pandemic’s effects and singed 16 new tenants totaling 61,414 SF since the Property was acquired in May 2020. To top it off, 36 renewal leases were signed totaling 117,967 SF bringing total leasing activity over 5+ years to 179,381 SF with both new and existing tenants looking to secure their occupancy in the Property.

STRATEGIC OCCUPANCY WITH SIGNIFICANT TENANT INVESTMENT

Many of the Citadel’s tenants have made personal investments in their spaces to create high-quality environments befitting of a strategic and/or headquarters location. Tract spent nearly $200 /SF with a $75 /SF tenant improvement package and MD2 came out of pocket for an additional $140 /SF above and beyond their $85 /SF in landlord contribution. Prenuvo’s total spend was $650 /SF of which $157 /SF came from the landlord but was offset by a buyout by the previous tenant who terminated their lease early. Investment Trust spent $225 /SF on space improvements of which $115 /SF came from the landlord.

INSTITUTIONAL QUALITY ASSET WITH ECONOMIC UPSIDE

Ownership has migrated all but a few smaller, legacy tenants to net rents and all new deals are also done as net rents which is consistent with the greater Cherry Creek market. To top it off, NOI has grown by 70% since May 2020 representing an 10% CAGR. The weighted average lease term has also moved from ~3 years to 5.0 years today and our average in-place rent is $8.27 /SF or 13.9% below our currently achieved $40 /SF net market rents.

DIVERSIFIED RENT ROLE WITH ANCHOR TENANCY

Today the Property is 96.3% leased to 30 tenants with a 5.2-year weighted average lease term – 34% of which have been tenants for 10+ years.

LOCATION, LOCATION, LOCATION…

The Citadel sits on the scenic Cherry Creek with immediate access via a pedestrian bridge to the adjacent Cherry Creek Shopping Center, Denver’s premier enclosed mall, which is less than a 10-minute walk away. Tenants are attracted to the Cherry Creek North’s adjacency as well as its separation from Cherry Creek North’s construction and congestion which makes The Citadel an “easy to use” property with 360 spaces providing a 2.7 : 1,000 SF parking ratio to accommodate tenants and their visitors.