Allegiance Realty Corporation

CASE STUDY
DISPOSITION PERFORMANCE

PROPERTY Highpoint Towers I and II
8401 & 8415 Datapoint Drive, San Antonio, Texas

The master-planned sister Towers, originally constructed in 1980 and 1981, underwent independent renovations in 2004 and 2006. Acquired from different Institutional Sellers, Tower I from Praedium and Tower II from Principal Life Insurance, the two 10-story office buildings are centrally located to all areas of San Antonio.

TYPE Class B
PORTFOLIO 301,521 total sf
  (153,361sf Tower I & 148,160sf Tower II)
OCCUPANCY Tower I: 85% at Acq. (2006), 88% at Disposition
Tower II: 49% at Acq.(2003) & 91.4% at Disposition
CAPITAL RAISE Tower I & II (Combined)
   76% RIA Sourced
   16% Individual Investors
   8% Employees

The 2003 acquisition of Tower II exceeded original underwriting from Year 1 by surpassing pro forma leasing levels, a reduction of annual Operating Expenses and equally important creating sustainable practices necessary for repeatable results with the 2006 acquisition of Tower I.

Upon stabilization of Tower II (the 2003 acquisition) in concert with the emergence of favorable market conditions, the disposition strategy was launched. During analysis, the opportunistic purchase of Tower I was identified, and with established investor and lending relationships in place, the execution of the second transaction was quickly accomplished. Allegiance capitalized on the successful packaging and sale of the portfolio and ultimately created a greater return for its investors than would have been realized with a single asset disposition.

ACQUISITION DATES August 2006 for Highpoint Tower I
December 2003 for Highpoint Tower II
PURCHASE PRICE $11,400,000 for Highpoint Tower I
$ 5,800,000 for Highpoint Tower II
DISPOSITION DATE January 30, 2007 (Sold as Portfolio)
SALES PRICE $30,000,000
INVESTOR IRR 206% for Highpoint Tower I
47.2% for Highpoint Tower II