Investment Opportunity two medical & commercial office buildings
Genesee Executive Plaza
9333 & 9339 Genesee Avenue i san Diego i CA i 92121
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Exclusive Advisor Colliers International
investment contactS Fred B. C贸rdova, III Senior Vice President Colliers International CA License No 01279582 DIR+1 213 532 3281 fred.cordova@colliers.com
Mark McEwen
Senior Vice President Colliers International CA License No 00894225 Dir +1 858 677 5330 mark.mcewen@colliers.com
Ryan Eddy
Associate Colliers International CA License No 01886196 Dir +1 213 532 3269 ryan.eddy@colliers.com
Medical office Contacts Paul Braun
Senior Vice President Colliers International CA License No 00891709 DIR+1 858 677 5324 paul.braun@colliers.com
Chris Ross
Associate Colliers International CA License No 01469025 DIR +1 858 677 5329 Chris.Ross@colliers.com
LOCAL MARKET KNOWLEDGE contact Tom Mercer
Senior Vice President Colliers International CA License No 01469025 DIR +1 858 677 5388 tom.mercer@colliers.com
project management contact Michael Carson
Senior Vice President Project Management Colliers International DIR +1 213 532 3215 MJCarson@colliers.com
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Colliers Investment Services Group ( “Broker”) exclusive marketing representative of GE Capital (“Seller”), is solely authorized to present this property investment offering (the “Offering”). Prior to submitting an offer to purchase Genesee Executive Plaza, as shown in Exhibit A (the “Property”), interested parties should perform and rely upon their own investigations, analyses, estimates and projections and otherwise satisfy any concerns regarding material aspects of the proposed transaction including, but not limited to, legal, municipal, environmental, operational, seismic, financial and physical issues, and all other matters affecting or pertaining to the Property. The Seller will be offering the Property including all appurtenances and tenant improvements, solely on an “As-Is, With-All-Faults” basis, without any representations or warranties. No person is authorized to make any representations or warranties on behalf of the Seller regarding the Property. Any and all information regarding the Property provided to any interested party by the Seller or Broker including all information contained in the Offering, is provided without any representation or assurance, expressed or implied, regarding the accuracy, completeness or current status of applicability of such information. Each interested party is expected to undertake such reviews and investigations and make such inquiries as such party may believe to be necessary, appropriate or advisable for the purpose of forming a decision to make an offer to acquire the Property.
The material contained herein is confidential and is presented strictly as information for the exclusive use of the prospective purchaser. Receipt and review of this Offering by the prospective purchaser constitutes an agreement not to divulge, share or distribute the information to any other party, except the prospective purchaser’s legal counsel and financial advisors, without the prior specific written authorization of the Seller or Broker. Each prospective purchaser shall also agree to and comply with the provisions of the confidentiality agreement executed by such prospective purchaser prior to receipt of this Offering. This Offering is submitted subject to errors, changes, omissions changes in price, market and other conditions. It contains selected information pertaining to the Property and does not purport to be all-inclusive or to contain all of the information that prospective purchasers may desire. It should be noted that any and all market analyses, estimates and projections contained in this Offering are provided for general reference purposes only and are based on assumptions related to the general economy, competition, real estate market trends, and other factors beyond the control of the Seller or Broker. Such analyses, estimates and projections are therefore subject to material variation, and may not be consistent with the views or assumptions held by other professionals. PHOTOCOPYING OR OTHER DUPLICATION OF THIS OFFERING IS NOT AUTHORIZED
This document/email has been prepared by Colliers International for advertising and general information only. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
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Table of contents SECTION ONE - Executive Summary Offering Overview Investment Summary
4 4
SECTION TWO - Property Overview Site Plans & Property Description Interior Detail & Floor Plans Stacking Plans
9 12 13
SECTION THREE - Market Overview Market Overview Submarket Overview & Amenities Map Competitive Set Sale Comparables Lease Comparables
18 22 23 26 28
SECTION FOUR - Financial Analysis Investment Analysis Combined Buildings Investment Analysis Building 35 Investment Analysis Building 36 Roll Over Chart Replacement Cost
35 39 44 46
SECTION FIVE - Tenancy Tenant Profiles
49
32
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This document has been prepared by Colliers International for advertising and general information only. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
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EXECUTIVE summary
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Executive summary THE OFFERING As the exclusive advisers to Seller, Colliers Investment Services Group is pleased to present for sale Genesee Executive Plaza, located at 9333 & 9339 Genesee Avenue, San Diego, CA. Built in 1984, these twin three-story (above below grade plaza) 80,000 square foot office and medical office buildings are 68% leased. Situated on 3.63 acres at the epicenter of San Diego’s most prestigious location, University Town Center (“UTC”), Genesee Executive Plaza presents a truly unique opportunity to reposition the asset into “UTC’s Premier Health and Professional Services Center”. The campus, which is just blocks away from Scripps and UCSD Medical Center, has recently been approved for an additional 72,500 square feet of medical office. This is an exceptional investment opportunity featuring: • The attractive ambiance of a beautifully master-planned community • Extraordinary nearby amenities • Ample 4.0:1 parking • Prominent identity in UTC • Very high barriers to entry • Easy freeway access to all parts of San Diego Genesee Executive Plaza features a strong transitioning tenant roster with less than 17% tenant rollover through 2014 and 38% of the leases extending through 2016. The Offering provides investors with the opportunity to acquire two unique low rise office buildings in a campus setting that is in a highly desirable location with an extremely strong repositioning opportunity.
INVESTMENT SUMMARY - COMBINED Gross Leasable Area Land Area Net Operating Income Capitalization Rate Occupancy (10/2010) Year Built Parking Spaces
±159,425 Square Feet ±3.63 Acres $1,048,655 8.74% 68.61% 1983 636 spaces (4.0 per 1,000 SF)
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Property information Unique Low-rise Campus Setting Genesee Executive Plaza includes two
attractive three-story (above below grade plaza) 80,000 square foot office buildings situated on 3.63 acres. The Property’s distinctive saw-toothed design features extensive glass lines and a landscaped central plaza which creates a campus setting ideal for repositioning into a health and professional services center. Just a few blocks from UCSD and Scripps Medical Center, the location is perfect for medical oriented tenants and related service providers.
Secured Parking With 4.0:1 parking (41 spaces at grade and 395 spaces on two levels of subterranean parking), the Property offers easy street level parking and drop off access as well secured underground parking. Great Visibility and Access Genesee Executive Plaza enjoys a highly visible presence at the intersection of Genesee Avenue and Executive Drive at the center of UTC. The Property’s location one mile from Interstate 5 and less than a mile from the Interstate 805 makes access to and from anywhere in San Diego County is easy and convenient. San Diego International Airport is only a 15 minute drive away. Exceptional Amenities Genesee Executive Plaza is located just a few blocks from Westfield’s UTC Mall, which includes national retailers such as Nordstrom, Macy’s, Apple, Coach, Anthropologie and Restoration Hardware.Within a mile of the property there are over five hotels with 1,405 rooms. The University City community is home to nearly 63,000 residents and over 26,000 housing units. The resort town of La Jolla with its world renowned beaches is only a few miles to the west.
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Executive summary
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Executive summary investment highlights Significant Discount to Replacement Cost Since the limited space in UTC is almost completely “built-out” there are significant barriers to building new product, driving replacement cost rents well beyond current market rental rates. Replacement costs for new product are estimated to be over $78,000,000 ($487+/- psf), which would require full service rents of more than $55.00+/psf ($4.59 / mo) based on a 9% return and 5% vacancy. Accordingly, Genesee Executive Plaza enjoys a strong competitive position in the market.
Strong Regional Investment Fundamentals San Diego, in particular the master planned community of UTC is one of the strongest and most sought after office investment submarkets in Southern California. In fact, the San Diego market placed 10th in the nation for commercial investments as published in the latest Emerging Trends in Real Estate annual report by Pricewaterhouse Coopers and the Urban Land Institute, including 8th nationally for “Buy” recommendations in the office property sector category. Despite being hit hard by the recession, vacancy rates have leveled off with positive net absorption in 2011 driven by strong demand drivers including health, education, housing, and Federal, State and Local government sectors.
Exceptional Repositioning Opportunity Perhaps the most intriguing
aspect of Genesee Executive Plaza is the opportunity to rebrand the property as “Genesee Plaza: UTC’s Premier Health and Professional Services Center”. The project is currently 68% leased and represents an opportunity to grow the NOI substantially by rebranding and releasing. Colliers has consulted with Gensler & Associates to develop a repositioning strategy that includes a completely new look for the building façade including: • Replacing the spandrel panels • Repainting the mullions • Installing new plaza design elements • New landscaping and pavers • New signage and graphics and lighting on the exterior • Upgrades to the rest rooms and interiors The result transforms the 30 year-old dated green façade into a sleek, modern institutional medical campus with a state of the art identity and mission. This $2.0 million transformation provides dramatic increase to the NOI. P. 4 I genesee executive plaza I offering memorandum
market overview Medical Office Market The UTC health care real estate market is comprised of just over 1.1 million square feet of medical office space. Most of the area’s medical office buildings are low-rise Class ‘B’ buildings completed in the 1990s.
Home to Scripps Memorial Hospital, UC San Diego Thornton Hospital, and VA Hospital, UTC’s access, amenities and surrounding demographics make it perhaps the most thriving of the nine submarkets in San Diego County. Historically, UTC has proven to be extremely stable, with market vacancy averaging approximately 5%.
Desirable Submarket The 4.4 Million SF UTC submarket is the signature location in San Diego. It is a well established institutional office submarket that enjoys a very supportive business environment with strong demand drivers and a highly skilled labor base. Many national and regional tenants have recently located to or expanded within this submarket including Kyocera Wireless, Provide Commerce/ProFlowers, Kratos Defense, Lockheed Martin, US Bankcorp, LPL Financial Services and Sun Microsystems. Central County The Central County of San Diego has been one of the strongest
performing regions of the county even through most of the recent local and national recession. In fact, since second quarter of 2009, we have had eight consecutive quarters of positive net absorption of which nearly 1 million square feet was recorded in 2010. Net absorption totaled 96,927 square feet in the first quarter of 2011 bringing vacancy to 14.2% from the peak of 17% in the second quarter of 2009.
Area Overview Strong Labor Pool and Housing Options UTC and the neighboring communities of La Jolla, Mira Mesa, Clairemont, Carmel Valley, Del Mar, Pacific Beach, and Rancho Santa Fe include a deep supply of housing for all income levels, providing great access to quality, well educated labor and making it a highly desirable place to locate a business for senior executives and owners.
Proximity to La Jolla The La Jolla / University Towne Center, or “UTC” San Diego submarket has experienced the steadiest growth over the past decade and which will continue to witness steady demand for health care services across nearly every specialty – resulting in the highest level of demand for medical office space in greater San Diego. 5
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Executive summary
805
5
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repositioning strategy Colliers consulted with the global architecture, design, planning and consulting firm Gensler to design the re-branding of Genesee Executive Plaza to Genesee Plaza. Our Project Management specialist has been working closely with Gensler architects and Colliers brokers to determine the most effective strategy and vision implementation to create a dramatic uplift in value.
Proposed Repositioning Budget
New Brand Identity Genesee Plaza - UTC’s Premier Health & Professional Center
Building Façade
Create Building Distinction with Consistent Tenant Strategy 9333 Genesee –Professional Office 9339 Genesee - Medical Office
Replace spandrel panels Paint mullions
Site Development Replace brick paver inlays at Courtyard
GP RENT
30.0%
$2.50
GEP RENT 25.0%
$2.00
20.0% GEP VACANCY 15.0% 10.0% GP VACANCY GP VACANCY
$1.00 $0.50
5.0%
$0.00 $
0.0% 2004
2005
2006
2007
2008
2009
2010
Est 2011
Est 2012
Est 2013
YEARS GP FSG Rent
GEP FSG Rent
GP Vacancy % y%
GEP Vacancy % y%
$15,000
Paint handrails and directories
$10,000
Enhanced landscaping at streets
$50,000
Re-clad monument sign
$20,000
Site graphics and ‘way finding’
$25,000 $80,000 $300,000
35.0%
$3.00
$1.50
$100,000
Replace brick paver bandings at front and rear plaza
Site lighting
Interior Public Access VACANCY RATEE VACA
MONTHLY R ATE PSF THLY RENTAL RATE PS
$3.50
2003
$60,000 $1,000,000
Projected Rents and Vacancy for for Genesee Executive Plaza (“GEP”) and Genesee Plaza “GP”)
2002
$60,000
Design element plaza entry
Modern Exterior & Finish New building facade New Landscaping New “Way-finding” Signage New Amenities – Front Courtyard
2001
$880,000
Public restrooms Garage paint, graphics and lighting
$96,000 $98,000 $194,000
Subtotal
$1,494,000
Contractor GC’s, OH/P
$149,400
Estimating Contingency
$149,400
Estimating Soft Costs
$194,220
Total Estimate
$1,987,020
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9333 Genesee
9333
Distinctive features • Outstanding UTC Location • Low-rise Campus Setting • Exposure to Genesee Avenue • Secured Subterranean Parking (4:1) • Extensive Glass Lines • Proximity to Westfield UTC • Easy Freeway Access to 5 & 805 Freeways Tenant strategies • Focused Office Tenancy(Medical, Research, Tech) • Flexible Floor Plates • Competitive Rental Rates and TI Allowances Target Tenants • Complimentary Healthcare-Related Office Tenants • Location-Driven Professional Office Users
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repositioning strategy 9339 Genesee Distinctive features • Outstanding UTC Location • Proximity to Scripps and UCSD Hospitals • Courtyard Building • EMS certified gurney sized elevators • Grade-Level Patient Parking • Extensive Glass Lines • Proximity to Westfield UTC • Easy Freeway Access to 5 & 805 Freeways Tenant Strategies • Medical Focused Re-Tenanting • Flexible Floor Plates / High BTE Submarket • Competitive starting base rents and TI Allowances
9339
Target Tenants • Scripps- & UCSD-Affiliated Physicians • Fee-For-Service Practices • Surgical & Elective Procedure Physicians
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This document has been prepared by Colliers International for advertising and general information only. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
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property overview
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PROPERTY overview
SITE PLAN & Combined DESCRIPTION Property Name:
Genesee Executive Plaza
Address:
9333 & 9339 Genesee Ave. San Diego, CA
Submarket:
University Town Center (“UTC”)
Number of Buildings
2
Zoning: APN
345-080-11
Occupancy:
68.61%
Year Built
1984
FAR Total Leasable Building 159,425 Rentable SF Area: 316,246 / 3.36 Ac
Tax Rate:
1.1015%
Parking Spaces:
636 surface spaces (4.01 : 1,000 sf)
Genesee Avenue
Total Land Area:
Executive Drive P. 13 I genesee executive plaza I offering memorandum
Property overview CONSTRUCTION DETAIL Foundation:
Concrete slab on grade with concrete pad footings at interior columns; concrete block foundation walls with concrete spread footings at perimeter; reinforced concrete shear walls.
Structure:
Below Grade: Reinforced concrete columns with reinforced structural concrete floor slabs. Above Grade: structural steel frame with concrete filled, steel decking.
Exterior Walls:
Aluminum curtain wall construction with glazed vision panels and glass spandrel panels.
Roof:
Flat roof with internal drains.
Floors:
One floors below grade; sub-grade plaza level, three floors above grade.
Heating and Cooling:
Central system with boiler, closed circuit evaporative coolers with water source heat pumps.
Fire Protection:
Wet pipe, automatic sprinkler systems with flow switches, central alarm panel, illuminated exit signs, battery backup light fixtures, fire extinguishers located throughout interior spaces. Stairwells are rated exit enclosures with drywall finish and fire rated doors and hardware.
Electrical Service:
SDG & E
Gas:
SDG & E
Elevators:
Four hydraulic passenger elevators, 3,000 pound capacity, manufactured by Otis Elevator Company. Elevators are finished with ceramic tile floors, stainless steel pan ceilings, pin spot lighting, wood and stainless steel panel wall finish and a glass wall at rear of cab with a view into exterior courtyard.
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PROPERTY description INTERIOR DETAIL Lobby:
Carpet and ceramic tile floors, painted sheetrock and suspended acoustical tile ceilings and painted sheetrock walls.
Common Areas: Carpeted floors, painted sheetrock and suspended acoustical tile ceilings and painted sheetrock walls. On-site Amenities:
Landscaped exterior courtyard between buildings, with water feature and public seating.
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Stairwells:
Six sets of steel framed stairs with concrete filled metal pan treads and metal handrails.
Rest rooms:
Rest rooms are finished with ceramic tile floors and wainscots, painted sheetrock and vinyl wall covering above wainscot, painted sheetrock ceilings, painted floor mounted toilet partitions and stone counters. Men’s and women’s rest rooms are located adjacent to elevator lobbies on each tenant floor.
Property overview Subterranean Parking Level 2
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Backup Generator Trash
SUITE #110
Elec. Meter Rm.
SUITE #PL15 Elev Elev
n
Me
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Elevator Lobby
Elev
Me
SUITE #100
Wo m
Parking
Elevator Lobby Wo m
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SUITE #170
SUITE #PL1
SUITE #150
SUITE #220
9333 Genesee Avenue - Plaza Level
Elev
Me
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Wo m
SUITE #300
en Elec
Elevator Lobby
Elev
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Elev
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SUITE #200
9333 Genesee Avenue - 1stFloor
Elev
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SUITE #160
SUITE #180
Parking
SUITE #210
Elev
Tel./ Eqpt. Rm.
Wo m
en
Tele.
SUITE #250
SUITE #260
SUITE #350
SUITE #270
9333 Genesee Avenue 2nd Floor P. 17 I genesee executive plaza I offering memorandum
Genesee Avenue - 3rd Floor
Floor plans 9339 Genesee Avenue - Plaza Level
9339 Genesee Avenue - 1stFloor Planter
Planter Planter Planter
SUITE #135
Parking
SUITE #100
SUITE #130
SUITE #P39
Parking
Wo m
Wo m
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Elev
Elev
Elevator Lobby
SUITE #150
en
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Elevator Lobby
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SUITE #P39
Building Storage
9339 Genesee Avenue 2nd Floor
Mechanical Room
SUITE #125
9339 Genesee Avenue - 3rd Floor SUITE #350
SUITE #240
Property Management Office
SUITE #250 SUITE #310
SUITE #260
Elec Rm.
SUITE #270
Wo m
Me
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Elev
Elev
Elevator Lobby
Wo m
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Elevator Lobby Elev
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SUITE #200 SUITE #320
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BUILDING 35 stacking plan
300
Western Cancer Center 13,366 sf Expires 6/30/17
350
Scirex CT 10,985 sf Expires 7/31/18
200
UC Regents 5,573 sf Expires 3/31/12
210
UC Regents 2,335 sf Expires 5/30/12
250
Erik Austin 1,520 sf Expires 9/30/12
220 260
Sunset Parking Services 2,685 sf Expires 8/1/16 The NPD Group 5,826 sf Expires 12/31/15
270
350
300
270
260
200 250
Vacant 4,850 sf 220
180
100 150 170
Vacant 5,264 sf Physiotherapy Associates 3,103 sf Expires 5/31/16 Scripps Health 7,119 sf Expires 2/29/16
110
Oliva, Goddard & Wright 5,309 sf Expires 11/14/14
160
FedEx Kinkos 1,707 sf Expires 4/1/12
180
Unilab Corporation 1,299 sf Expires 12/31/13
150
160 170
100
110
PL2
P15
Green Light Cafe 826 sf Expires 1/31/18 P15
EXPIRATION SCHEDULE / CODE
VACANT 31.8%
Year 1 10.9%
Year 2 0.8%
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Year 3 3.3%
Year 4 12.9%
Year 5 14.5%
Year 6 16.5%
Year 7 6.9%
Year 8 0.0%
Year 9 2.3%
Year 10 0.0%
Stacking plan 300
Cosmetic Laser Dermatology 11,091 sf Expires 8/31/17
310
320
350
200
IGO Medical Group 15,267 sf Expires 8/31/17
240
250 270
Vacant 1,895 sf
310 300
Vacant 3,198 sf Expires 12/31/11
Vantage Partners 1,420 sf Expires 9/30/1
Vacant 7,434 sf
260
Vacant 2,607 sf
Gentle Dental Service Corporation 3,424 sf Expires9/30/20
320
240 250
Vacant 2,113 sf
200
260 270
135
100 125
Plaza Research Corporation 6,538 sf Expires 2/28/17
100
110
Property Management Office 305 sf
130 150
Vacant 4,145 sf
130
Vacant 7,228 sf 125
150
Dr. Flowers Vision Institute 3,634 sf Expires 4/28/16
135
Vacant 1,814 sf
110 P39
P39
Dr. John Alexander 6,287 sf Expires 9/30/12 P39
EXPIRATION SCHEDULE / CODE
VACANT 31.8%
Year 1 10.9%
Year 2 0.8%
Year 3 3.3%
Year 4 12.9%
Year 5 14.5%
Year 6 16.5%
Year 7 6.9%
Year 8 0.0%
Year 9 2.3%
Year 10 0.0%
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This document has been prepared by Colliers International for advertising and general information only. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
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area & market overview
5
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RANCHO SANTA FE
SOLANA BEACH
RANCHO BERNARDO
AREA description 56
DEL MAR CARMEL VALLEY
TORREY PINES
POWAY MIRA MESA SCRIPPS RANCH
SORRENTO MIRAMAR MESA UTC SANTEE
805
LA JOLLA
67
52
KEARNY MESA 5 CLAIREMONT 125
PACIFIC BEACH
EL CAJON
MISSION VALLEY
163
8
15
LA MESA
94
POINT LOMA
LEMON SPRING GROVE VALLEY
DOWNTOWN CORONADO NATIONAL CITY 54 P. 23 I genesee executive plaza I offering memorandum
75
CHULA VISTA
54
Area overview Historical SAN DIEGO COUNTY San Diego County is the south-westernmost county in California. It occupies of 4,526 square miles with approximately 70 miles of coastline. Spaniards settled the San Diego County area in 1769 through the founding of Mission San Diego de Alcala (in Old Town San Diego) and Mission San Luis Rey de Francia in 1798 (in Oceanside). San Diego experienced a population boom during World War II when the U.S. Pacific Fleet was relocated from Pearl Harbor, becoming a key base of operations for the Marine Corp and the Navy. Since WWII, San Diego has remained the base of operations of numerous defense contractors that fuel one of the largest industrial sectors of the local economy. Some of the largest local defense employers include General Dynamics / NASSCO, Northrop Grumman, and SPAWAR. The end of the cold war brought a significant reduction in the defense industry including the BRAC closure of the Naval Training Center (NTC) in Point Loma and the General Dynamics facility west of SR163. The retraining and utilization of high-skilled and high-tech former defense workers during this period created a substantial workforce for companies in the communications, software, computer and electronic manufacturing industries. The defense manufacturing sector still remains a large proportion of the San Diego workforce, but the employment base has become more diversified. San Diego County has the second largest biotechnology sector in the country. Over 12.3 million square feet of wet lab space is concentrated primarily in Torrey Pines, Sorrento Mesa, Sorrento Valley, UTC, Carlsbad and Oceanside. This sector benefits from close-ties with UCSD, The Scripps Research Institute (TSRI), The Salk Institute, and The Burnham Institute.
San Diego has one of the finest climates in the country with temperatures in the mid70s year-round. The temperate weather coupled with incredible destinations such as the San Diego Zoo and Wild Animal Park, SeaWorld, Legoland, beautiful public beaches, and world class championship golf courses make San Diego a top tourist location. San Diego transportation is concentrated around a highway network that includes four interstate and numerous state highways. San Diego International Airport / Lindbergh Field is the primary airport serving the region’s business, tourist, and freight traffic. Amtrak rail service connects San Diego with Los Angeles and coastal cities as far north as San Luis Obispo, and 3 county light-rail lines provide daily mass transit service to coastal cities, north county, and central San Diego and south bay.
SAN DIEGO COUNTY today San Diego is the second most populous county in California and ranks fifth in the nation with over 3.17 million residents. By 2020, the population is expected to grow by 11.4% to nearly 3.54 million residents. The San Diego County unemployment rate decreased by 0.5% in February, to reach the current rate of 10.6%. The unemployment rates of California and the nation stand at 12.8% and 10.4%, respectively. San Diego is in the early stages of an economic recovery that took hold in 2010. In 2009, San Diego’s gross metro product (GMP) had negative growth (-2.0%) for the first time since 1991: $139.2 billion in 2009 compared to $142.0 billion in 2008. However, Moody’s Economy.com is forecasting a growth rate of 3.2% in 2010 equating $143.6 billion. National, state, and local government agencies are the largest employers in the county. The University of California and the US Navy each employ over 20,000 people. However, San Diego has several private companies that also employ thousands of employees each. P. 24 I genesee executive plaza I offering memorandum
MARKET overview UTC Market Overview The UTC office submarket is one of fifteen submarkets in the Central County market. Core UTC office submarket is comprised of nearly 4.4 million square feet of space. Approximately 3.1 million square feet is concentrated in Class A space while about 1.0 million square feet and 0.3 million square feet existing in Class B and Class C space respectively. Demand in the UTC office has been relatively stable over the past year. In the first quarter of 2011, a positive net absorption of only 6,932 square feet was recorded across all classes. Class B space posts the highest rate of all classes at 37.0% while Class A stands at 23.9%. Class C vacancy resided 5.7% rate at the end of first quarter. Overall vacancy among all classes stands at 25.5%, of which 2.7% is attributed to sublease space. There has not been any new development in UTC over the past few years. The last significant project completed was the 300,664-square-foot La Jolla Commons Office Tower on Executive Drive. Hines developed and completed this Class A office building in the fourth quarter of 2008. Nothing has been completed since and there are no projects currently under construction. Proposed future construction includes a 100,000-square-foot Class B office building in the Eastgate Technology Center and a 75,000-square-foot Class A Phase IV building in the Bridge Pointe Corporate Center. Rental rates have been trending downward for the last three and half years. Since the highest point in third quarter of 2007, the overall office average asking rental rate has declined by 37% and stood at a full service rate of $2.42 per SF at the end of first quarter 2011. Over the same period, the Class A rate dropped by 37% as well and stood at $2.46 per SF. UTC rates are 13% higher than the county average of $2.14 per SF. Early indications of asking rental rate increases appear to be taking hold and as of second quarter and will increase steadily throughout 2011. The professional services employment sector has had the largest increase in employment county-wide over the past year (6.3% as of March). This directly benefits UTC – one of the largest concentrations of this employment sector. Competitive rental rates and premium quality location has been attracting numerous Central San Diego tenants from Mission Valley, Kearny Mesa and Downtown over the past couple of years. For the foreseeable future, we will see many more tenants contemplating and executing relocation and expansion plans into the area between the 805, 5 56 freeways, locally referred to as San Diego’s “Golden Triangle”. P. 25 I genesee executive plaza I offering memorandum
Market overview Chart on Central County?
The Central County of San Diego has been one of the strongest performing regions of the county even through most of the recent local and national recession. In fact, since second quarter of 2009, we have had eight consecutive quarters of positive net absorption of which nearly 1 million square feet was recorded in 2010. Net absorption totaled 96,927 square feet in the first quarter of 2011 bringing vacancy to 14.2%. Central County’s vacancy rate is well below the county-wide average of 16.4%.
$4.50
Strong net absorption was recorded in Carmel Valley (82,927 SF), Mission Valley (58,669 SF) and Sorrento Mesa (41,570 SF) during the first quarter. This brought their respective vacancy rates to 16.5% (from 18.5% in Q4 2010), 17.4% (from 18.5%) and 9.9% (from 10.3%). Although Kearny Mesa posted minor negative absorption of 17,258 square feet in first quarter, vacancy still remained at a relatively low rate of 11.3%. Rental rates overall for Central County remain on par with the county as a whole. The overall average “full service” asking rental rate stood at $2.13 per SF compared to the county average of $2.14 per SF. Carmel Valley ($3.05) is the only submarket in Central County that posts a comparably higher average rate than UTC. For the remainder of 2011 and well into 2012, Central County will continue to lead the county in demand as space continues to lease up to the recovering professional services and technology sectors.
San Diego County Medical Office San Diego County boasts an extremely stable health care environment, offering an extensive array of services to meet the needs and desires of its residents. It is home to 28 hospitals, with five dominant health systems that operate a majority of these hospitals and that occupy a significant share of the county’s health care real estate: Scripps Health, Sharp HealthCare, UC San Diego, Kaiser Permanente and Palomar Pomerado Hospital.
$3.95 $3 95
$4.00 $3.25
$3.50
R Rental Rate
$2.50
$2.30
4.8%
$3.25
9.1%
$4.13
$3 90 $3.90 10.2% $3.47 $3.61 9.4%
$3.83 $
9.0% 8.0% 7.0%
7.5% 6.0%
6.5%
5.9%
5.3%
11.0% 10.0%
8.5%
7.0% 7.0% 6.2%
$2.00 $1.50
$2.85 $ $2.75
$2.80
$3 00 $3.00
$3.10
$4.07 $4.15
6.0% 5.0%
4.8%
4.0%
Va Vacancy Rate
Central County Market Overview
3.0%
$1.00
3.0%
2.0%
$0.50
1.0%
$0.00
0.0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Years FSG Rent
Vacancy %
Est Est Est 2011 2012 2013
FSG Rent Trendline
There are nine major health care submarkets in San Diego County comprised of over 9.9 million square feet of medical office space. As a whole, the county saw a vacancy factor of 9.9% at the end of 1st quarter 2011, recovering significantly from its peak of 12.2% a year prior. Current weighted average gross lease rates are $2.62/sf. Like the rest of the nation, San Diego County demand drivers have been significant over the past 10 years – drivers which are expected to be magnified many times over due to the aging baby boomer population, health care reform, strong hospital and health systems, technology advances, and significant barriers to entry. It is further aided by a dynamic and well-balanced demand for medical services, ranging from the traditional primary care and acute care services to the continuously evolving and broad spectrum of cosmetic and other elective procedures. The submarket that has experienced the most steady growth over the past decade and which will continue to witness steady demand for health care services across nearly every specialty – resulting in the highest level of demand for medical office space – is La Jolla / University Towne Center, or “UTC”.
P. 26 I genesee executive plaza I offering memorandum
La Jolla
3
5
2
Hw y
5
e es n Ge
5
e. e Av
Ea
st
Dr
Dr.
1
utive
J
. e Dr
g Villa
ial udic
4
nty
Exec
olla
Towne Center Dr.
La J
5 Rege nts Rd 5 4 6 2 2 Genesee Ave. 6 1 . 1 l Dr
e
Nob
4
6 3
Cou
3
5
S21
UCSD
ga
te
M
all
805
1
UCSD Thornton Hospital Moores UCSD Cancer Center, Shilley Eye Center
11
UTC Westfield Shopping Mall Nordstrom, Macy’s, William Sonoma, Sephora, Sears, Pottery Barn, Apple Store
1
Embassy Suites San Diego
2
Science Research Park La Jolla Institute for Allergy & Immunology
2
Costa Verde Center Bristol Farms, Peet’s Coffee, Coco’s, Starbucks,
2
San Diego Marriott La Jolla
3
San Diego VA Hospital
3
La Jolla Village Square DSW, Petsmart, CPK, Trader Joe’s, Ralphs, Islands, Starbucks
3
Marriott Execustay Towers
4
Scripps Green Hospital
4
La Jolla Village Shopping Center Whole Foods, CVS, Peet’s Coffee, BJ’s Brewhouse
44
Marriott Execustay Apartments
5
Scripps Memorial Hospital La Jolla Cosmetic Surgery Centre, Scripps Diabetes Institute, La Jolla Orthopedic Surgery, Associated Eye Surgeon’s Medical
5
Vons, Starbucks
5
US Suites at Regents La Jolla Hotel
6
UCSD School of Medicine, School of Pharmacy, Center for Molecular Genetics
6
Pueblo Bonito Hotels & Resorts
P. 27 I genesee executive plaza I offering memorandum
market overview UTC Medical Office Submarket
Monthly Rent ly Rent
The UTC health care real estate market is comprised of just over 1.1 million UTC Medical Office Historic Rent UTC Medical Office Historical Rents square feet of medical office space. Most of the area’s medical office buildings $5.50 are low-rise Class ‘B’ buildings completed in the 1990s. In contrast with most $5.00 other submarkets in San Diego County, UTC has a dynamic mix of on-campus $4.15 $4.50 $3.95 $4.07 $3.90 medical buildings, off-campus medical buildings, and well located office/medical $4.00 $3.47 buildings – those containing a mix of both traditional office tenants as well as $3.25 $3.10 $3.25 $3.50 $2.85 $2 85 $2.75 health care providers. $2.80 $2 80 $2 75 $3.00 $2.50
FSG
$2.30
Home to Scripps Memorial Hospital, UC San Diego Thornton Hospital, and VA $2.00 Hospital, UTC’s access, amenities and surrounding demographics make it perhaps $1.50 the most thriving – and certainly the “healthiest” – of the nine submarkets in $1.00 San Diego County. Historically, UTC has proven to be extremely stable, never 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Est 2011 Est 2012 exceeding 9.3% vacancy at any time between 1st Quarter 2000 and 4th Quarter 2008 and hitting a low of 3.4% in 2007. Only in 2009 did vacancy exceed 10%. At the close of 1st Quarter 2011, its vacancy factor had recovered to 9.4%, or about 105,000 square feet of vacant space. A large portion of this vacancy SECOND CHART???? stems from a recently completed medical office building as well as a recently $4.50 11.0% approved increase in allowable medical square footage at Genesee Executive $4.13 $4.07 $4.15 $3.95 $3.90 Plaza. 10.0% $3.83 $4.00 $3.10 $2.85
$2.80
$3.00
Rental Rate
There is currently no new construction in the greater UTC area, and outside of one medical office building on the Scripps campus, industry leaders expect that to be the case for years to come due to zoning constraints and lack of developable land. In the past 18 months, UTC has witnessed over 45,000 SF of positive net absorption (over 62,000 SF of gross absorption). Colliers International’s market experts predict that vacancy levels will approach 5% in the next 36 months. Looking at the delivery of health care in the area, Scripps Memorial Hospital and UCSD Thornton Hospital continue to thrive. They have both begun major short- and long-term expansion projects (see Exhibits __ and __). These two hospitals are not only regionally but nationally recognized leaders in health care, solidifying UTC as one of the most attractive areas to practice medicine and making its real estate among the most desirable to own.
$3.25
$3.25
9.1%
$3.47 9.4%
$3.61
9.0% 8.0%
8.5%
$2.75
7.0%
7.5% $2.50
7.0% 7.0%
$2.30
6.5%
6.2% $2.00
6.0%
5.9%
5.0%
5.3% 4.8%
6.0%
4.8%
4.0%
$1.50
Vacancy Rate
10.2%
$3.50
3.0% $1.00
3.0%
2.0%
$0.50
1.0%
$0.00
0.0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Years FSG Rent
Vacancy %
Est Est Est 2011 2012 2013
FSG Rent Trendline
P. 28 I genesee executive plaza I offering memorandum
Ren
1 2 3 4 5 6
7
P. 29 I genesee executive plaza I offering memorandum
Competitive set
8
9 10 P. 30 I genesee executive plaza I offering memorandum
P. 31 I genesee executive plaza I offering memorandum
Sale comparables
Property Name Property Address
1
City, State
Construction Class Construction Quality Condition Number of Stories
4
5
2
3
4
Genesee Executive Plaza
Campus Pointe
Liberty Station
Torrey Reserve West
Horizon Tech Center
9333 & 9339 Genesee Avenue
10300 Campus Point Dr
2305 Historic Decatur Rd
3390 Carmel Mountain Rd.
Horizon Tech Center
San Diego, CA
San Diego, CA
San Diego, CA
San Diego, CA
San Diego
SF
SF
CTU
CTU
SF
B
B
A
A
A
Excellent
Good
Good
Excellent
Good
Good
Excellent
Excellent
Excellent
Excellent
3
2
3
2
2
1983
1979/2009
2009
2000
2008
GBA
159,425
373,070
105,061
118,030
157,884
RBA
159,425
373,070
105,061
118,030
157,884 501,811
Year Built
3
1
PROPERTY DATA Building Type
2
Subject
SITE DATA Site Area Usable SF
369,389
1,814,710
198,995
309,276
Site Area Usable AC
8.48
41.66
4.57
7.10
11.52
43.16%
20.56%
52.80%
38.16%
31.46% 80%
Coverage (GBA / Land)
FINANCIAL DATA Occupancy at Sale
NA
100%
85%
95%
NOI
NA
N/A
N/A
N/A
N/A
Cap Rate
NA
N/A
7.6%
N/A
9.78%
Sale Date
NA
Dec-10
Nov-10
Sep-10
Jun-10
Sale Price
NA
$113,500,000
$30,900,000
$27,300,000
$40,500,000
Sale Price PSF
NA
$304.23
$294.11
$231.30
$256.52
NOTES
6
Comp 1: LEED certified Life science building in the UTC, 66% renovated in 2009, 61% leased at close. Comp 2: New Gold LEED certified building, 95% leased at close. Comp 3: Three Building sale to private REIT. Comp 4: Three building sale leased to a single tenant with partial termination clauses in 24 to 26 months. Likely Market Value: The sales comparables are from office buildings in the greater San Diego area that are superior given their minimal vacancy and age of construction. Based on this activity, we reduced the likely market value by 10% from the weighted average to account for the vacancy and age of the buildings.
P. 32 I genesee executive plaza I offering memorandum
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P. 33 I genesee executive plaza I offering memorandum
Lease comparables
Subject
1
3
4
5
Genesee Executive Plza
Chancellor Park
Regents Medical Center
Chancellor Park
Regents Square I
Kilroy University Cntr
Address
9333 & 9339 Genesee
4520 Executive Dr
4150 Regents Park Row
4520 Executive Dr
4275 Executive Dr.
4690 Executive Dr.
San Diego, CA
San Diego, CA
San Diego, CA
San Diego, CA
San Diego, CA
San Diego, CA
SF
SF
SF
SF
SF
SF
City / State PROPERTY DATA Construction Class
B
A
B
A
A
B
Excellent
Excellent
Excellent
Excellent
Excellent
Excellent
Good
Good
Good
Good
Good
Excellent
3
4
3
4
11
2
1983
1988
1988
1988
1984
1998
Gross Building Area
159,425
84,176
66,313
126,043
164,636
47,324
Occupancy w lease
159,425
77%
86%
62%
83%
88%
Leased Premises
1,776
4,650
4,675
5,245
6,733
Mo. Gross Lease Rate PSF
$2.85
$3.47
$3.00
$3.93
$2.45
Expenses PSF
$1.00
$1.17
$1.00
$1.05
$1.00
Monthly NNN Rent PSF
$1.85
$2.30
$2.00
$2.88
$1.45
Date Signed
Sep-10
Jan-10
Oct-09
Nov-10
Nov-10
Lease Term (Years)
Sep-11
Dec-11
Oct-19
Nov-13
Oct-15
Options
N/A
N/A
N/A
N/A
2 Yrs.
Terms
See Notes
See Notes
See Notes
See Notes
See Notes
$50.00
$45.00
$50.00
$0.00
$0.00
See Notes
See Notes
See Notes
See Notes
See Notes
Construction Quality Condition Number of Stories
3
2
Property Name
Building Type
2
1
Year Built
LEASE DATA
4
5 6
TI Allowance Comments (see notes)
P. 34 I genesee executive plaza I offering memorandum
This document has been prepared by Colliers International for advertising and general information only. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
P. 35 I genesee executive plaza I offering memorandum
35
Financial analysis
P. 36 I genesee executive plaza I offering memorandum
Genesee Executive Plaza Investment Analysis Assumptions General 1.0 1.1 1.2
Term of Analysis Start Date Term
2.0
Rentable Square Footage
2.1
Rentable Square Footage
Market
August 2011 10 Year(s)
Occupied 111,889
Total 159,425
% 70%
Monthly FSG Per SF Medical Office > 4,000 SF $3.10 Medical Office < 4,000 SF $3.25 Office > 5,000 SF $2.25 Office < 5,000 SF $2.35 Plaza Level Office $2.25 Office suites have 1 month of free rent per lease year Medical Office suites have 1/2 month of free rent per lease year Weighted-Average $2.67 Annual Escalations for New Leases
Annual per SF $37.20 $39.00 $27.00 $28.20 $27.00
FSG Market Lease Rates 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8
FSG Rental Rate
Future Leases Medical Lease Term Office Lease Term > 5K SF Office Lease Term < 5K SF Downtime between Leases
10 Year(s) 5 Year(s) 3 Year(s) 6 Month(s)
General Vacancy & Retention Ratio 5.0 5.1
General Vacancy / Credit Loss (Contingency) Credit Loss
6.0 6.1 6.2
Retention Ratio Medical Suites Office Suites
3.0%
90.0% 75.0% Capital Costs
7.0 7.1 7.2 7.2
Tenant Improvements per SF New Tenants Renewals Current Vacant Offices
8.0 8.1 8.2
Leasing Commissions New Tenants Renewals
Market Rental Escalations
7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11
Year 1 - Jul-2012 Year 2 - Jul-2013 Year 3 - Jul-2014 Year 4 - Jul-2015 Year 5 - Jul-2016 Year 6 - Jul-2017 Year 7 - Jul-2018 Year 8 - Jul-2019 Year 9 - Jul-2020 Year 10 - Jul-2021 Year 11 - Jul-2022
Examples % 4.0% 6.0% 8.0% 10.0% 8.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Per Year $33.30 $35.30 $38.12 $41.93 $45.29 $46.64 $48.04 $49.48 $50.97 $52.50 $54.07
$4.07
$649,000
PSF/Yr $0.59 $0.10 $0.17 $0.76 $0.29 $0.45 $1.15 $2.96 $4.01 $0.80 $0.72
Total $94,000 $16,000 $27,000 $121,000 $47,000 $72,000 $184,000 $472,000 $639,000 $128,000 $114,000
Other Income 8.0
Other Income
8.1
Parking Income (1)
$32.02 3.0%
Future Leases 4.0 4.1 4.2 4.3 4.4
7.0
Operating Expenses 9.0
Base Operating Expenses
9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11
HVAC Elevator Landscaping R&M Insurance On Site Salary Cleaning Utilities Property Taxes (2) Property Management Fee (3) Parking Expense
% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 2.0% 3.0% 3.0%
9.12 Sub-Total 9.13 Annual Escalations
$12.01
$1,914,000 3.0%
10.0 Annual Capital Expenses Medical Suites $50.00 $15.00
Office Suites $20.00 $10.00 $40.00
6.0% 3.0%
PSF $0.31 $14.82
10.1 Capital Reserves 10.2 Renovation Cost
Total $49,000 $2,363,000
Residual 11.0 Value Calculation Information 11.1 Terminal Cost of Sale 11.2 Terminal Cap Rate
1.25% 6.75%
Notes (1) Need Information from Trigild and GE. (2) (3)
Real Estate Taxes: Ad Valorem = Tax rate is 1.1015%, 2010 taxes are $627,685. 2010 Direct Assessments are $139.98. Grown annually at 2.0% Inflation. Management Fee: 3.0% of Effective Gross Revenue.
P. 37 I genesee executive plaza I offering memorandum
37
9333 Genesee Ave UND 5-23-11 DRAFT.xlsx - Assumptions OM
P
Financial analysis Genesee Executive Plaza Leveraged Cash Flow Year 1 PSF
Year Ending:
Year 1 Jul-2012
Year 2 Jul-2013
Year 3 Jul-2014
Year 4 Jul-2015
Year 5 Jul-2016
Year 6 Jul-2017
Year 7 Jul-2018
Year 8 Jul-2019
Year 9 Jul-2020
Year 10 Jul-2021
Year 11 Jul-2022
REVENUE RENT Potential Rental Revenue Absorption & Turnover Vacancy Base Rent Abatements Other Income Parking Income Subtotal: Rent Rent - Per SF RECOVERIES Expense Reimbursements
$24.82 ($0.42) ($1.28) $0.42 $4.07 $27.62
$3,957,388 (66,167) (204,137) 67,115 648,936
$5,202,136 (26,931) (487,075) 69,128 818,721
$5,851,886 (7,269) (89,642) 71,201 906,206
$5,990,602 (46,215) 0 73,338 937,857
$6,256,351 (154,913) 0 75,537 965,992
$6,593,831 (153,123) 0 77,804 994,972
$7,168,175 (246,153) 0 80,137 1,024,821
$7,343,216 (177,021) 0 82,542 1,055,566
$7,565,245 (70,630) 0 85,018 1,087,233
$7,848,662 (139,965) 0 87,568 1,119,850
$8,149,513 (194,203) 0 90,195 1,153,446
$4,403,135 $2.30
$5,575,979 $2.91
$6,732,382 $3.52
$6,955,582 $3.64
$7,142,967 $3.73
$7,513,484 $3.93
$8,026,980 $4.20
$8,304,303 $4.34
$8,666,866 $4.53
$8,916,115 $4.66
$9,198,951 $4.81
$0.04
$6,863
$43,894
$97,044
$141,310
$164,944
$179,673
$139,561
$174,413
$226,366
$262,913
$268,468
Subtotal: Recoveries
$0.04
$6,863
$43,894
$97,044
$141,310
$164,944
$179,673
$139,561
$174,413
$226,366
$262,913
$268,468
Gross Rental Income:
$27.66
$4,409,998
$5,619,873
$6,829,426
$7,096,892
$7,307,911
$7,693,157
$8,166,541
$8,478,716
$8,893,232
$9,179,028
$9,467,419
Losses & Contingencies Credit Loss / Vacancy
($0.83)
($132,300)
($168,596)
($204,883)
($212,907)
($219,237)
($230,795)
($244,996)
($254,361)
($266,797)
($275,371)
($284,023)
Subtotal: Losses & Contingencies
($0.83)
($132,300)
($168,596)
($204,883)
($212,907)
($219,237)
($230,795)
($244,996)
($254,361)
($266,797)
($275,371)
($284,023)
TOTAL REVENUE
$26.83
Revenue - Per SF
$4,277,698
$5,451,277
$6,624,543
$6,883,985
$7,088,674
$7,462,362
$7,921,545
$8,224,355
$8,626,435
$8,903,657
$9,183,396
$2.24
$2.85
$3.46
$3.60
$3.71
$3.90
$4.14
$4.30
$4.51
$4.65
$4.80
OPERATING EXPENSES EXPENSES Operating Expenses
($12.01)
($1,914,279)
($2,023,012)
($2,118,501)
($2,178,009)
($2,236,511)
($2,301,515)
($2,370,560)
($2,436,434)
($2,506,841)
($2,575,110)
($2,645,101)
Subtotal: Expenses Operating Expenses - Per SF
($12.01)
($1,914,279) ($1.00)
($2,023,012) ($1.06)
($2,118,501) ($1.11)
($2,178,009) ($1.14)
($2,236,511) ($1.17)
($2,301,515) ($1.20)
($2,370,560) ($1.24)
($2,436,434) ($1.27)
($2,506,841) ($1.31)
($2,575,110) ($1.35)
($2,645,101) ($1.38)
NET OPERATING INCOME
$14.82
$2,363,419
$3,428,265
$4,506,042
$4,705,976
$4,852,163
$5,160,847
$5,550,985
$5,787,921
$6,119,594
$6,328,547
$6,538,295
Capitalization Rate NOI - Per SF
4.38% $1.24
6.35% $1.79
8.34% $2.36
8.71% $2.46
8.99% $2.54
9.56% $2.70
10.28% $2.90
10.72% $3.03
11.33% $3.20
11.72% $3.31
CAPITAL COSTS Capital Costs
($22.43)
($3,576,461)
($1,576,896)
($329,793)
($413,268)
($651,101)
($451,249)
($1,934,492)
($650,223)
($288,973)
($642,622)
Subtotal: Capital
($22.43)
($3,576,461)
($1,576,896)
($329,793)
($413,268)
($651,101)
($451,249)
($1,934,492)
($650,223)
($288,973)
($642,622)
UNLEVERAGED NET CASH FLOW
($7.61)
($1,213,042)
9333 Genesee Ave UND 5-23-11 DRAFT.xlsx - LevCF OM
$1,851,369
$4,176,249
$4,292,708
$4,201,062
$4,709,598
$3,616,493
$5,137,698
$5,830,621
12.11% $3.42
$5,685,925
Page 1 of 1
P. 38 I genesee executive plaza I offering memorandum
Leased RSF
Suite
Tenant Name
9333-100
Vacant
5,264
9333-110
Oliva, Gooddard & Wright
5,309
Lease CommenceS
Lease Expires
Current / future rent increases
7/1/08
11/30/14
Physiotherapy Associates, Inc.
3,103
12/1/10
5/31/16
9333-160
Fedex Kinko's
1,707
5/1/06
4/1/12
9333-180
Unilab Corporation
1,299
10/1/10
10/1/10
UC Regents
5,573
9333-210
Vacant
2,845
9333-220
Sunset Parking Services
3,175
3/1/07
$39.11
$207,649
$3.26
$17,304 $17,570
$39.71
$210,834
$3.31
$40.99
$217,628
$3.42
$18,136
7/1/13
$41.99
$222,936
$3.50
$18,578
$31.20
$96,814
$2.60
$8,068 $8,626
2/28/16
$33.36
$103,516
$2.78
$30.60
$52,234
$2.55
$4,353
$31.80
$54,283
$2.65
$4,524
$33.60
$239,198
$2.80
$19,933
10/1/11
$34.56
$246,033
$2.88
$20,503
10/1/12
$35.64
$253,721
$2.97
$21,143
10/1/13
$36.72
$261,410
$3.06
$21,784
10/1/14
$37.80
$269,098
$3.15
$22,425
10/1/15
$39.00
$277,641
$3.25
$23,137
$36.00
$46,764
$3.00
$3,897
12/31/13 10/1/11
$37.08
$48,167
$3.09
$4,014
10/1/12
$38.19
$49,612
$3.18
$4,134
10/1/13 9333-200
Monthly Base
7/1/11
5/1/11 7,119
Monthly Rent
7/1/12
6/1/11
Scripps Health
annual base
Lease Type
monthly reimbursement
annual reimbursement
base year
gross Up
Pro Rata % 3.30%
9333-150
9333-170
annual rent
3/31/12 4/1/11
$39.34
$51,100
$3.28
$4,258
$42.40
$236,302
$3.53
$19,692
$43.83
$244,290
$3.65
$20,358
FSG
2008
$2,276,699
3.33%
FSG
2010
$1,859,660
1.95%
FSG
2006
$1,753,979
1.07%
FSG
2010
$1,859,660
4.47%
FSG
2010
$1,859,660
0.81%
FSG
2007
$2,039,737
3.50% 1.78%
4/1/11
8/1/16 4/1/12
P. 39 I genesee executive plaza I offering memorandum
$26.40
$83,820
$2.20
$6,985
$27.19
$86,335
$2.27
$7,195
4/1/13
$28.01
$88,925
$2.33
$7,410
4/1/14
$28.85
$91,592
$2.40
$7,633
4/1/15
$29.71
$94,340
$2.48
$7,862
4/1/16
$30.60
$97,170
$2.55
$8,098
FSG
2011
TBD
1.99%
Notes
Building 35rent rent roll Suite
Tenant Name
9333-250
Erik Austin
Leased RSF
Lease CommenceS
Lease Expires
1,520
8/1/07
9/30/12
Current / future rent increases
annual rent
annual base
$32.99
$50,146
8/1/11
$34.05
$51,763
8/1/12 9333-260
The NPD Group
5,826
9333-270
Vacant
9333-300
Vacant
13,366
9333-350
Scirex CT
10,985
9333-P15
9333-PL1
Green Light CafĂŠ
Vacant
10/1/10
Monthly Rent
Pro rata %
FSG
2007
$2,039,737
0.95%
FSG
2005
$1,506,060
3.65%
$2.75
$4,179
$2.84
$4,314
$35.12
$53,381
$2.93
$4,448
$153,806
$2.20
$12,817
8/1/11
$27.24
$158,700
$2.27
$13,225
8/1/12
$28.20
$164,293
$2.35
$13,691
10/1/13
$29.40
$171,284
$2.45
$14,274
10/1/14
$30.60
$178,276
$2.55
$14,856
10/1/15
$31.80
$185,267
$2.65
$15,439
annual reimbursement
gross Up
Lease Type
$26.40
12/31/15
monthly reimbursement
base year
Monthly Base
4,850
828
8,256
Notes
3.04% 8.38% 8/1/08
2/1/11
7/31/18
$39.99
$439,263
$3.33
$36,605
8/1/11
$39.65
$435,516
$3.30
$36,293
8/1/12
$42.46
$466,474
$3.54
$38,873
8/1/13
$43.76
$480,727
$3.65
$40,061
8/1/14
$45.06
$494,980
$3.75
$41,248
8/1/15
$46.48
$510,529
$3.87
$42,544
8/1/16
$47.77
$524,783
$3.98
$43,732
8/1/17
$49.31
$541,628
$4.11
$45,136
$14.75
$12,215
$1.23
$1,018
1/31/16 2/1/12
$15.19
$12,581
$1.27
$1,048
2/1/13
$15.65
$12,959
$1.30
$1,080
2/1/14
$16.12
$13,347
$1.34
$1,112
2/1/15
$16.60
$13,748
$1.38
$1,146
FSG
2009
$2,276,699
6.89%
FSG
2011
TBD
0.52%
5.18%
P. 40 I genesee executive plaza I offering memorandum
Suite
Tenant Name
Leased RSF
Lease CommenceS
Lease Expires
9339-100
Plaza Research Corporation
6,538
3/1/10
2/28/17
9339-110
Property Management Office
9339-125
Current / future rent increases
annual rent
annual base
Monthly Rent
Monthly Base
Lease Type
$27.19
$177,781
$2.27
$14,815
FSG
3/1/12
$28.01
$183,115
$2.33
$15,260
3/1/13
$28.85
$188,608
$2.40
$15,717
3/1/14
$29.71
$194,266
$2.48
$16,189
3/1/15
$30.60
$200,094
$2.55
$16,675
3/1/16
$31.52
$206,097
$2.63
$17,175
monthly reimbursement
annual reimbursement
base year
gross Up
Pro rata %
2010
$1,859,660
4.10%
305
0.19%
Vacant
4,145
2.60%
9339-130
Vacant
9,042
5.67%
9339-150
Dr. Flowers Vision Institute
3,634
9339-200
IGO Medical Group
2/1/10
4/28/16 5/1/11
9339-240
Gentle Dental Service Corporation
15,267
3,424
8/1/07
10/1/10
8/31/17
$133,004
$3.05
$11,084
$37.68
$136,929
$3.14
$11,411
$42.72
$652,277
$3.56
$54,356
8/1/11
$44.27
$675,831
$3.69
$56,319
8/1/12
$45.81
$699,386
$3.82
$58,282
8/1/13
$47.47
$724,752
$3.96
$60,396
8/1/14
$49.13
$750,118
$4.09
$62,510
8/1/15
$50.79
$775,485
$4.23
$64,624
8/1/15
$52.58
$802,663
$4.38
$66,889
8/1/17
$54.36
$829,841
$4.53
$69,153
$32.78
$112,244
$2.73
$9,354
9/30/20
P. 41 I genesee executive plaza I offering memorandum
$36.60
10/1/11
$33.77
$115,612
$2.81
$9,634
10/1/12
$34.78
$119,080
$2.90
$9,923
10/1/13
$35.82
$122,652
$2.99
$10,221
10/1/14
$36.90
$126,332
$3.07
$10,528 $10,844
10/1/15
$38.00
$130,122
$3.17
10/1/16
$39.14
$134,026
$3.26
$11,169
10/1/17
$40.32
$138,046
$3.36
$11,504
10/1/18
$41.53
$142,188
$3.46
$11,849
10/1/19
$42.77
$146,453
$3.56
$12,204
FSG
2010
$1,859,660
2.28%
FSG
2007
$2,039,737
9.58%
FSG
2000
$1,506,416
2.15%
Notes
rent roll Suite
Tenant Name
9339-250
Vacant
9339-260 9339-270 9339-300
Leased RSF
Lease CommenceS
Lease Expires
Current / future rent increases
annual base
Monthly Rent
Monthly Base
Lease Type
monthly reimbursement
annual reimbursement
base year
gross Up
Pro rata %
1,420
0.89%
Vacant
2,113
1.33%
Vacant
1,895
1.19%
Cosmetic Laser Dermatology
11,091
9339-310
Vacant
7,434
9339-320
Kelly Services
3,198
9339-350
Vacant
2,607
9339-P39
Dr. John Alexander
6,287
2/1/10
8/31/17
$38.70
$429,222
$3.23
$35,769
2/1/12
$39.81
$441,533
$3.32
$36,794 $37,848
2/1/13
$40.95
$454,176
$3.41
2/1/14
$42.13
$467,264
$3.51
$38,939
2/1/15
$43.35
$480,795
$3.61
$40,066
2/1/16
$44.61
$494,770
$3.72
$41,231
2/1/17
$47.22
$523,717
$3.93
$43,643
$38.48
$123,058
$3.21
$10,255
$39.64
$126,756
$3.30
$10,563
FSG
None
None
FSG
2008
$2,276,699
Notes
6.96%
4.66% 8/1/09
12/31/11 8/1/11
2.01% 1.64%
10/1/02
9/30/12 10/1/11
Total Building
annual rent
Leased SF:
96,188
60.33%
Available SF:
63,237
39.67%
Total SF:
159,425
100.0%
$41.22
$259,178
$3.44
$21,598
$42.62
$267,939
$3.55
$22,328
FSG
2007
$2,039,737
3.94%
P. 42 I genesee executive plaza I offering memorandum
P. 43 I genesee executive plaza I offering memorandum
For the Years Ending
Vacant
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Total SF Expiring
48,804 48 804
12,555 12 555
7,586 7 586
5,309 5 309
20,510 20 510
23,589 23 589
26,358 26 358
10,985 10 985
0
3,424 3 424
Jul-21 305
Cumulative SF Expiring
48,804
61,359
68,945
74,254
94,764
118,353
144,711
155,696
155,696
159,120
159,425
Roll Over schedule
Total SF Expiring (%)
30.6%
7.9%
4.8%
3.3%
12.9%
14.8%
16.5%
6.9%
0.0%
2.1%
0.2%
Cumulative SF Expiring (%)
30.6%
38.5%
43.2%
46.6%
59.4%
74.2%
90.8%
97.7%
97.7%
99.8%
100.0%
Rollover Schedule 60,000
180,000
160,000 50,000 140,000
100,000 30 000 30,000 80,000
20,000
Cumulative SSqFt Expiring
120,000
40,000
Total SF Expiring Total SF Expiring Cumulative SF Expiring
60,000
40,000 10,000 20,000
0
Genesee Executive PlazaVacant
0 Jul‐12
Jul‐13
Jul‐14
Jul‐15
Jul‐16
Jul‐17
Jul‐18
Jul‐19
Jul‐20
Jul‐21
Schedule of Lease Expirations Vacant
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
For the Years Ending
Vacant
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Total SF Expiring
48,804 48 804
12,555 12 555
7,586 7 586
5,309 5 309
20,510 20 510
23,589 23 589
26,358 26 358
10,985 10 985
0
3,424 3 424
305
Cumulative SF Expiring
48,804
61,359
68,945
74,254
94,764
118,353
144,711
155,696
155,696
159,120
159,425
Total SF Expiring (%)
30.6%
7.9%
4.8%
3.3%
12.9%
14.8%
16.5%
6.9%
0.0%
2.1%
0.2%
Cumulative SF Expiring (%)
30.6%
38.5%
43.2%
46.6%
59.4%
74.2%
90.8%
97.7%
97.7%
99.8%
100.0%
Rollover Schedule 60,000
180,000 P. 44 I genesee executive plaza I offering memorandum
P. 45 I genesee executive plaza I offering memorandum
45
Financial analysis REPLACEMENT COST ANALYSIS CATEGORY Building Shell Site Tenant Improvements Soft Costs (incl. financing) Entrepreneurial Profit New Project Costs Depreciation (Consider Age) Depreciated Building Rep. Cost Market Value per SFL Land Market Value SFB Adjusted Property Replacement Cost
PRICE PSF
SF
Value
NEW CONSTRUCTION RENT ANALYSIS New Project Cost with Land Projected Return on Costs Required Annual Net Operating Income Required Income PSF Stabilized Occupancy Stabilized Annual NOI Rent PSF Operating Expenses Required New Project Annual Rent Required Monthly Rent PSF
P. 46 I genesee executive plaza I offering memorandum
This document has been prepared by Colliers International for advertising and general information only. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
P. 47 I genesee executive plaza I offering memorandum
tenant profiles
P. 48 I genesee executive plaza I offering memorandum
TENANT Square Feet Term Lease Commencement Lease Expiration
Scripps Health 7,119 39 months 10/1/99 2/22/16
Scripps Health is a private, nonprofit health system in San Diego, California that includes: • Four acute-care hospitals on five campuses • More than 2,500 affiliated physicians and 13,000 employees • Scripps Clinic and Scripps Coastal Medical Center, a network of integrated outpatient facilities with specialists from more than 60 medical and surgical specialties • Home health care services • A wide range of health education classes and support services Established more than 80 years ago in the community of La Jolla, the health system now extends from Chula Vista to Oceanside, with more than 20 primary and specialty care outpatient centers. A leader in the prevention, diagnosis and treatment of disease, Scripps was named by Thomson Reuters as one of the Top 10 health systems in the nation for providing high quality, safe and efficient patient care. On the forefront of genomics medicine and wireless health technology, the organization is dedicated to improving community health while advancing medicine through clinical research and graduate medical education. Scripps has also earned a national reputation as a premier employer, named by Fortune magazine as one of America’s 100 Best Companies to Work For every year since 2008.
TENANT Square Feet Term Lease Commencement Lease Expiration
Dermatology Cosmetic Center 11,091 72 months 4/1/10 8/31/17
Goldman, Butterwick, Fitzpatrick, & Groff, Cosmetic Laser Dermatology is a landmark center where we combine the major cosmetic breakthroughs of science and medicine with the art of vision, creativity and skill to bring you the ultimate in rejuvenation. Our passion, driven by knowledge and skill, is to unveil the most beautiful, youthful and radiant you. When you visit GBF&G, a health care professional will work with you to design a prescription for rejuvenation based on your own unique cosmetic goals. P. 49 I genesee executive plaza I offering memorandum
TENANT Square Feet Term Lease Commencement Lease Expiration
UCSD 7,908 59 months 3/19/07 5/31/12
UC San Diego Health Sciences has a worldwide reputation for excellence and innovation, and a proven track record in scientific breakthroughs. UC San Diego Health System was ranked first in San Diego in U.S. News & World Report’s first-ever Best Hospitals metro rankings in 2011. To be ranked in its metro area, a hospital had to score in the top 25 percent among its peers in at least one of 16 medical specialties. This prestigious ranking recognizes UC San Diego Health System as a leader in delivering ground breaking health care to Southern California. UC San Diego Health System includes: • UC San Diego Medical Center • UC San Diego Thornton Hospital • UC San Diego Moores Cancer Center • UC San Diego Sulpizio Cardiovascular Center • UC San Diego Shiley Eye Center • Other centers, and primary and specialty practices of UC San Diego Medical Group faculty physicians The Medical Center and Thornton Hospital operate under one license, with a combined licensed capacity of 552 beds.
TENANT Square Feet Term Lease Commencement Lease Expiration
Fed Ex 1,707 64 months 12/1/01 12/29/16
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $38 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 290,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.
tenant profiles TENANT Square Feet Term Lease Commencement Lease Expiration
Western Cancer Center 13,366 61 months 4/1/11 5/31/17
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TENANT Square Feet Term Lease Commencement Lease Expiration
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IGO Medical 15,267 60 months 8/1/07 8/31/17
It is the purpose of IGO Medical Group, AMC, to provide high-quality, ethical, and private medical care to women and, where appropriate, to their partners, including obstetrical, gynecological, hormone replacement, and infertility services. We seek to ensure patient comfort, confidentiality, and timely care by offering appropriate and cost-effective related medical services through quality digital mammography, laboratory, bone densitometry, ultrasound, and outpatient surgical facilities. IGOâ&#x20AC;&#x2122;s goal is to be known for excellence in all aspects of its operations and for outstanding service to our patients and our community. P. 50 I genesee executive plaza I offering memorandum
INVESTMENT INFORMATION
MARKET INFORMATION
Fred B. C贸rdova
Mark McEwen
Paul Braun
Tom Mercer
Colliers International -Los Angeles 865 S. Figueroa Street, Suite 3500 Los Angeles, CA 90017
Colliers International - San Diego 4660 La Jolla Village Dr. Ste 100 San Diego, CA 91222
Colliers International - San Diego 4660 La Jolla Village Dr. Ste 100 San Diego, CA 91222
Colliers International - San Diego 4660 La Jolla Village Dr. Ste 100 San Diego, CA 91222
Senior Vice President CA License No. 01279582 DIR +1 213 532 3281 fred.cordova@colliers.com
Senior Vice President CA License No. 00894225 DIR +1 858 677 5330 mark.mcewen@colliers.com
Senior Vice President - Healthcare CA License No. 00891709 DIR +1 858 677 5324 paul,braun@colliers.com
Senior Vice President - Office Leasing CA License No. 01469025 DIR +1 858 677 5388 tom.mercer@colliers.com