MIDWAY GARDEN PLAZA Midway Drive, San Diego, California OFFERING MEMORANDUM > VALUE-ADD RETAIL OPPORTUNITY

Transcription

1 MIDWAY GARDEN PLAZA Midway Drive, San Diego, California OFFERING MEMORANDUM > VALUE-ADD RETAIL OPPORTUNITY

2 Confidentiality and Disclaimer This Offering Memorandum contains select information pertaining to the business and affairs of the property at Midway Garden Plaza, Midway Drive, San Diego, California (Property). Colliers International has prepared this document. This Offering Memorandum may not be all-inclusive or contain all of the information a prospective purchaser may desire. The information contained in this Offering Memorandum is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or made available to any other person without the written consent of Owner and Colliers International. The material is based in part upon information supplied by the Owner and in part upon financial information obtained by Colliers International from sources it deems reliable. Neither Owner, nor their officers, employees, or agents make any representation or warranty, express or implied, as to the accuracy or completeness of this Offering Memorandum or any of its contents and no legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their own projections, form their own conclusions without reliance upon the material contained herein, and conduct their own due diligence. By acknowledging your receipt of this Offering Memorandum from Colliers International, you agree: 1. The Offering Memorandum and its contents are confidential; 2. You will hold it and treat it in the strictest of confidence; 3. All photographs and graphic elements are property of Colliers International and use without expressed written permission is prohibited; and 4. You will not, directly or indirectly, disclose or permit anyone else to disclose this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Owner. Owner and Colliers International expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers to purchase the Property and to terminate discussions with any person or entity reviewing this Offering Memorandum or making an offer to purchase the Property unless and until a written agreement for the purchase and sale of the Property has been fully executed and delivered. If you wish not to pursue negotiations leading to the acquisition of the Property or in the future you discontinue such negotiations, then you agree to purge all materials relating to this Property including this Offering Memorandum. A prospective purchaser s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Owner or Colliers International or any of their affiliates or any of their respective officers, directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. This Offering Memorandum shall not be deemed to represent the state of affairs of the Property or constitute an indication that there has been no change in the state of affairs of the Property since the date this Offering Memorandum.

3 Table of Contents The Offering 2 The Property 3 The Market 11 The Financials 17 Investment Expert: PAUL LAFRENZ Senior Vice President paul.lafrenz@colliers.com Lic. No

4

5 THE OFFERING Colliers International, as exclusive marketing advisor, is pleased to present to qualified investors the opportunity to acquire the 25,000 square foot Midway Garden Plaza multitenant shopping center, centrally located in the Sports Arena area of San Diego, California. 2 COPPERWOOD COURTYARD

6 THE PROPERTY

7

8 PROPERTY DESCRIPTION PROPERTY ADDRESS Midway Drive San Diego, California LOCATION S/W/C of Midway Drive and Riley Street PROPERTY TYPE Multi-tenant retail strip center leasehold PARCEL NUMBER NUMBER OF UNITS 14 BUILDING AREA ±25,003 RSF SITE AREA ±1.30 AC YEAR BUILT 1988 PARKING 75 uncovered, asphalt paved parking spaces PROPERTY RIGHTS Leasehold ZONING CC-1-3 TYPICAL SHOP DEPTH 50 to 60 STOREFRONT WIDTHS 16 to 56 FOUNDATION 4 reinforced concrete perimeter foundation SITE DESCRIPTION The site is comprised of a triangular corner parcel with frontage along three streets: Midway Drive, Riley Street, and Cauby Street. EXTERIOR Painted stucco and plate glass in aluminum mullions WALLS Wood frame perimeter walls. Interior walls consist of drywall over wood framing ROOF Plywood sheathing over a wood truss joist system covered with built-up composition flat roof, and metal mansards CEILINGS Suspended acoustic ceiling tiles (2 x 4 ) in most shop areas LIGHTING Recessed fluorescent and incandescent light fixtures FLOORS Commercial grade carpet or vinyl tile in shop areas with carpet in upper level suites in the 2-story building DOORS Aluminum frame and glass entry door storefronts RESTROOMS A minimum of one single-fixture bathroom is provided in each of the units. The buildout for the restrooms features vinyl flooring with wainscot and painted drywall walls and ceilings with flush mounted fluorescent lighting. HVAC Roof mounted air-conditioning and heating pack-age units with individual thermostatic controls for each unit UTILITY METERING The units are individually metered for electric and gas utility; water is bulk metered. VERTICAL ACCESS There are two exterior steel frame staircases to the 2nd floor space.

9 Investment Highlights ATTRACTIVE PRICING > > Asking Price: $1,929,000 > > $77 PSF acquisition price (leasehold interest; the land is leased). 6 HIGH POTENTIAL RETURNS > > On current in-place income, realize a 9.44% return on an all-cash acquisition. > > If you place debt of $1,000,000, the in-place cashon-cash return could be 13.27%. THE PROPERTY

10 San Diego International Airport ROSECRANS ST MIDWAY GARDEN PLAZA MIDWAY DR

11 Liberty Station 8 THE PROPERTY

12 Site Plan 9 > MIDWAY GARDEN PLAZA

13 Parcel Map 10 THE PROPERTY

14 THE MARKET

15

16 MARKET OVERVIEW San Diego County The property is located in the western portion of San Diego County in the Midway District area of the City of San Diego, and is approximately three miles northwest of downtown San Diego. The second largest County in the State, San Diego County encompasses an area of 4,204 square miles. Located at the extreme southwestern portion of the State, it is bordered by Orange and Riverside Counties to the north, Imperial County to the east, Mexico to the south, and the Pacific Ocean to the west. By nature of its location, terrain varies greatly and includes beaches, foothills, mountains and deserts. The County s geographic location has undoubtedly contributed to its social and economic growth and development, as well as that of the City of San Diego. San Diego County has grown significantly during the past fifty years. With a current population of 3,227,496 San Diego County is the second most populous of the 58 counties in California, ranking behind Los Angeles County (10,136,559) and before Orange County (3,147,655) as of the latest January 2015 figures. 13 > MIDWAY GARDEN PLAZA

17 14 THE MARKET

18

19 SUBMARKET OVERVIEW Point Loma Point Loma is a seaside community within the city of San Diego and is located just south of Midway Garden Plaza. Geographically, it is a hilly peninsula that is bordered on the west and south by the Pacific Ocean, the east by San Diego Bay and Old Town, and the north by the San Diego River. The newest commercial and retail area is found at Liberty Station, site of the former Naval Training Center San Diego, which also has residential and educational sections. 16 Point Loma is home to several major military installations including the US Navy s SPAWAR program, the US Marine Corps Recruit Training Depot (MCRD San Diego) and Naval Base Point Loma. The Navy controls approximately 1,800 acres of Point Loma and provides employment to about 48,000 military personnel and civilians. DEMOGRAPHICS According to 2015 estimates by Pitney Bowes/Gadberry Group, the area within one to three miles of Midway Drive has a population of 15,165 and 124,285, respectively. Estimates of the median household income within this vicinity range from $60,746 within a one mile distance and $62,534 within three miles. THE MARKET MARKET STATISTICS The Colliers International Q market statistics for the Point Loma/Sports Arena area track an industrial/r&d inventory of 2.3 million SF and an office inventory of 1.7 million SF. The Q retail survey by CoStar places the retail inventory at 4.6 million SF. Retail vacancy in the Point Loma/Sports Arena market stood at 3.2% in Q Tight vacancy in the Point Loma/Sports Arena area is indicative of the strong demand countywide where the vacancy was 4.0%.

20 THE FINANCIALS

21

22 Anticipated NOI FEBRUARY 2016 IN-PLACE ANNUAL INCOME In-Place Rental Income $517,430 In-Place Expense Reimbursement Income $90,808 In-Place Income (95% Occupancy) $608,238 ESTIMATED EXPENSES Price $1,929,000 Cap Rate 9.44% Property Taxes ($57,000) Other Expenses ($99,737) Ground Rent ($269,363) Estimated Net Operating Income (NOI) $182,138 If Buyer obtains $1,000,000 of bank debt at 4.25% with a 30 year amortization, the cash-on-cash return to Buyer would be approximately 13.27%. 19 > MIDWAY GARDEN PLAZA

23 Ground Lease Summary Lessor/Landlord: Lessee: Lease Commencement Date: August 15, 1986 City National Bank, as Trustee of the Herbert and Helen Kelly Trust dated May 17, 1951, et al. Laubro No. 1, LLC, a California limited liability company Lease Expiration: August 14, The lease is currently in the first option period, which expires August 14, The original lease period expired on August 14, Initial Term: 25 years Option Periods: Option Term Expiration Date First Option Term August 14, 2021 Second Option Term August 14, 2031 Third Option Term August 14, 2041 Fourth Option Term August 14, 2051 Current Rent Payment: $22, per month ($269, annually). Rent is due on the 15th of each month. Rental Escalations: August 15, 2017: Increase based on CPI from 8/15/2015 to 8/15/2017. August 15, 2020: Increased based on CPI from 8/15/2017 to 8/15/2020. August 15, 2021: (beginning of 2nd option period) Rent based on 10% annual return on fair market value of site at that time. Re-calculated rent cannot be lower than the rental rate period at the conclusion of the previous term. August 15, 2023: CPI Adjustment from August 15, 2021 August 15, 2025: CPI adjustment from August 15, 2023 August 15, 2027: CPI adjustment from August 15, 2025 August 15, 2029: CPI adjustment from August 15, 2027 August 15, 2031: (beginning of 3rd option period) Rent based on 10% annual return on fair market value of site at that time. Re-calculated rent cannot be lower than the rental rate period at the conclusion of the previous term. August 15, 2034: CPI adjustment from August 15, 2031 August 15, 2034: CPI adjustment from August 15, 2034 August 15, 2040: CPI adjustment from August 15, 2037 August 15, 2043: (now in the 4th option period) For the 4th and final, option period, the rent is not re-calculated based on 10% annual return on fair market value of site at that time. At the commencement of this 4th option period, August 15, 2041, the rent continues at the then-current rate until this CPI adjustment on August 15, August 15, 2046: CPI adjustment from August 15, 2043 August 15, 2049: CPI adjustment from August 15, 2046 Percentage Rate: None. Expenses: Triple Net; lessee pays all expenses Comments: Lessee has the right to encumber leasehold with a mortgage. Lessee also has the right of first refusal to purchase the underlying land, i.e., the lessor s lease fee position if the owner receives a bona fide third-party offer and elects to sell.

24

25 Investment Expert: PAUL LAFRENZ Senior Vice President Lic. No COLLIERS INTERNATIONAL 4660 La Jolla Village Drive Suite 100 San Diego, California Lic. No colliers.com/sandiego