EXECUTIVE SUMMARY A RARE OPPORTUNITY TO ACQUIRE STABILIZED IN-PLACE CASH FLOW WITH SIGNIFICANT UPSIDE N.HILL DRIVE

Transcription

1 EXECUTIVE SUMMARY A RARE OPPORTUNITY TO ACQUIRE STABILIZED IN-PLACE CASH FLOW WITH SIGNIFICANT UPSIDE N.HILL B r i s b a n e, C a l i f o r n i a

2 2 150 N. HILL THE OFFERING CBRE Capital Markets, as exclusive advisor, is pleased to present the outstanding opportunity to acquire the fee simple interest in 150 N. Hill Drive (the Property or Building ), strategically located between San Francisco and South San Francisco, the home of biotechnology. 150 N. Hill Drive is a 71,404 square foot multi-tenant office building with a growing population of R&D/lab tenants. Located in Brisbane just north of South San Francisco, the largest life science submarket in the United States, the Property benefits from significant supply constraints of both traditional office and R&D/lab space. The two-story building has experienced thoughtful renovation and repositioning and is well poised to capture future demand. OFFERING SUMMARY Address: 150 N. Hill Drive Brisbane, CA Total Rentable Area: 71,404 Square Feet Land Area: 3.93 Acres Year Built: 1983 Parking Ratio: 3.70 Spaces per 1,000 Square Feet Zoning: Crocker Park Trade Commercial District (TC-1) Number of Floors: 2 Percent Leased: 95% Number of Tenants: 16 Major Tenants: Department of Public Health* 15.29% of NRA LED: Dec-21 ADT 11.77% of NRA LED: Oct-21 DMV Investigation* 8.94% of NRA LED: Apr-22 Cureline 8.29% of NRA LED: Nov out of the 16 tenants each account for less than 10% of the NRA *State of California 95% LEASED 71,404 SF TOTAL

3 INVESTMENT HIGHLIGHTS #1 BIOTECHNOLOGY MARKET IN THE UNITED STATES 150 N. Hill Drive is located at the center of the nation s largest biotechnology market. The convenient Brisbane location allows lab users the opportunity to recruit from a welleducated and well-trained employee base from either San Francisco or South San Francisco. Multiple modes of transportation and the close proximity of the San Francisco International Airport (SFO) adds to the desirability of this location. THE PROPERTY IS 95% LEASED TO 16 TENANTS REPRESENTING A VARIETY OF INDUSTRIES: Biotechnology Government Consumer Services Construction Consulting The stable rollover pattern, averages 12% per year over the first three years, providing steady participation in an improving rental rate environment. Since 2011, average office asking rents in the Daly City/Brisbane submarket have climbed nearly 54% while the overall vacancy rate is poised for continued improvement. The weighted average remaining lease term is 3.2 years with in-place tenants paying below market rent. Multi-tenant diversification also helps reduce the impact of issues arising from any one tenant. N.HILL Percent of Net Rentable Area (NRA) Expiring % 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% EXISTING LEASE ROLLOVER 8% 5% 13% 5% 5% 2% 2% 16% Government Consumer Services Diverse Tenant Roster 26% 18% Software Food & Beverage EXECUTIVE SUMMARY 0.00% Currently Vacant % of Building Expiring Biotechnology Construction Consulting Communications Transportation Insurance 3

4 4 150 N. HILL Average Asking Rate (FSG) Vacancy Rate R&D/LAB CONVERSION OPPORTUNITY The Property s TC-1 zoning allows for a mix of uses including R&D/lab. New ownership can immediately capitalize on the already proven lab demand by continuing to focus on smaller footprint lab users that require a less intensive build-out. 150 N. Hill Drive s average R&D/lab asking rate of $4.88 FSG [1] provides a compelling return-on-cost that far exceeds the Property s current office average asking rate of $3.00 FSG. Further supporting the R&D/Lab conversion thesis has been the rapidly decreasing Daly City/Brisbane vacancy rate, which as of the second quarter of 2017 is 0.0%. Historical R&D/Lab Vacancy Rate Trends 16.0% 12.0% 8.0% 4.0% 2.7% 0.0% 0.0% Daly City/Brisbane North County South San Francisco R&D/Lab Average Asking Rate Premium to Office $6.00 FSG 63% $5.00 FSG $4.00 FSG $4.88 FSG $3.00 FSG $2.00 FSG $3.00 FSG $1.00 FSG $0.00 FSG Office Lab CONTINUED OFFICE RENT GROWTH Since the first quarter of 2014, traditional office rents within the Daly City/Brisbane submarket have outperformed both South San Francisco and the broader northern Peninsula market. Cumulative rent growth during this period recorded 23% as a crosssection of traditional office users either expanded or relocated to Brisbane. Continued rental growth is expected as a growing number of biotechnology tenants compete with an already robust traditional office demand. Average Asking Rate (FSG) $ % Daly City/Brisbane Cumulative Office Rent Growth Since 2014 $3.60 $3.20 $3.53 $3.33 $3.31 $2.80 $2.40 $ Daly City/Brisbane North County South San Francisco [1] Full Service Gross Equivalent is calculated assuming annual electrical costs of $1.59

5 LIFE SCIENCE CONVERSION RAPIDLY SHRINKING BUILDING BASE SINCE 2014, OVER 1.3 MILLION SF OF COMPETITIVE SPACE HAS BEEN DISPLACED IN THE ADJACENT SUBMARKET OF SAN BRUNO REMAINING SAN BRUNO DISPLACEMENT 4000 Shoreline Court 68,098 Square Feet 6000 Shoreline Court 148,000 Square Feet Genesis Towers 770,000 Square Feet 7000 Marina 87,000 Square Feet Expiring Square Feet (Thousands) K Square Feet Expiring In the Bayhill Area Through LIFE SCIENCE CONVERSION MAP South San Francisco Life Science Cluster SOUTH SAN FRANCISCO CALTRAIN STATION GENESIS TOWERS BAYSHORE BLVD N.HILL EXECUTIVE SUMMARY 6000 SHORELINE COURT 4000 SHORELINE COURT 1,073,098 SQUARE FEET OR 13% OF THE TOTAL NORTH COUNTY OFFICE BASE HAS BEEN CONVERTED TO LIFE SCIENCE 7000 MARINA 5

6 6 150 N. HILL SIGNIFICANT TENANT MIGRATION Since 2013, 39 tenants, totaling 1.23 million square feet have migrated to Brisbane and South San Francisco. Future tenant displacement from YouTube s take over in San Bruno will only continue this trend. SAN FRANCISCO INTERNATIONAL AIRPORT (SFO) EXPLORA MED PUMA BIOTECHNOLOGY MERCK & CO. UNITY BIOTECHNOLOGY EMLAB P&K ALLIANCE RESOURCESTHE COLUMN GROUP HALOZYME THERAPEUTICS AMAG PHARMACEUTICALS NETEASE, INC. OCULEVE ZS ASSOCIATESCALICO IMMUNE DESIGN 23 & ME PRONAI THERAPEUTICS, INC. ASTRAZENECA BLADE THERAPEUTICS VAXART CYTOMX THERAPEUTIX PHARMACYCLICS OCULEVE, INC. BIOTIE THERAPIESADITAZZ LIGHTNING BOLT SOLUTIONS ULTRAGENYX GOOGLE LINKAGE BIOSCIENCE BALBOA PAYCHEX TRAVEL RAPTOR PHARMACEUTICALS ALLERGEN RESEARCH CORP. SOUTH SAN FRANCISCO CALTRAIN STATION TUNITAS THERAPEUTICS, INC. CHILDCARE CAREERS VEGA CAPITAL GROUP STELLA & DOT LONZA PAYCHEX UCSF YOUTUBE DISPLACEMENT CALTRAIN N.HILL BAYSHORE BLVD

7 De-Risked, Well Maintained Office Product The Property has experienced significant repositioning since 2007, limiting the next ownership s investment in additional capital and deferred maintenance. RECENT CAPITAL IMPROVEMENTS: Office to Lab Conversion New HVAC ADA Upgrades Renovated Central Atrium Upgraded Landscaping Upgraded Signage SITE PLAN N Parking Ratio 3.70 Spaces per 1,000 SF Guadalupe Canyon Parkway Bayshore Boulevard North Hill Drive N. H I L L D R I V E 71,404 SF EXECUTIVE SUMMARY APN *Not to Scale 7

8 N.HILL B r i s b a n e, C a l i f o r n i a A LISTING FROM CBRE CAPITAL MARKETS OFFICE WEST, LED BY INVESTMENT ADVISORS DEBT & STRUCTURED FINANCE CAPITAL MARKETS OFFICE WESTERN U.S. SCOTT J. PROSSER, SIOR Executive Vice President scott.prosser@cbre.com Lic JOE MORIARTY Executive Vice President joseph.moriarty@cbre.com Lic TYLER MEYERDIRK First Vice President tyler.meyerdirk@cbre.com Lic LOCAL MARKET LEASING MARC POPE Cushman & Wakefield Executive Director marc.pope@cushwake.com Lic SETH MCKINNON Vice President seth.mckinnon@cbre.com Lic RUSSELL INGRUM Vice Chairman russell.ingrum@cbre.com Lic JACK DEPUY Senior Associate jack.depuy@cbre.com Lic GARY BOITANO Cushman & Wakefield Director gary.boitano@cushwake.com Lic BRAD ZAMPA Executive Vice President brad.zampa@cbre.com Lic MICHAEL WALKER Senior Vice President michael.l.walker@cbre.com Lic BAY AREA Russell Ingrum Scott Prosser Joe Moriarty Tyler Meyerdirk Seth McKinnon Jack DePuy DENVER Tim Richey Mike Winn Chad Flynn SEATTLE Tom Pehl Lou Senini SAN DIEGO Louay Alsadek Hunter Rowe LA/OC COUNTIES Todd Tydlaska Sean Sullivan Mike Longo Anthony DeLorenzo PHOENIX Barry Gabel PORTLAND Trevor Kafoury Charles Safley DEBT & STRUCTURED FINANCE Brad Zampa Michael Walker Brady O Donnell Val Achtemeier Bruce Francis Mark McGovern 2017 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited.