Prime Winchester & Payne Location in San Jose - 4 tenant NNN retail-leasehold Interest Only Offering Memorandum presented by the Alam Team Mary Alam, MBA Senior Vice President O: 415.358.2111 M: 415.297.5586 malam@nainorcal.com CalDRE #01927340 Joshua Ballesteros Investment Advisor O: 415.480.0214 M: 209.518.9025 jballesteros@nainorcal.com CalDRE #02010271 Ganga Balebail Investment Advisor O: 415.534.0110 M: 510.862.4612 gbalebail@nainorcal.com CalDRE #02015344 CJ Brill Investment Advisor O: 415.349.0147 M: 310.793.6069 cjbrill@nainorcal.com CalDRE: #02073511
Table Of Contents Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Table of Contents 1 Section 1 Property Information 7 Section 2 Location Information 9 Section 3 Financial Analysis 16 Section 4 Sale Comparables 22 Section 5 Rent Comparables 29 Section 6 Demographics
Section 1 1 PROPERTY INFORMATION
Location Overview Description Location Description Silicon Valley San Jose is an economic, cultural, and political center of Silicon Valley, and the largest city in Northern California (both in population and area). With an estimated 2017 population of 1,035,317, it is the third-most populous city in California (after Los Angeles and San Diego) and the tenth-most populous in United States. Located in the center of the Santa Clara Valley, on the southern shore of San Francisco Bay, San Jose covers an area of 179.97 square miles (466.1 km2). Its the county seat of Santa Clara County, the most affluent county in California and one of the most affluent counties in the United States. San Jose is the most populous city in both the San Francisco Bay Area and the San Jose - San Francisco - Oakland Combined Statistical Area, which contain 7.7 million and 8.7 million people respectively. San Jose Bay Area, CA The large concentration of high-tech engineering, computer, and microprocessor companies around San Jose has led the area to be known as Silicon Valley. Area schools such as the University of California, Berkeley, University of California, Santa Cruz, San Jose State University, San Francisco State University, California State University, East Bay, Santa Clara University, and Stanford University pump thousands of engineering and computer science graduates into the local economy every year. San Jose residents produce more U.S. patents than any other city. Thirty-five percent of all venture capital funds in the U.S. are invested in San Jose and Silicon Valley companies. By April 2018, Google was in the process of planning the biggest tech campus in Silicon Valley in San Jose. In January 2014, Forbes Magazine reported that Careerbliss.com had ranked San Jose-Sunnyvale-Santa Clara metro area as the happiest place to work in the United States. The report cited a large concentration of technology jobs that typically offer a high salary and opportunity for growth, in addition to companies providing fun and innovative work environments as some of the reasons for the ranking. www.nainorcal.com 2
Investment Overview 1302-1308 Winchester Blvd. San Jose, CA 95128 Offering Summary SALE PRICE: $1,890,000 2018 NOI: $130,734 2018 CAP RATE: 6.92% 2019 NOI: $136,212 2019 CAP RATE: 7.21% Highlights High Cap Rate of 6.9% set to increase to 7.1% in 2019 100% NNN Leased Leasehold interest only-building and improvements-ground lease commenced on 6/13/1988 and expires on 9/28/2043 plus one 10-year option Leasehold Commencement on 6/13/1988 with 25 years remaining on current term 1 X 10 Year Option Occupied by Baskin Robbins, California Check Cashing, Little Caesar s and Poke House Fresh Hawaiian Poke Brand new trash enclosure, exterior paint and landscaping makeover in 2018 Brand new pavement for ADA compliance Excellent demographics of 605,243 people within a five-mile radius with an average household income of approximately $138,230 per year Located within the Winchester Boulevard Urban Village Plan OCCUPANCY RATE: 100% PRICE/SF: $360 BUILDING SIZE: LOT SIZE: 5,244 SF 0.52 Acres YEAR BUILT: 1989 APN: 279-25-020 ZONING: CP www.nainorcal.com 37
Property Description Property Overview NAI Northern California is pleased to present for sale this well located, leasehold interest (building and improvements) occupied by 4 credit tenants, all NNN leased. The property benefits from its strategic location on South Winchester Ave in South San Jose just 1 mile from the I-880 Freeway, 1.5 miles from the I-280 Freeway and Santana Row shopping district and 2 miles from the Pruneyard Shopping Mall via South Winchester Blvd and South Bascom Ave. South Winchester enjoys close to a 27,000 vehicles per day traffic count which further adds to the visibility of this retail property and its continued success. This busy retail corridor features a wide variety of vendors such as Starbucks, Rite Aid, O Reilly s, Taco Bell, 7-Eleven, McDonald s, Grocery Outlet, Burger King, Del Taco, UFC Gym, El Pollo Loco, Pizza Guys, Togo s and more. Location Overview The subject benefits from strong demographics of approximately 605,243 people within a five mile radius with an average household income of approximately $138,230 per year. Population growth within five miles has been phenomenal at nearly 8.20% between 2010 and 2018 and projected to be close to 4.08% in the next five years. The property is surrounded by residential, retail, offices and financial services, elementary schools and various ethnic grocers and restaurants that serve an affluent, diverse and growing community. www.nainorcal.com 4
Property Overview www.nainorcal.com 5
Additional Photos Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 nainorcal.com 6
Section 2 2 LOCATION INFORMATION
Regional Map nainorcal.com 8
Section 3 3 FINANCIAL ANALYSIS
Rent Roll Unit # Tenant Approx. SF % SF Monthly Rent 2018 NNN (CAM) Month Total Monthly Payment Annual Rent 2018 Monthly Rent/SF Annual Rent/SF Rent Increases Rent Increase Date Lease Exp Date Options 2019 Month Payment 2019 Annual Rent 2019 Annual Rent/SF 1302 Baskin Robins 1,100 21% $3,902 $1,057 $4,960 $46,827 $9.00 $42.57 2.5% 8/1/2019 7/30/2026 2 x 5 year $4,000 $47,314 $36.34 1304 1306 Check Cashing Store Little Caesar's Pizza 1,463 28% $6,180 $1,461 $7,641 $74,158 $4.22 $50.69 CPI Min 3% 1/1/2019 12/31/2019 -- $6,365 $76,383 $52.21 1,215 23% $5,167 $1,427 $6,594 $62,004 $4.25 $51.03 3% 4/1/2019 3/31/2020 1 x 5 year $5,322 $63,554 $52.3 1308 Poke House 1,466 28% $5,131 $1,427 $6,558 $61,572 $3.50 $42.00 3% 5/1/2019 4/1/2020 2 x 5 year $5,285 $62,957 $42.95 Totals 5,244 100% $20,380 $5,373 $25,753 $244,561 $3.89 $46.64 $20,972 $250,209 $47.71 Ground Lease Start Date Expiration Date Monthly Rent Rent Increase Options 6/13/1988 September 28, 2043 $8,458 Based on CPI Index on the rental adjustment date every 5 years from the initial commencement date 1 X 10 year www.nainorcal.com 8
Financial Summary Debt and Return Calculations Loan Quote (subject to change) Sale Price $1,890,000 Loan Amount $1,134,000 Loan to Value 60% Down Payment 756,000 Interest Rate 5.25% Amortization 30 Return Calculations Net Operating Income $134,777 Debt Service $6,262 $75,144 Pre-Tax Cash Flow (Cash on Cash return) 7.9% $59,633 Principal Reduction $15,609 Total Return 10% $75,242 www.nainorcal.com 11
Financial Summary Income And Expenses 2018 ACTUAL 2019 Proforma Rental Income NNN Income Total Gross Income $244,561 $250,209 $64,473 $64,473 $309,034 $314,682 Expense Breakdown Taxes 2018 Insurance PG&E Republic Services San Jose Water Co. Landscape Crane Pest Control Ground Maintenance Repairs & Other Maintenance CAM Administrative Fee (10%) Property Management Monthly Rent to Owner of Ground Lease (CPI Index) Total Expenses $27,365 $27,365 $3,646 $3,646 $1,140 $1,140 $7,601 $7,601 $7,522 $7,522 $2,880 $2,880 $2,880 $2,880 $3,500 $3,500 $7,240 $7,240 $2,988 $2,988 $6,000 $6,000 $101,496 $101,496 $174,257 $174,257 Valuation Analysis Net Income Vacancy Rate (3%) Cap Rate NOI Price 2018 2019 $134,777 $4,043 $140,425 $4,213 6.92% 7.21% $130,734 $136,212 $1,890,000 $1,890,000 nainorcal.com 12
Retailer Map Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 nainorcal.com 13
WINCHESTER BOULEVARD URBAN VILLAGE PLAN PLANNING AREA The Winchester Boulevard (Winchester) Urban Village Plan is prepared by the City and community to provide a policy framework to guide new job and housing growth within the Urban Village boundary. The Plan will also guide the characteristics of future development, including buildings, parks, plazas and placemaking, streetscape and circulation within this area. This Plan supports the identified growth capacity for this Urban Village in the Envision San José 2040 General Plan, providing the capacity for development of approximately 2,200 new dwelling units and 2,000 new jobs. Winchester Boulevard is a 1.5-mile corridor located in West San José, parallel to Interstate 880 and California State Route 17 (SR17) to the east and San Tomas Expressway to the west. This Urban Village extends from Interstate 280 in the north to Impala Drive to the south. It provides a range of commercial services, retail, restaurant, and residential uses, and is a connection to several regional destinations: The Winchester Mystery House, Santana Row and the Westfield Valley Fair shopping center to the north, and Downtown Campbell to the south. The Village is in close proximity a future express bus service along Stevens Creek Boulevard (Bus Rote 523), and a potential future Bus Rapid Transit (BRT) line along Stevens Creek Boulevard. The neighborhoods surrounding this Urban Village are predominantly single-family detached residences, while residential uses within the Urban Village are predominantly multi-family. Within this Urban Village are several opportunities for new and intensified residential and commercial development. The Urban Village planning process also presents an opportunity for establishing circulation and urban design frameworks that will transform the area into a vibrant, walkable and bikeable village. Together, these efforts will ensure that new uses are integrated with existing uses and that Winchester Boulevard becomes the urban corridor that the community has envisioned. nainorcal.com 14
Location Description WINCHESTER BOULEVARD URBAN VILLAGE PLAN PLAN OVERVIEW The Winchester Urban Village Plan is prepared by the City of San José and the community to further the Urban Village Major Strategy of the Envision San José 2040 General Plan. The Urban Village Major Strategy promotes the development of Urban Villages to provide active, walkable, bicycle-friendly, transit-oriented, mixed-use urban settings for new housing and job growth attractive to a variety of people and consistent with the Plan s environmental goals. As a City-Council approved policy document for the future growth of the Winchester Urban Village, this Plan establishes a framework to further the transition of the Winchester Urban Village into a more vibrant mixed-use and pedestrian-oriented place that supports and creates a safe environment for all modes of travel, a thriving commercial corridor, and public gathering places. The Winchester Urban Village is planned to be a complete neighborhood that is thoughtfully designed. In a complete neighborhood, people have safe and convenient access to the amenities needed in daily life, including a variety of housing options, retail stores and other commercial services, public open spaces and recreational facilities, a variety of transportation options, and civic amenities. A complete neighborhood is built at a walkable and bikeable human scale, and meets the needs of people of all ages and abilities. 1302-1308 Winchester Blvd. www.nainorcal.com 15
Section 4 4 SALE COMPARABLES
Sales Comparables Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Subject Property 1302-1308 Winchester Blvd. San Jose, CA 95128 Sale Price: $1,890,000 Lot Size: 0.52 Acres Year Built: 1989 Building SF: 5,244 SF Price PSF: $360.41 NOI: $134,734 CAP: 6.9% 1 1010-1016 Alma St Menlo Park, CA 94025 Sale Price: $11,535,000 Lot Size: 28,750 SF Building SF: 5,455 SF 1 Price PSF: $2,114.57 Closed: 05/13/2016 2 Concar Office Park 700 Concar Dr San Mateo, CA 94402 Sale Price: $2,043,551 Lot Size: 69,260 SF Year Built: 2002 Building SF: 2,200 SF Price PSF: $928.89 Closed: 03/01/2017 2 nainorcal.com 17
Sales Comparables Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 3 Sunnyvale 76 Car Wash 905 E El Camino Real Sunnyvale, CA 94087 Sale Price: $1,260,000 Lot Size: 28,750 SF Year Built: 1972 Building SF: 3,150 SF Price PSF: $400.00 CAP: 9.20% Closed: 07/08/2015 3 4 Taco Bell 1298 S Winchester Blvd San Jose, CA 95128 Sale Price: $2,500,000 Lot Size: 16,988 SF Year Built: 1991 Building SF: 1,974 SF Price PSF: $1,266.46 CAP: 4.00% Closed: 12/05/2017 4 nainorcal.com 18
Sales Comparables Summary Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Subject Property Price Bldg SF Price/SF CAP Leasehold: Winchester & Payne Center 1302-1308 Winchester Blvd. San Jose, CA 95128 $1,890,000 5,244 SF $360.41 6.9% Sale Comps Price Bldg SF Price/SF CAP Close 1 1010-1016 Alma St Menlo Park, CA 94025 $11,535,000 5,455 SF $2,114.57-05/13/2016 2 Concar Office Park 700 Concar Dr San Mateo, CA 94402 $2,043,551 2,200 SF $928.89-03/01/2017 3 Sunnyvale 76 Car Wash 905 E El Camino Real Sunnyvale, CA 94087 $1,260,000 3,150 SF $400.00 9.2% 07/08/2015 4 Taco Bell 1298 S Winchester Blvd San Jose, CA 95128 $2,500,000 1,974 SF $1,266.46 4.0% 12/05/2017 Price Bldg SF Price/SF CAP Close nainorcal.com 19
Sales Comparables Summary Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Subject Property Price Bldg SF Price/SF CAP Totals/Averages $4,334,638 3,195 SF $1,356.69 6.6% nainorcal.com 20
Sales Comparables Map Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Subject Property 1302-1308 Winchester Blvd. San Jose, CA 95128 1 1010-1016 Alma St Menlo Park, CA 94025 2 Concar Office Park 700 Concar Dr San Mateo, CA 94402 3 Sunnyvale 76 Car Wash 905 E El Camino Real Sunnyvale, CA 94087 4 Taco Bell 1298 S Winchester Blvd San Jose, CA 95128 nainorcal.com 21
Section 5 5 RENT COMPARABLES
Rent Comparables Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Subject Property 1302-1308 Winchester Blvd. San Jose, CA 95128 Lease Rate: N/A Lot Size: 0.52 Acres No. Units: 4 Space Size: 0 SF Year Built: 1989 1 267 E Campbell Ave Campbell, CA 95008 Lease Rate: $51.60 SF/YR Lease Type: NNN Space Size: 1,080 SF 1 Bldg Size: 8,250 SF Lot Size: 0.52 Acres Lease Term: 120 months Willow Glen Frozen Yogurt 2 175-201 E Campbell Ave Campbell, CA 95008 Lease Rate: $42.00 SF/YR Lease Type: NNN Space Size: 1,008 SF 2 Bldg Size: 44,176 SF Lot Size: 0.52 Acres Bishops Barbershop nainorcal.com 23
Rent Comparables Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 3 2145 S Winchester Blvd Campbell, CA 95008 Lease Rate: $42.00 SF/YR Space Size: 1,160 SF Bldg Size: 5,400 SF 3 Lot Size: 0.52 Acres Lease Term: 54 months 4 2135 S Winchester Blvd Campbell, CA 95008 Lease Rate: $48.00 SF/YR Lease Type: NNN Space Size: 1,791 SF 4 Bldg Size: 2,795 SF Lot Size: 0.52 Acres Lease Term: 60 months Just Right Cafe 5 1875 S Bascom Ave Campbell, CA 95008 Lease Rate: $42.00 SF/YR Lease Type: NNN Space Size: 1,985 SF 5 Bldg Size: 139,104 SF Lot Size: 0.52 Acres Lease Term: 36 months Core Sculpt nainorcal.com 24
Rent Comparables Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 6 2202 Stevens Creek Blvd San Jose, CA 95128 Lease Rate: $56.15 SF/YR Lease Type: NNN Space Size: 1,800 SF 6 Bldg Size: 5,800 SF Lot Size: 0.52 Acres Lease Term: 120 months Viet Noodles & More nainorcal.com 25
Rent Comparables Summary Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Rent Comps Price/SF/YR Available SF Bldg SF 1 267 E Campbell Ave Campbell, CA 95008 $51.60 1,080 SF 8,250 SF 175-201 E Campbell Ave Campbell, CA 95008 $42.00 1,008 SF 44,176 SF 2145 S Winchester Blvd Campbell, CA 95008 $42.00 1,160 SF 5,400 SF 2135 S Winchester Blvd Campbell, CA 95008 $48.00 1,791 SF 2,795 SF 1875 S Bascom Ave Campbell, CA 95008 $42.00 1,985 SF 139,104 SF 2202 Stevens Creek Blvd San Jose, CA 95128 $56.15 1,800 SF 5,800 SF 2 3 4 5 6 nainorcal.com 26
Rent Comparables Summary Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Price/SF/YR Available SF Bldg SF Totals/Averages $46.96 1,471 SF 34,254 SF nainorcal.com 27
Rent Comparables Map Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Subject Property 1302-1308 Winchester Blvd. San Jose, CA 95128 1 267 E Campbell Ave Campbell, CA 95008 2 175-201 E Campbell Ave Campbell, CA 95008 3 2145 S Winchester Blvd Campbell, CA 95008 4 2135 S Winchester Blvd Campbell, CA 95008 5 1875 S Bascom Ave Campbell, CA 95008 6 2202 Stevens Creek Blvd San Jose, CA 95128 nainorcal.com 28
Section 6 6 DEMOGRAPHICS
Demographics Population 1 mile 3 miles 5 miles 2023 Projection 35,210 263,572 629,926 2018 Estimate 33,908 253,226 605,243 2010 Census 31,804 234,038 559,398 Growth 2018-2023 3.84% 4.09% 4.08% Growth 2010-2018 6.62% 8.20% 8.20% 2018 Population Hispanic Origin 10,610 58,855 137,236 2018 Population by Race 1 mile 3 miles 5 miles White 22,927 164,044 366,900 Black 1,708 9,469 19,408 Am. Indian & Alaskan 543 3,314 7,446 Asian 6,962 63,036 181,621 Hawaiian & Pacific Island 182 1,336 2,723 Other 1,587 12,026 27,144 U.S. Armed Forces: 29 84 208 Households 1 mile 3 miles 5 miles 2023 Projection 13,172 102,212 235,424 2018 Estimate 12,703 98,263 226,182 2010 Census 12,011 91,164 209,041 Growth 2018-2023 3.69% 4.02% 4.09% Growth 2010-2018 5.76% 7.79% 8.20% Owner Occupied 5,484 48,174 117,577 Renter Occupied 7,219 50,089 108,605 2018 Avg Household Income $125,777 $133,650 $138,230 2018 Med Household Income $91,376 $104,890 $110,069 2018 Households by Household Inc <$25,000 1,712 11,200 27,159 $25,000 - $50,000 1,935 12,844 27,531 $50,000 - $75,000 1,765 12,468 26,011 $75,000 - $100,000 1,435 10,496 22,726 $100,000 - $125,000 1,188 10,855 23,996 $125,000 - $150,000 948 8,166 18,040 $150,000 - $200,000 1,127 11,433 29,328 $200,000+ 2,594 20,801 51,393 nainorcal.com 30
Traffic Count Collection Street Cross Street Cross Street Dist/Dir Traffic Volume Count Year Dist from Subject S Winchester Blvd Loma Verde Dr 0.09 S 26,909 2017 0.09 S Winchester Blvd Fireside Dr 0.08 N 29,040 2017 0.12 Payne Ave Greenbriar Ave 0.01 W 2,138 2017 0.20 S Winchester Blvd Driftwood Dr 0.00 S 34,029 2017 0.20 Payne Ave Eden Ave 0.04 W 12,751 2017 0.24 Monica Ln Payne Ave 0.09 N 1,077 2017 0.27 Loma Verde Dr Bluebird Dr 0.03 N 3,110 2017 0.29 Eden Ave Westfield Ave 0.10 N 394 2017 0.30 Eden Ave 0.04 W 1,384 2014 0.30 Valley Square Ln 0.02 S 1,355 2014 0.31 Type MPSI... MPSI... MPSI... MPSI... MPSI... MPSI... MPSI... MPSI... MPSI... MPSI... nainorcal.com 31
Leasehold: Winchester & Payne Center 1302-1308 Winchester Blvd., San Jose, CA 95128 Mary Alam, MBA Senior Vice President O: 415.358.2111 M: 415.297.5586 malam@nainorcal.com CalDRE #01927340 Joshua Ballesteros Investment Advisor O: 415.480.0214 M: 209.518.9025 jballesteros@nainorcal.com CalDRE #02010271