The Sporting Club 8930 University Center Ln, San Diego OFFERING MEMORANDUM
4 Executive Summary 7 Project Features 9 Investment Highlights 10 Property Overview 20 Own vs Lease Analysis 3
EXECUTIVE SUMMARY The Sporting Club is a unique opportunity to purchase an iconic asset within the Aventine La Jolla. The building offers an unparalleled tenant experience with fitness, pool, restaurants, bars and luxury hotel. The offering is ideal for buyers looking to occupy bright and soaring space, or for investors looking to offer tenants a one-of-a-kind creative office experience. Opportunities at The Sporting Club stretch as far as the imagination. 4 5
PROJECT FEATURES 5 Unparalleled opportunity to own a unique stand-alone asset in the Aventine at La Jolla Amenity rich environment adjacent to renovated Hyatt Hotel, Michael s restaurant undergoing a full renovation, as well as Fleming s Steak House, Café Japengo and walking distance to The Shops at La Jolla Village anchored by Whole Foods Market Hotel meeting space available for specific owner occasions and events Collaborative round shape with voluminous ceilings and large floor to ceiling windows Outstanding branding opportunity on La Jolla Village Drive Depending on the business plan, ability to sell to hotel guests at the adjacent 417 key Hyatt Regency hotel 6 7
INVESTMENT HIGHLIGHTS Offering Price $14,706,000 Price per Square Foot $450/SF Total Rentable Area 32,680 SF Parking Available as needed 9
PROPERTY OVERVIEW AREA AMENITIES 1 REGENTS MARKETPLACE Regents Pizzeria, Nozomi, L&L Hawaiian, Starbucks, Papa John s 2 3 SAN DIEGO MARRIOTT LAWRENCE FAMILY JEWISH COMMUNITY CENTER 9 8 PACIFIC OCEAN THE SPORTING CLUB LA JOLLA 7 5 6 DEL MAR 4 COSTA VERDE CENTER Bristol Farms, Yogurtland, Subway, Starbucks, Sammy s Woodfired Pizza, Roy s La Jolla, Robeks Juice, McDonald s, KI Sushi & Sake Bar, Five Guys Burger and Fries, Draft Republic, Coco s Bakery, Chipotle, Baskin Robbins, Apolloni Greek Bistro, US Post Office, Massage Envy, Wells Fargo, U.S. Postal Service, Costa Verde Car Wash 1 2 3 LA JOLLA VILLAGE DRIVE 5 WESTFIELD UTC MALL Crate & Barrel, 24 Hour Fitness, Nordstrom, Sears, Macy s, Williams Sonoma, Gap, Anthropology, Zara, Sports Chalet, Tender Greens, Arclight Cinemas, Apple Store, Bonobos, Carlton Hair, Corner Bakery Cafe, Seasons 52, Craft Pizza, Eureka!, Lemonade, Pottery Barn, Restoration Hardware, Rubio s, Starbucks, Wells Fargo 6 SCRIPPS MEMORIAL HOSPITAL LA JOLLA 4 MID-COAST TROLLEY EXTENSION 7 THE AVENTINE Hyatt Regency La Jolla, Café Japengo, Perks General Store, Barcino Grill, Flemings Prime Steakhouse, Michael s Lounge, The Melting Pot, Truluck s 8 THE SHOPS AT LA JOLLA VILLAGE Whole Foods Market, CVS Pharmacy, Peet s Coffee & Tea, Sprinkles Cupcakes, Bank of America, Citibank, Chase Bank, Rubio s, Paper Source 9 LA JOLLA VILLAGE SQUARE AMC Theatres, Trader Joes, ULTA, Best Buy, Ralphs, Islands, California Pizza Kitchen, Chipotle Mexican Grill, Cost Plus World Market, Daphne s California Greek, DSW Shoe Warehouse, Ginza Sushi, Jamba Juice, Marshall s, PetSmart, Pier 1 Imports, Ross, Sol Yoga, ULTA, Union Bank, Urban Plates, Zpizza NOBEL DRIVE GENNESSEE ROAD 5 10 11
CHANGE IS COMING Mid-Coast Trolley Extension The Blue Line Trolley will be extended from the Santa Fe Depot in Downtown San Diego to UTC by 2021 $2.1 Billion trolley extension, adding 11 miles of the trolley between UTC and DT Westfield is investing $1 Billion in the UTC mall First phase: Mall renovation common area updates completed in 2012 Second phase:$600 million to be completed Fall 2017 Additional 90 new shops (251,000 sf) of first-to-market retail and high-end restaurants: Javier s, Shake Shack, Alo Yoga Soul Cycle, Kendra Scott, Apple Brand new 149,000 sf Nordstrom flagship store Third phase to be completed fall 2019: Two residential towers consisting of a 22-story and a 4-story tower holding 300 luxury apartments connected by a 26,000 sf amenity deck Luxury amenities include private co-work space, exercise facility, mail management system, concierge service, and extra storage 12 13
SITE PLAN LA Tennis JO LL AV ILL AG ED RIV E Pool Enc lo Pav sed ilion 8910 University Center Lane The Sporting Club 8930 University Center Lane Hya Annex Building Tru tt luc Fle mi 14 EL ANE Ja pe ng o VE M RI TR Th elt e Po ing t s D EN ng LE BO N UNI VER SIT YC k's 15
FLOOR PLANS 1 st FLOOR HYPOTHETICAL FLOOR PLAN 2 nd FLOOR HYPOTHETICAL FLOOR PLAN Head Count (20) Workstations (6) Private Offices 10x12, TYP. Head Count (52) Workstations (4) Private Offices 10x12, TYP. Space Breakdown (1) Large Conf. Room (2) Med. Conf Rooms (4) Huddle Rooms Floor 1: 7,913 RSF Space Breakdown (1) Med. Conf. Room (2) Huddle Rooms Floor 2: 7,695 RSF 16 17
FLOOR PLANS 3 rd FLOOR HYPOTHETICAL FLOOR PLAN Head Count (76) Workstations (2) Private Offices 10x12, TYP. Space Breakdown (1) Med. Conf Rooms (3) Focus Rooms Floor 3: 4,455 RSF* *Assumes increase in square footage due to mezzanine expansion. 18 19
FLOOR PLANS ANNEX AS-BUILT FLOOR PLAN Anex: 10,959 SF GMA 20 21
OWN VS. LEASE ANALYSIS GLOBAL ASSUMPTIONS Analysis Period 10 Years Combined Federal and State Tax Rate 39.00% Operating Expense Growth Rate 3.00% Capital Gains Rates (Federal and State Combined) 39.00% OWN LEASE Purchase Assumptions Lease Assumptions Purchase Price ($450/sf) $14,706,000 Size (Square Feet) 32,680 RSF Improvements ($50/sf) $1,634,000 Initial Base Rent (PSF) Closing Costs (1.5%) $220,590 Freestanding (22,680 RSF) $4.10 FSG Total Project Cost $16,560,590 Lower Level (10,000 RSF) $2.50 FSG LEASE ALTERNATIVE OWN ALTERNATIVE Start-Up Costs Start-Up Costs Lease Assumptions Purchase Assumptions Size of Leased Premises 32,680 SF Size of Owned Premises 32,680 SF Base Building Purchase Price $450.00 $14,706,000 Freestanding Building 22,680 SF $4.10 PSF Closing Costs 1.50% $220,590 Lower Level Premises 10,000 SF $2.50 PSF Tenant Improvement Costs $50.00 $1,634,000 Blended Monthly Base Rent $3.61 PSF Total Investment $506.75 $16,560,590 Monthly Operating Expenses $1.00 PSF Lease Type (Net or Gross) GROSS Annual Base Rent Increases 3.00% Total Equity Investment (Down Payment & Fees) $1,656,059 Monthly Operating Expenses (Excludes Utilities) $1.00 PSF Initial Free Rent 4 Months Depreciable Basis (Improvements Only) 80% $13,619,390 Out-of-Pocket Tenant Improvements (PSF) $0.00 PSF Annual Growth / Appreciation of Property 2.00% Down Payment (10%) $1,656,059 Prepaid Rent / Security Deposit $235,976 Total Start-Up Costs $1,656,059 Total Start-Up Costs $235,976 Monthly Costs Monthly Costs Mortgage Payment $87,442 Avg Monthly Base Rent $131,327 Avg Monthly CAM Costs $37,464 Avg Monthly CAM Costs $4,784 Total Monthly Costs $124,906 Total Monthly Costs $136,111 Monthly Ownership Benefits Monthly Lease Benefits Avg Estimated Tax Benefits Estimated Tax Benefits Depreciation Benefit ($11,349) Depreciation Benefit $0 Expense Deduction ($14,611) Rental / Expense Deduction ($53,083) Interest Deduction (7yr Avg) ($19,023) Total Estimated Tax Benefits ($44,984) Total Estimated Tax Benefits ($53,083) Equity Available for Investment $1,656,059 Loan Assumptions Net Out-of-Pocket Tenant Improvements $0 Loan Amount 90.00% LTV $14,904,531 Net Equity Available for Investment $1,656,059 Interest Rate 4.58% Amortization Period 23 Years Pre-Tax Equity Investment Rate 8.00% Loan Fees/Costs 0.00% $0 Other Benefits / Costs Other Benefits / Costs Average Appreciation (2.0%) ($27,981) After-Tax Return on Equity ($9,756) Total Other Benefits / Costs ($27,981) Total Other Benefits / Costs ($9,756) Combined Ownership Benefits ($72,965) Combined Leasing Benefits ($62,839) Effective Monthly Cost $51,941 Effective Monthly Cost $73,272 Monthly Savings vs. Leasing $21,330 Ownership Analysis Summary - 10 Year Hold Building Appreciation $3,357,779 Loan Paydown $4,639,803 10-Year Wealth Creation $7,997,582 22 23
FOR MORE INFORMATION CONTACT: MATT CARLSON Senior Vice President T 858 546 2636 matt.carlson@cbre.com Lic. 01459868 MIKE HOECK Senior Vice President T 858 646 4700 mike.hoeck@cbre.com Lic. 01386247 2015 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. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited. 4365 Executive Drive Suite 1600 San Diego, CA 92121