University Square Carson, CA 18662 MacArthur Blvd., Suite 300 Irvine, CA 92612 Tel 949.833.3380 Fax 949.833.3382 www.rezacompanies.com
The material contained in this Investment Offering Brochure is furnished solely for the purpose of considering the purchase of University Square and is not to be used for any other purpose. This information should not, under any circumstances, be photocopied or disclosed to any third party without the written consent of REZA Investment Group Inc. or Owner, or used for any purpose whatsoever other than to evaluate the possible purchase of the Property. The only party authorized to represent the Property Owner ( Owner ) in connection with the sale of the Property is REZA Investment Group Inc., and no other person is authorized by the Owner to provide any information or to make any representations other than contained in this Investment Offering Brochure. If the person receiving these materials does not choose to pursue a purchase of the Property, this Offering Brochure must be returned to REZA Investment Group Inc. Neither REZA Investment Group Inc. nor the Owner make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied upon as a promise or representation as to the future performance of the Property. This Offering Brochure may include certain statements and estimates by REZA Investment Group Inc. with respect to the projected future performance of the Property. These Assumptions may or may not be proven to be correct, and there can be no assurance that such estimates will be achieved. Further, REZA Investment Group Inc. and the Owner disclaim any and all liability for representations or warranties, expressed or implied, contained in or omitted from this Investment Offering Brochure, or any other written or oral communication transmitted or made available to the recipient. The recipient shall be entitled to rely solely on those representations and warranties that may be made to it in any final, fully executed and delivered Real Estate Purchase Agreement between it and Owner. The information contained herein is subject to change without notice and the recipient of these materials shall not look to Owner or REZA Investment Group Inc., nor any of their officers, employees, representatives, independent contractors or affiliates, for the accuracy or completeness thereof. Recipients of this Investment Offering Brochure are advised and encouraged to conduct their own comprehensive review and analysis of the Property. This Investment Offering Brochure is a solicitation of interest only and is not an offer to sell the Property. The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest to purchase the Property and expressly reserves the right, at its sole discretion, to terminate negotiations with any entity, for any reason, at any time with or without notice. The Owner shall have no legal commitment or obligation to any entity reviewing the Investment Offering Brochure or making an offer to purchase the Property unless and until the Owner executes and delivers a signed Real Estate Purchase Agreement on terms acceptable to Owner, in Owner s sole discretion. By submitting an offer, a prospective purchaser will be deemed to have acknowledged the foregoing and agreed to release the Owner and REZA Investment Group Inc. from any liability with respect thereto. To the extent Owner or any agent of Owner corresponds with any prospective purchaser, any prospective purchaser should not rely on any such correspondence or statements as binding Owner. Only a fully executed Real Estate Purchase Agreement shall bind the property and each prospective purchaser proceeds at its own risk. 2
Table of Contents 1 2 3 Executive Summary Property Overview Property Data Tenancy Property Highlights & Area Overview Site Plan Tenant Profiles Aerial Photo Location Map City Profile County Profile Lease Comparables Lease Comparables Lease Comparables Map 4 5 Financial Analysis Rent Roll 10 Year Cash Flow Argus Assumptions Performance Promissory Note Abstract Appendix Demographic Information Parcel Map 3
University Square Carson, CA Executive Summary
Property Overview Overview University Square is a recently constructed dd s (a Ross Dress For Less concept) anchored neighborhood shopping center that encompasses approximately 40,807 square feet of retail space in the dense and established Los Angeles South Bay community of Carson, CA. The property is prominently located at the intersection of S. Avalon Blvd. and E. Albertoni St. and is situated along the Artesia Freeway (California State Highway 91), with excellent freeway frontage, signage, and visibility. Investment highlights of this property include: Property Highlights Pride of Ownership asset with a strong anchor tenant draw Constructed in 2009, the Property is well maintained and is aesthetically attractive to both consumers and prospective tenants alike The in-place revenue stream within the property is largely derived from national/ regional tenants, which comprise approximately 89% of the in-place income stream Long-term lease structures, with approximately 88% of the occupied GLA in place through 2018 Tenant Highlights Excellent tenant mix within the discount retail and quick-service food categories Anchored by dd s Discounts, a Ross Dress For Less concept (lease is guaranteed by Ross). With approximately 115 stores nationwide (57 in California), dd s provides soft goods and merchandise at discount prices With FY 2012 revenues of $8.6 Billion, Ross Stores is a leading off-price apparel retailer in the U.S. Ranked #299 in the Fortune 500, the company operates approximately 1,125 locations in the U.S. With 15 locations throughout Southern California, El Pescador Restaurants have an established brand within the community. The location within the subject property boasts excellent sales revenues Other national and regional tenants include Panda Express, Fatburger, Subway, Ono Hawaiian BBQ, and Liberty Tax Service Location and Visibility Highlights Strong traffic counts, with average daily traffic counts of approximately 46,588 vehicles at the intersection of S. Avalon Blvd. and E. Albertoni St. Premier location, with visible frontage along the Artesia Freeway. The Artesia Freeway receives average daily traffic counts of approximately 196,000 vehicles at the Avalon Blvd. interchange A large freeway pylon sign provides excellent visibility for the center s tenants Multiple ingress/egress points directly into the center on S. Avalon Blvd. and E. Albertoni St. provide ease of access to the property Demographic Highlights The city of Carson is an established and infill submarket in the Los Angeles market. The property benefits from a large trade area, with a population over 172,050 residents and 662,162 residents within a three and five-mile radius, respectively University Square benefits from strong income demographics, with average household incomes of approximately $88,280 and $73,933 within a one and threemile radius of the property Approximately 42% of the local residents are of Hispanic descent (within a three-mile radius of the property). According to the Initiative for a Competitive Inner City (ICIC), the Hispanic market has the strongest purchasing power within urban locations, exceeding average U.S. household spending by approximately 20% With a current annual enrollment of approximately 14,670 students and faculty members, California State University Dominguez Hills is a significant economic driver within the area and is situated approximately ½ mile southeast of University Square. The subject property is one of the closest retail centers to the university and is frequented by both students and faculty members The Home Depot Center, a 125-acre, $150 Million sports and entertainment facility that hosts concerts and sporting events, is located on the California State Dominguez Hills campus and features a 27,000 seat main stadium. This regional facility is home to professional soccer clubs the Los Angeles Galaxy and Chivas USA and attracts significant consumer traffic to the trade area 5
Property Overview (cont d) Offering Highlights Price: $14,075,000 Occupancy: 97% As-Is Cap Rate: 6.75% As-Is Cash/Cash: 7.1% As-Is NOI: $949,964 Building Size: Loan Assumptions: Performance Promissory Note: 40,807 Sq. Ft. Buyer to assume existing loan subject to the following terms: Loan Amount: Approx. Balance (1/2014): Interest Rate: Amortization: Origination Date: Maturity Date: $8,500,000 $8,336,572 4.9% 30 Years October 2012 September 2022 Non-Recourse note held by Guggenheim Partners The property is also subject to a Performance Promissory Note that does not have any cash payment, principal, or interest obligations unless the default mechanisms are triggered. Please refer to the Performance Promissory Note Abstract in the Financial Analysis section for further information. Major Tenants Sq. Ft. % of Project Expiration Dates DD's Discount (Ross Dress for Less Guaranty) 21,700 53.2% Jan-20 El Pescador 6,505 15.9% Jun-19 Fatburger 2,200 5.4% Jan-19 Ono Hawaiian BBQ 2,008 4.9% Jan-19 Panda Express 2,000 4.9% Dec-18 El Burro Tacos & Beer 1,508 3.7% May-19 Liberty Tax Service 1,424 3.5% Apr-16 Cingular Staffing 1,200 2.9% Nov-15 Subway 1,146 2.8% Dec-18 Available 1,116 2.7% 40,807 Property Data Location: 17401-17421 Avalon Blvd., 481-501 E. Albertoni St. NWC Avalon Blvd. and E. Albertoni St. Carson, CA 90746-1430 Assessor s Parcel Number: 7339-001-019 Number of Buildings: 4 Land Size: 3.57 Acres Traffic Counts: 196,000 AADT Artesia Freeway (CA-91) 29,868 AADT Avalon Blvd. 16,720 AADT E. Albertoni St. Year Built: 2009 Rentable Squre Feet: 40,807 Avalon Blvd Albertoni St Gardena Fwy 6
University Square Carson, CA Property Highlights & Area Overview
Site Plan 91 Freeway Avalon Blvd Albertoni St Vacant 8
Tenant Profiles Logo Tenant Name No. of Locations Use Website Sales Market Capitalization dd's Discounts 1,125 Ross is a leading off-price retailer that sells mostly closeout merchandise, inlcuding men's, women's, and children's clothing, at prices well below those of department and speciality stores. It also sells small furnishings, toys and games, luggage, and jewelry. Ross also operates dd's Discounts, a chain of clothing and furniture stores, with prices below those of the main Ross Stores. www.rossstores.com $8.61 Billion NASDAQ(GS): ROST El Pescador 15 Fatburger 120+ Ono Hawaiian BBQ 45 Panda Express 1,537 Subway 38,984 Cingular Staffing 5 Liberty Tax Service 4,000+ For over 25 years, El Pescador Restaurants have been the place to find the best food, best live entertainment and the friendliest servers in town. They are a full service Mexican restaurant. Started in 1952, Fatburger is known for their signature 1/3 pound sandwich. They are cooked to order and use fresh ingredients. They are known as the "last great hamburger stand". Fatburger is located mostly in Southern California and has now spread to the rest of North America, Asia, Kuwait, China and Indonesia. Hawaii is a melting pot of ethnic cultures showing in its cuisine: a fusion of Hawaiian, Japanese, Korean, Chinese, and American dishes and Ono Hawaiian BBQ brings it to life. Their fresh ingredients and marinades are made from scratch. Panda Express is a fast casual restaurant serving American Chinese cuisine located in more than 44 states, Puerto Rico and Japan. The chain is primarily located in high-traffic locations, including malls, airports, sporting arenas, strip plazas, theme parks, and college campuses. It is the largest chain of Chinese fast food restaurants. Founded in 1965, Subway is a multi-national restaurant franchise (owned and operated by Doctor's Associates) that sells mainly sandwiches and salads. It is the largest single-brand restaurant chain globally and is the second largest restaurant operator globally. It operates 38,984 stores in 99 countries and territories. Cingular Staffing is a leader in providing workforce solutions. They offer a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporaryto-hire and direct-hire basis. Liberty Tax Service is a United States-based company specializing in the preparation of tax returns for individuals and small businesses. It currently stands as the third largest tax preparation franchise after 15 years of business. www.elpescadorrestaurants.com N/A Private www.fatburger.com N/A Private www.onohawaiianbbq.com N/A Private www.pandaexpress.com $1.5 Billion Private www.subway.com N/A Private www.cingularstaffing.com N/A Private www.libertytax.com N/A Private 9
Aerial Gardena Fwy (196,000 AADT) Cal State Dominguez Hills (Approx. 14,670 students & faculty) Avalon Blvd (29,868 AADT) Albertoni St (16,720 AADT) 10
Aerial (cont d) Albertoni St (16,720 AADT) Avalon Blvd (29,868 AADT) Gardena Fwy (196,000 AADT) 11
Location Map University Square 12
City Profile The city of Carson is located in Los Angeles County, California. Approximately 19 miles to the north is downtown Los Angeles, linked to Carson by Interstate Highway 110. Carson is primarily a manufacturing community. About half of its land mass is taken up by factories, refineries, and other industrial structures. After decades of existence as an unincorporated community of Los Angeles County, Carson was finally incorporated as a city in 1968 when its citizens took to the polls and voted to do so by a nearly 2-to- 1 margin. On the same date, by a much narrower vote, the citizens chose the name Carson for their new city over the name Dominguez (these were the two leading family names in the city s history). Following its incorporation, Carson acted quickly to enforce a strict landscaping and building code, resulting in modernizations and improvements in the city s industrial parks and overall appearance. Located in the South Bay section of Los Angeles County, Carson has grown from a population of 61,000 in 1968 to 92,376 in 2011. It is located 13 miles south of downtown Los Angeles and is known as a suburb of the city. While Carson is well known as an industrial center with unparalleled access to transportation and the Pacific Rim, it is also a culturally diverse community that is an attractive place to live and work. The city has more than 120 acres of park land divided into 12 parks, 2 mini-parks, and sports/ recreational facilities that include 3 swimming pools, a boxing center, a state-of-the-art sports complex and the Carson Community Center. These facilities allow the residents of Carson to enjoy a variety of sports, recreational and cultural programs. Carson is part of the Los Angeles Unified School District. Most notably, it is home to the California State University, Dominguez Hills. It is one the more racially diverse campuses in the United States. Carson is also home to the California Academy for Math & Science which was rated in Newsweek Magazine as one of the top 20 high schools in the country. It also the location of the Home Depot Center, a sports complex including a soccerspecific stadium used by the Los Angeles Galaxy, the Los Angeles Sol, and Chivas USA, a tennis stadium and a track and field facility. It is also the default home ground for the United States men s national soccer team. Home Depot Center 13
County Profile Los Angeles County, one of California s original 27 counties, was established Feb. 18, 1850, is the largest international trade center in the United States. It is also a national leader in manufacturing and distribution. Originally the County occupied a comparatively small area along the coast between Santa Barbara and San Diego, but within a year its boundaries were enlarged from 4,340 square miles to 34,520 square miles, an area sprawling east to the Colorado River. During subsequent years, Los Angeles County slowly ebbed to its present size, the last major detachment occurring in 1889 with the creation of Orange County. Los Angeles County remains one of the nation s largest counties with 4,084 square miles, an area some 800 square miles larger than the combined area of the states of Delaware and Rhode Island. Los Angeles County includes the islands of San Clemente and Santa Catalina. It is bordered on the east by Orange and San Bernardino Counties, on the north by Kern County, on the west by Ventura County, and on the south by the Pacific Ocean. Its coastline is 81 miles long. The County has the largest population (9,962,789) of any county in the nation, and is exceeded by only seven states. Approximately 27 percent of California residents reside in Los Angeles County. There are 88 cities within the County, each with its own city council. More than 65 percent of the County is unincorporated. The 2012-2013 County adopted budget is approximately $27.585 billion. Twenty-one percent of the revenue comes from the state, 21% from the federal government, 19% from property taxes, and 39% from other sources. The largest percentage - 23% - of the budget goes to pay for social services, while 19% is spent on public protection and 23% on health services. The cost of living in Los Angeles is lower than in other major U.S. cities, including San Francisco, Boston, New York, Washington, D.C. and Chicago. (LA s Business Team) Los Angeles International Airport (LAX) is the largest origin and destination (i.e. non-connecting flights) airport in the world, and the sixth largest in terms of total passenger volume. Also, LAX is one of the busiest cargo airports in the world. L.A. County also has two smaller airports with regularly scheduled domestic service: Long Beach (LGB) and Bob Hope (BUR) in Burbank. (LAEDC) International trade is a major driver of the area s economy. The Los Angeles Customs District which includes the ports of Long Beach and Los Angeles, Port Hueneme, and Los Angeles International Airport is the nation s largest. Los Angeles County has a labor force of 4,839,900 people. (Labor Market Information Division, EDD) Small companies account for 99.4% of all businesses that pay taxes in Los Angeles County, and they employ more than 70% of the county s 4.8 million payroll workers. (State of California) The County, with 101,296 budgeted employees and 37 departments, is the largest employer in the five-county region. Of these, 31,568 of the positions are in law and justice; 28,772 are in health services; and 21,405 are in social services. Economic & Business Climate The tourism industry in Los Angeles County attracted approximately 41.4 million visitors and generated approximately $16.5 billion in visitor spending and $30.5 billion in total economic impact in 2012 (Los Angeles Convention and Visitors Bureau) Los Angeles is the largest manufacturing center in the US. The most important sectors are apparel, computer and electronic products, transportation products, fabricated metals, food products, aerospace products and parts and search, detection and navigation products and furniture. If it were a separate state, the county would be the eighth largest manufacturing state in the union. (LAEDC) 14
County Profile (cont d) Demographic Profile for the Los Angeles Metropolitan Area Total Population Households 2000 Total 9,519,338 3,133,774 2010 Total 9,818,605 3,445,076 2012 Total 9,962,789 3,449,273 Persons Under 18 years, Percent, 2011 24.10% Bachelor's Degree or Higher, % of Persons Age 25+, 2007-2011 29.20% Home Ownership Rate, 2007-2011 47.80% Median Household Income Income 2008 Median Household Income $55,452 2007-2011 Median Household Income $56,266 Airports Passengers per day Los Angeles Int'l Airport (LAX) 154,112 Employment by Occupation Industry Percentage Management 4.8 Business and financial operations 4.8 Computer and mathematical 2.7 Architecture and engineering 1.8 Life, physical, and social science 0.8 Community and social services 1.5 Legal 0.8 Education, training, and library 6.6 Arts, design, entertainment, sports, and media 1.3 Industry Percentage Healthcare practitioner and technical 5.9 Healthcare support 3.1 Protective service 2.5 Food preparation and serving related 8.7 Building and grounds cleaning and maintenance 3.3 Personal care and service 2.8 Sales and related 10.6 Office and administrative support 16.7 Farming, fishing, and forestry 0.3 Construction and extraction 3.9 Installation, maintenance, and repair 3.9 Production 6.5 Transportation and material moving 6.7 Sources: AnySite Corporationk Discover Los Angeles, Ca Dept of Trans, Los Angeles International Airport, LAEDC 15
University Square Carson, CA Lease Comparables
Lease Comparables Property Address Year Built Total Sq. Ft. Vacant Sq. Ft. Percent Vacant Asking/Average Rents/SF Lease Type Tenants Photos 1 South Bay Plaza E. Dominguez St. and Bonita St. 930-940 E. Dominguez St. Carson, CA 1978 *recent remodel 44,044 2,018 5% $3.00 NNN El Taco Charro, Jerry s Cleaners, House of Seafood, Pho King Way, Carson-Avalon Dialysis 2 Carson Plaza E. University Dr. and Avalon Blvd. 603-677 E. University Dr. Carson, CA 1991 80,838 10,780 13% $2.50 NNN Ralphs, Crown Drugs, Domino s Pizza, Baskin Robbins, Curves, Newstar Nails, Jackson Hewitt Financial 3 Torrance Western Shopping Center (Corner Pad) S. Western Ave. and W. 182nd St. 18203 S. Western Ave. Torrance, CA 2013 *new pad 37,235 3,192 9% $3.35 NNN 99 Cents Only, 7-11, Subway Kula Sushi, Kaizen Karate * Property Averages 54,039 5,330 9% $2.95 17
Lease Comparables Map University Square 3 2 1 18
University Square Carson, CA Financial Analysis
Rent Roll 1 1 2 2 3 3 4 4 Tenant Name Type & Suite Number Lease Dates & Term DD s Discount Retail, Suite: A1 Jun-2009 to Jan-2020 128 Months Floor SqFt Bldg Share 21,700 53.18% Rate & Amount per Year per Month $14.50 $314,650 $1.21 $26,221 Changes on Changes to Description of Operating Expense Reimbursements Imprvmnts Rate Amount Commssns Rate Amount Assumption about subsequent terms for this tenant Jun-2014 $15.00 See method: DD s - - Option $15 MLA Notes: Note: Lease is Guaranteed by Ross Dress For Less. This lease does not have their standard 5 year kick-out clause. Prop. 13: Tenant not responsible for increase in property taxes on more than 2 change of ownership assessments during intital term and more than 1 during each option. DD s Discount Option, Suite: A1 Feb-2020 to Jan-2040 240 Months 21,700 53.18% Notes: Options: Tenant has 4-5 Yr. options at the above rates Panda Express Retail, Suite: B1 Dec-2008 to Dec-2018 121 Months Panda Express Option, Suite: B1 Jan-2019 to Dec-2038 240 Months 2,000 4.90% 2,000 4.90% Notes: Options: Tenant has 4-5 Yr. options at the above rates Ono Hawaiian BBQ Retail, Suite: B2 Jan-2014 to Jan-2019 61 Months 2,008 4.92% $16.00 $347,200 $1.33 $28,933 $46.20 $92,400 $3.85 $7,700 $50.82 $101,640 $4.24 $8,470 $31.80 $63,854 $2.65 $5,321 Feb-2025 Feb-2030 Feb-2035 Jan-2024 Jan-2029 Jan-2034 Notes: Rent Commencement starts Feb. 2014. Used Jan. 2014 to include 1 full year of income in Argus. Ono Hawaiian BBQ Option, Suite: B2 Feb-2019 to Jan-2029 120 Months 2,008 4.92% Notes: Options: Tenant has 2-5 Yr. options at the above rates Fatburger Retail, Suite: B3 Jan-2009 to Jan-2019 121 Months Fatburger Option, Suite: B3 Feb-2019 to Jan-2034 180 Months 2,200 5.39% 2,200 5.39% Notes: Options: Tenant has 3-5 Yr. options at the above rates $36.00 $72,288 $3.00 $6,024 $38.40 $84,480 $3.20 $7,040 $48.17 $105,972 $4.01 $8,831 $17.00 $18.00 $19.00 - - See method: NNN - 15% Admin. (C) $55.90 $61.49 $67.64 See method: DD s - - Market $15 MLA See method: NNN - 15% Admin. (C) - - See method: NNN - 15% Admin. (C) Feb-2024 $40.32 See method: NNN - 15% Admin. (C) Feb-2014 $43.01 See method: Fatburger Feb-2024 Feb-2029 $53.95 $60.42 See method: Fatburger - - Option $36 MLA - - Market $36 MLA - - Option $36 MLA - - Market $36 MLA - - Option $36 MLA - - Market $36 MLA 20
Rent Roll (cont d) Tenant Name Type & Suite Number Lease Dates & Term Floor SqFt Bldg Share Rate & Amount per Year per Month Changes on Changes to Description of Operating Expense Reimbursements Imprvmnts Rate Amount Commssns Rate Amount Assumption about subsequent terms for this tenant 5 El Pescador Retail, Suite: C Jul-2009 to Jun-2019 120 Months 6,505 15.94% $36.86 $239,806 $3.07 $19,984 Dec-2014 Dec-2015 Dec-2016 Dec-2017 Dec-2018 $37.97 $39.11 $40.28 $41.49 $42.74 See method: NNN - 8% Admin. (C,T,I) - - Option $36 MLA 5 El Pescador Option, Suite: C Jul-2019 to Jun-2039 240 Months 6,505 15.94% $42.74 $278,001 $3.56 $23,167 Dec-2019 Dec-2020 Dec-2021 Dec-2022 Dec-2023 Dec-2024 Dec-2025 Dec-2026 Dec-2027 Dec-2028 Dec-2029 Dec-2030 Dec-2031 Dec-2032 Dec-2033 Dec-2034 Dec-2035 Dec-2036 Dec-2037 Dec-2038 $44.02 $45.34 $46.70 $48.10 $49.54 $51.03 $52.56 $54.14 $55.76 $57.43 $59.16 $60.93 $62.76 $64.64 $66.58 $68.58 $70.64 $72.76 $74.94 $77.19 See method: NNN - 8% Admin. (C,T,I) - - Market $36 MLA Notes: Options: Tenant has 4-5 Yr. options at the above rates 6 El Burro Tacos & Beer Retail, Suite: D1 Dec-2008 to May-2019 126 Months 1,508 3.70% $49.44 $74,556 $4.12 $6,213 Dec-2014 Dec-2015 Dec-2016 Dec-2017 Dec-2018 $50.92 $52.45 $54.02 $55.65 $57.31 See method: NNN - 15% Admin. (C,I) - - Option $36 MLA 6 El Burro Tacos & Beer Option, Suite: D1 Jun-2019 to May-2029 120 Months 1,508 3.70% $57.31 $86,430 $4.78 $7,203 Dec-2019 Dec-2020 Dec-2021 Dec-2022 Dec-2023 Dec-2024 Dec-2025 Dec-2026 Dec-2027 Dec-2028 $59.03 $60.80 $62.63 $64.51 $66.44 $68.44 $70.49 $72.60 $74.78 $77.03 See method: NNN - 15% Admin. (C,I) - - Market $36 MLA Notes: Options: Tenant has 2-5 Yr. options at the above rates 21
Rent Roll (cont d) 7 7 8 9 9 10 Tenant Name Type & Suite Number Lease Dates & Term Subway Retail, Suite: D2 Dec-2008 to Dec-2018 121 Months Floor SqFt Bldg Share 1,146 2.81% Rate & Amount per Year per Month $41.39 $47,437 $3.45 $3,953 Changes on Dec-2014 Dec-2015 Dec-2016 Dec-2017 Dec-2018 Notes: Scheduled Rent Increases: Tenant has annual CPI increase w/ a maximum of 4%. Used 3% above. Subway Option, Suite: D2 Jan-2019 to Dec-2028 120 Months 1,146 2.81% $47.99 $54,993 $4.00 $4,583 Dec-2019 Dec-2020 Dec-2021 Dec-2022 Dec-2023 Dec-2024 Dec-2025 Dec-2026 Dec-2027 Dec-2028 Notes: Options: Tenant has 2-5 Yr. options at annual CPI increase w/ a maximum of 4%. Used 3% above. Available Retail, Suite: D3 Jan-2015 to Dec-2019 60 Months Cingular Staffing Retail, Suite: D4-A Dec-2010 to Nov-2015 60 Months Cingular Staffing Option, Suite: D4-A Dec-2015 to Nov-2020 60 Months 1,116 2.73% 1,200 2.94% 1,200 2.94% Notes: Options: Tenant has 1-5 Yr. options at the above rates Liberty Tax Service Retail, Suite: D4-B Mar-2013 to Apr-2016 38 Months 1,424 3.49% Total Occupied SqFt 39,691 Total Available SqFt 1,116 $32.96 $36,783 $2.75 $3,065 $27.86 $33,438 $2.32 $2,786 $29.56 $35,474 $2.46 $2,956 $16.20 $23,069 $1.35 $1,922 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Changes to $42.64 $43.91 $45.23 $46.59 $47.99 $49.43 $50.91 $52.44 $54.01 $55.63 $57.30 $59.02 $60.79 $62.61 $64.49 $33.95 $34.97 $36.02 $37.10 Description of Operating Expense Reimbursements See method: NNN - 10% Admin. (C,I) See method: NNN - 10% Admin. (C,I) See method: NNN - 15% Admin. (C,I) Dec-2014 $28.70 See method: NNN - 15% Admin. (C,I) Dec-2016 Dec-2017 Dec-2018 Dec-2019 Mar-2014 Mar-2015 Mar-2016 $30.45 $31.36 $32.30 $33.27 $16.69 $17.19 $17.70 See method: NNN - 15% Admin. (C,I) See method: NNN - 15% Admin. (C) Imprvmnts Rate Amount Commssns Rate Amount Assumption about subsequent terms for this tenant - - Option $36 MLA - - Market $36 MLA - - Market $32F MLA - - Option $27 MLA - - Market $27 MLA - - Market $18 MLA 22
10 Year Income & Expense For the Years Ending Year 1 Dec-2014 Year 2 Dec-2015 Year 3 Dec-2016 Year 4 Dec-2017 Year 5 Dec-2018 Year 6 Dec-2019 Year 7 Dec-2020 Year 8 Dec-2021 Year 9 Dec-2022 Year 10 Dec-2023 Year 11 Dec-2024 Potential Gross Revenue Base Rental Revenue $1,026,589 $1,045,621 $1,061,023 $1,075,961 $1,090,949 $1,133,767 $1,171,004 $1,186,734 $1,201,987 $1,217,954 $1,264,173 Absorption & Turnover Vacancy (35,712) (4,532) (10,331) (8,575) Scheduled Base Rental Revenue 990,877 1,045,621 1,056,491 1,075,961 1,090,949 1,133,767 1,160,673 1,178,159 1,201,987 1,217,954 1,264,173 Expense Reimbursement Revenue Trash Removal(3 bins) Trash Removal(1 bin) Debris Pickup/Hauling Repairs & Maintenance Dayporter Roads & Grounds Parking Lot Sweeping Utilities(Elec. & Water) Property Taxes Insurance - General Liab. Insurance - Property 20,908 7,092 130 13,649 10,832 10,888 1,810 17,337 177,053 3,650 5,196 22,907 7,520 137 14,495 11,485 11,539 1,865 18,413 187,446 3,879 5,521 23,294 7,698 139 14,836 11,757 11,815 1,921 18,844 191,957 3,985 5,670 24,300 7,977 144 15,377 12,182 12,243 1,978 19,532 198,861 4,136 5,889 25,031 8,217 149 15,840 12,548 12,614 2,038 20,118 204,829 4,262 6,064 25,780 8,465 154 16,316 12,927 12,989 2,099 20,719 210,972 4,389 6,247 26,147 8,654 157 16,674 13,216 13,282 2,162 21,179 215,792 4,484 6,385 26,856 8,901 162 17,152 13,596 13,662 2,227 21,784 221,986 4,613 6,565 28,172 9,247 168 17,828 14,125 14,194 2,293 22,644 230,537 4,795 6,827 29,016 9,526 174 18,364 14,548 14,620 2,362 23,323 237,450 4,939 7,033 29,887 9,812 178 18,915 14,985 15,058 2,433 24,021 244,575 5,087 7,243 Total Reimbursement Revenue 268,545 285,207 291,916 302,619 311,710 321,057 328,132 337,504 350,830 361,355 372,194 Total Potential Gross Revenue 1,259,422 1,330,828 1,348,407 1,378,580 1,402,659 1,454,824 1,488,805 1,515,663 1,552,817 1,579,309 1,636,367 General Vacancy (43,401) (39,768) (45,370) (46,356) (48,739) (39,397) (42,079) (51,837) (52,908) (55,500) Effective Gross Revenue 1,259,422 1,287,427 1,308,639 1,333,210 1,356,303 1,406,085 1,449,408 1,473,584 1,500,980 1,526,401 1,580,867 Operating Expenses Trash Removal(3 bins) Trash Removal(1 bin) Debris Pickup/Hauling Repairs & Maintenance Dayporter Roads & Grounds Parking Lot Sweeping Utilities(Elec. & Water) Property Taxes Insurance - General Liab. Insurance - Property HVAC Maint.-DD s(nr) Property Management(NR) 19,800 6,600 120 13,510 10,080 10,130 3,120 17,100 180,456 3,673 5,229 1,600 38,040 20,394 6,798 124 13,915 10,382 10,434 3,214 17,613 185,870 3,783 5,386 1,648 39,181 21,006 7,002 127 14,333 10,694 10,747 3,310 18,141 191,446 3,897 5,547 1,697 40,357 21,636 7,212 131 14,763 11,015 11,069 3,409 18,686 197,189 4,014 5,714 1,748 41,567 Total Operating Expenses 309,458 318,742 328,304 338,153 348,297 358,747 369,509 380,595 392,012 403,774 415,886 Net Operating Income 949,964 968,685 980,335 995,057 1,008,006 1,047,338 1,079,899 1,092,989 1,108,968 1,122,627 1,164,981 22,285 7,428 135 15,206 11,345 11,401 3,512 19,246 203,105 4,134 5,885 1,801 42,814 22,954 7,651 139 15,662 11,685 11,743 3,617 19,824 209,198 4,258 6,062 1,855 44,099 23,642 7,881 143 16,132 12,036 12,096 3,725 20,418 215,474 4,386 6,244 1,910 45,422 24,352 8,117 148 16,616 12,397 12,459 3,837 21,031 221,938 4,517 6,431 1,968 46,784 25,082 8,361 152 17,114 12,769 12,832 3,952 21,662 228,596 4,653 6,624 2,027 48,188 25,835 8,612 157 17,627 13,152 13,217 4,071 22,312 235,454 4,792 6,823 2,088 49,634 26,610 8,870 161 18,156 13,547 13,614 4,193 22,981 242,518 4,936 7,027 2,150 51,123 23
Argus Assumptions Analysis Period Commencement Date January 2014 Term 10 Years Area Measures Building Square Feet 40,807 Inflation Rates General 3% Annually Operating Expenses All expenses have been taken from the 2013 Budget with management set at 3% of the Effective Operating Income and property taxes adjusted to 1.228% of $14,075,000. Ownership currently has Earthquake Insurance through a master policy, did not include in this analysis, DD s does not reimburse for Earthquake Insurance. All expenses inflated at annual 3%. General Vacancy Loss First year is actual vacancy. Years 2 through 10 are 5% of the potential gross revenue excluding DD s Discount. Renewals/Expirations Several tenants have options to renew after their initial lease period. For tenants with options, their option terms have been applied once the tenant s primary term ends. The speculative renewal is applied at the termination of all tenants primary and option terms (if applicable). Market Leasing Assumptions Lease Retention Ratio 75% Rent Adjustments Annual 3% Inc. Downtime 6 months (which equates to 2 months vacant) Rent Abatement - None Reimbursement Method* NNN 15% Admin CI Lease Term 5 Years Tenant Improvements - $20/$0SF (New/Renewal) Leasing Commissions 4%/0% Rent (New/Renewal) * NNN 15% Admin CI - tenants pay their respective prorata share of operating expenses as well as a 15% admin fee, which is charged to cam and insurance. Property Purchase & Resale IRR Calculations Purchase Price: $14,075,000 Resale Method: Capitalize Net Operating Income Resale Cap Rate: 6.75% Cap Year: Year 11 24
Performance Promissory Note Abstract Existence of Performance Promissory Note between Seller and Carson Redevelopment Agency, a public body, corporate and politic ( Agency ), in accordance with that certain Disposition and Development Agreement dated as of May 18, 2006 (the Agreement ) by and between Seller and Agency. Current note balance is $600,000.00 (Six hundred thousand dollars). Maturity Date is October 1, 2015. Each October 1st (the anniversary of the issuance of the certificate of occupancy for the El Pescador Restaurant), a credit of $300,000 of the remaining Note Amount shall be given, subject to the El Pescador Restaurant remaining in operation and open for business for the entire year for which credit is to be given, i.e. the previous twelve (12) months. In the event El Pescador Restaurant closes for business for longer than a ten (10) day period, exclusive of legal holidays, then Seller shall have up to six (6) months to find a replacement restaurant acceptable to the Agency and the new restaurant shall be in operation within one hundred and twenty (120) days of its approval. Credits shall only be given for full years of operation. In the event of a closure and new restaurant the Maturity Date shall be extended by the time needed to obtain a new approved restaurant and make it operational, however, said time shall not exceed the combination of the six (6) months to find a replacement and the additional four (4) months for the new restaurant to become operational. No cash payments of principal or interest shall be due hereunder during the term of this Note unless the Note is accelerated due to an Event of Default under the Agreement has occurred. Except as hereinafter provided, on the Maturity Date all outstanding sums of unpaid principal thereon shall be due and payable by Seller. In summary, if El Pescador Restaurant continues operating through October 1, 2015 the Note balances the following years will be: October 1, 2014 - $300,000 October 1, 2015 - $0.00 Seller will indemnify and hold Buyer harmless from any and all payments made by Buyer to the Agency under the Performance Promissory Note. Please contact listing broker for additional details. 25
University Square Carson, CA Appendix
Demographics POPULATION 1 mile 3 mile 5 mile 2011 Male Population 6,364 83,207 325,030 2011 Female Population 7,402 88,843 337,132 % 2011 Male Population 46.23% 48.36% 49.09% % 2011 Female Population 53.77% 51.64% 50.91% 2011 Total Adult Population 10,651 130,149 489,230 2011 Total Daytime Population 23,943 206,130 623,936 2011 Total Daytime Work Population 17,372 115,356 269,872 2011 Median Age Total Population 23 25 23 2011 Median Age Adult Population 33 35 33 2011 Age 0-5 496 8,404 37,555 2011 Age 6-13 763 10,905 46,608 2011 Age 14-17 1,857 22,592 88,770 2011 Age 18-20 2,322 19,983 79,092 2011 Age 21-24 1,926 22,707 95,590 2011 Age 25-29 627 9,978 41,568 2011 Age 30-34 575 9,590 39,249 2011 Age 35-39 656 9,719 38,511 2011 Age 40-44 683 9,700 37,036 2011 Age 45-49 678 9,098 34,545 2011 Age 50-54 634 8,274 30,249 2011 Age 55-59 699 7,638 25,568 2011 Age 60-64 620 6,684 20,555 2011 Age 65-69 474 5,365 15,165 2011 Age 70-74 333 4,451 12,013 2011 Age 75-79 216 3,309 9,066 2011 Age 80-84 113 2,060 6,092 2011 Age 85+ 95 1,596 4,931 % 2011 Age 0-5 3.60% 4.88% 5.67% % 2011 Age 6-13 5.54% 6.34% 7.04% % 2011 Age 14-17 13.49% 13.13% 13.41% % 2011 Age 18-20 16.87% 11.61% 11.94% % 2011 Age 21-24 13.99% 13.20% 14.44% POPULATION 1 mile 3 mile 5 mile % 2011 Age 25-29 4.55% 5.80% 6.28% % 2011 Age 30-34 4.18% 5.57% 5.93% % 2011 Age 35-39 4.77% 5.65% 5.82% % 2011 Age 40-44 4.96% 5.64% 5.59% % 2011 Age 45-49 4.92% 5.29% 5.22% % 2011 Age 50-54 4.61% 4.81% 4.57% % 2011 Age 55-59 5.08% 4.44% 3.86% % 2011 Age 60-64 4.50% 3.88% 3.10% % 2011 Age 65-69 3.44% 3.12% 2.29% % 2011 Age 70-74 2.42% 2.59% 1.81% % 2011 Age 75-79 1.57% 1.92% 1.37% % 2011 Age 80-84 0.82% 1.20% 0.92% % 2011 Age 85+ 0.69% 0.93% 0.74% 2011 White Population 3,085 38,455 188,957 2011 Black Population 6,349 56,204 163,176 2011 Asian/Hawaiian/Pacific Islander 1,537 30,901 96,574 2011 American Indian/Alaska Native 55 999 4,262 2011 Other Population (Incl 2+ Races) 2,741 45,491 209,193 2011 Hispanic Population 4,502 71,420 336,956 2011 Non-Hispanic Population 9,264 100,630 325,206 % 2011 White Population 22.41% 22.35% 28.54% % 2011 Black Population 46.12% 32.67% 24.64% % 2011 Asian/Hawaiian/Pacific Islander 11.16% 17.96% 14.58% % 2011 American Indian/Alaska Native 0.40% 0.58% 0.64% % 2011 Other Population (Incl 2+ Races) 19.91% 26.44% 31.59% % 2011 Hispanic Population 32.70% 41.51% 50.89% % 2011 Non-Hispanic Population 67.30% 58.49% 49.11% 2000 Non-Hispanic White 1,457 15,157 73,371 2000 Non-Hispanic Black 5,829 58,622 177,027 2000 Non-Hispanic Amer Indian/Alaska Native 29 449 1,664 2000 Non-Hispanic Asian 798 26,778 77,149 2000 Non-Hispanic Hawaiian/Pacific Islander 157 1,573 6,316 Source: Claritas 27
Demographics (cont d) POPULATION 1 mile 3 mile 5 mile 2000 Non-Hispanic Some Other Race 51 335 1,441 2000 Non-Hispanic Two or More Races 259 3,790 13,871 % 2000 Non-Hispanic White 16.98% 14.20% 20.91% % 2000 Non-Hispanic Black 67.94% 54.94% 50.46% % 2000 Non-Hispanic Amer Indian/Alaska Native 0.34% 0.42% 0.47% % 2000 Non-Hispanic Asian 9.30% 25.10% 21.99% % 2000 Non-Hispanic Hawaiian/Pacific Islander 1.83% 1.47% 1.80% % 2000 Non-Hispanic Some Other Race 0.59% 0.31% 0.41% % 2000 Non-Hispanic Two or More Races 3.02% 3.55% 3.95% Population Change 1 mile 3 mile 5 mile Total Employees n/a n/a n/a Total Establishemnts n/a n/a n/a 2011 Total Population 13,766 172,050 662,162 2011 Total Households 3,988 51,821 186,572 Population Change 1990-2011 1,684 12,961 78,511 Household Change 1990-2011 396 2,607 9,988 % Population Change 1990-2011 13.94% 8.15% 13.45% % Household Change 1990-2011 11.02% 5.30% 5.66% Population Change 2000-2011 1,091 4,897 28,262 Household Change 2000-2011 372 1,053 4,645 % Population Change 2000-2011 8.61% 2.93% 4.46% % Households Change 2000-2011 10.29% 2.07% 2.55% Housing 1 mile 3 mile 5 mile 2000 Total Housing Units 3,706 52,621 190,584 2000 Occupied Housing Units 3,621 50,680 182,000 2000 Owner Occupied Housing Units 3,163 31,307 96,273 2000 Renter Occupied Housing Units 458 19,373 85,728 2000 Vacant Housing Units 85 1,941 8,583 % 2000 Occupied Housing Units 97.71% 96.31% 95.50% % 2000 Owner Occupied Housing Units 85.35% 59.50% 50.51% % 2000 Renter Occupied Housing Units 12.36% 36.82% 44.98% % 2000 Vacant Housing Units 2.29% 3.69% 4.50% Income 1 mile 3 mile 5 mile 2011 Median Household Income $63,208 $54,008 $47,163 2011 Per Capita Income $25,575 $22,269 $18,899 2011 Average Household Income $88,280 $73,933 $67,073 2011 Household Income < $10,000 94 2,467 13,132 2011 Household Income $10,000-$14,999 107 2,504 11,927 2011 Household Income $15,000-$19,999 166 2,657 11,082 2011 Household Income $20,000-$24,999 173 2,587 10,835 2011 Household Income $25,000-$29,999 63 3,080 11,633 2011 Household Income $30,000-$34,999 212 2,633 10,721 2011 Household Income $35,000-$39,999 163 2,489 10,453 2011 Household Income $40,000-$44,999 167 2,844 9,764 2011 Household Income $45,000-$49,999 193 2,679 8,638 2011 Household Income $50,000-$59,999 492 4,917 15,996 2011 Household Income $60,000-$74,999 762 6,668 19,640 2011 Household Income $75,000-$99,999 584 6,957 23,019 2011 Household Income $100,000-$124,999 192 3,910 12,452 2011 Household Income $125,000-$149,999 214 2,774 7,756 2011 Household Income $150,000-$199,999 268 1,711 6,054 2011 Household Income $200,000-$249,999 42 465 1,774 2011 Household Income $250,000-$499,999 92 455 1,507 2011 Household Income $500,000+ 2 25 188 2011 Household Income $200,000+ 136 944 3,469 % 2011 Household Income < $10,000 2.36% 4.76% 7.04% % 2011 Household Income $10,000-$14,999 2.68% 4.83% 6.39% % 2011 Household Income $15,000-$19,999 4.16% 5.13% 5.94% % 2011 Household Income $20,000-$24,999 4.34% 4.99% 5.81% % 2011 Household Income $25,000-$29,999 1.58% 5.94% 6.24% % 2011 Household Income $30,000-$34,999 5.32% 5.08% 5.75% % 2011 Household Income $35,000-$39,999 4.09% 4.80% 5.60% % 2011 Household Income $40,000-$44,999 4.19% 5.49% 5.23% % 2011 Household Income $45,000-$49,999 4.84% 5.17% 4.63% % 2011 Household Income $50,000-$59,999 12.34% 9.49% 8.57% Source: Claritas 28
Demographics (cont d) Income 1 mile 3 mile 5 mile % 2011 Household Income $60,000-$74,999 19.12% 12.87% 10.53% % 2011 Household Income $75,000-$99,999 14.65% 13.42% 12.34% % 2011 Household Income $100,000-$124,999 4.82% 7.55% 6.67% % 2011 Household Income $125,000-$149,999 5.37% 5.35% 4.16% % 2011 Household Income $150,000-$199,999 6.72% 3.30% 3.24% % 2011 Household Income $200,000-$249,999 1.05% 0.90% 0.95% % 2011 Household Income $250,000-$499,999 2.31% 0.88% 0.81% % 2011 Household Income $500,000+ 0.05% 0.05% 0.10% % 2011 Household Income $200,000+ 3.41% 1.82% 1.86% Retail Sales Volume 1 mile 3 mile 5 mile 2011 Children/Infants Clothing Stores $1,756,088 $20,849,733 $69,605,209 2011 Jewelry Stores $1,322,885 $15,665,264 $52,215,989 2011 Mens Clothing Stores $2,586,079 $31,108,928 $104,404,292 2011 Shoe Stores $2,420,849 $28,875,747 $96,396,516 2011 Womens Clothing Stores $4,663,909 $55,898,436 $186,478,805 2011 Automobile Dealers $35,120,795 $393,942,044 $1,271,579,096 Retail Sales Volume 1 mile 3 mile 5 mile 2011 Furniture Stores $3,196,347 $37,293,812 $123,087,191 2011 Home Furnishings Stores $1,892,484 $22,984,979 $77,886,596 2011 Gen Merch/Appliance/Furniture Stores $28,001,868 $329,663,141 $1,093,869,893 2011 Gasoline Stations w/ Convenience Stores $18,459,340 $203,555,572 $706,954,934 2011 Other Gasoline Stations $13,106,647 $161,198,029 $548,319,453 2011 Department Stores excl Leased Depts $30,953,442 $365,186,150 $1,212,957,271 2011 General Merchandise Stores $24,805,519 $292,369,333 $970,782,709 2011 Other Health/Personal Care Stores $2,228,767 $25,198,331 $81,827,233 2011 Pharmacies/Drug Stores $10,886,377 $126,157,949 $415,448,800 2011 Pet/Pet Supplies Stores $1,563,495 $18,208,078 $59,923,771 2011 Book/Periodical/Music Stores $391,814 $5,775,940 $20,844,963 2011 Hobby/Toy/Game Stores $893,632 $8,583,147 $25,163,461 2011 Musical Instrument/Supplies Stores $300,446 $3,443,936 $11,249,635 2011 Sewing/Needlework/Piece Goods Stores $83,824 $1,092,224 $3,805,022 2011 Sporting Goods Stores $1,232,371 $17,498,878 $63,900,799 2011 Video Tape Stores - Retail $255,971 $2,999,735 $9,923,160 2011 Automotive Parts/Acc/Repair Stores $4,061,043 $47,248,227 $155,817,143 2011 Other Motor Vehicle Dealers $1,182,889 $14,104,593 $47,190,442 2011 Tire Dealers $1,096,740 $12,740,343 $41,936,638 2011 Hardware Stores $513,385 $6,020,700 $20,818,148 2011 Home Centers $3,579,984 $40,299,744 $131,042,018 2011 Nursery/Garden Centers $1,163,695 $13,390,786 $43,958,041 2011 Outdoor Power Equipment Stores $498,923 $5,145,532 $15,802,674 2011 Paint/Wallpaper Stores $143,986 $1,581,476 $5,054,390 2011 Appliance/TV/Other Electronics Stores $2,951,575 $35,523,006 $119,087,374 2011 Camera/Photographic Supplies Stores $513,014 $5,980,735 $19,766,208 2011 Computer/Software Stores $1,589,094 $18,401,358 $60,350,859 2011 Beer/Wine/Liquor Stores $1,888,227 $22,497,676 $75,292,742 2011 Convenience/Specialty Food Stores $5,352,691 $42,357,539 $158,635,468 2011 Restaurant Expenditures $20,851,727 $189,680,898 $655,951,786 2011 Supermarkets/Other Grocery excl Conv $22,516,818 $261,439,364 $861,627,705 Source: Claritas 29
Parcel Map 30
18662 MacArthur Blvd., Suite 300, Irvine, CA 92612 Tel 949.833.3380 Fax 949.833.3382 www.rezacompanies.com