Otay Mesa, San Diego Southern California A 205,800 SQUARE FOOT INSTITUTIONAL-QUALITY INDUSTRIAL FACILITY 100% LEASED TO THREE INVESTMENT GRADE CREDIT AND INTERNATIONAL COMPANIES Holliday Fenoglio Fowler, L.P., acting by and through Holliday GP Corp., a real estate broker licensed with the California Department of Real Estate, License Number 01385740 ( HFF )
opportunity HFF has been exclusively retained to offer qualified investors the opportunity to purchase the fee simple interest in Dublin Drive (the Property ), a 100% leased 205,800 square foot, institutional quality industrial building located in one of the strongest industrial markets in the nation, Otay Mesa, San Diego, California. Dublin Drive offers stable in-place cash flow from credit tenancy including Fortune 100 company Honeywell International Inc., which has occupied the Property since 1990, as well as significant value growth potential via below-market rents in an extremely tight submarket that currently boasts 4.6% vacancy*. The Property benefits from close proximity to the US/Mexico international border and its location within the Foreign Trade Zone, which sees over $580 Billion in volume annually. Dublin Drive is offered for sale with no asking price and no existing debt encumbrance, allowing an investor to capitalize on the historically low interest rate environment. PROPERTY SUMMARY PROPERTY ADDRESS PROPERTY TYPE Dublin Drive San Diego, CA 92154 Multi-Tenant Industrial Building YEAR BUILT 1990 DUBLIN DRIVE IS FULLY LEASED WITH 66% CREDIT TENANCY FROM FORTUNE 100 COMPANY HONEYWELL INTERNATIONAL, INC. (MOODY S: A2). THE REMAINING SQUARE FOOTAGE IS OCCUPIED BY PUBLICLY TRADED/ INTERNATIONAL COMPANIES, CUBIC CORPORATION AND SIGMATRON INTERNATIONAL. PERCENTAGE LEASED 100% RENTABLE SQUARE FOOTAGE 205,800 PARCEL NUMBER 646-220-2900 LAND AREA 11.65 Acres 66% WTD. AVG. REMAINING LEASE TERM LOADING CLEAR HEIGHT PARKING 3.3 Years 28 dock-high, 1 grade-level 24-29 Feet 426 Parking Spaces (2.0/1,000 SF) 19% 15% 2 * Submarket data is all Class A & B industrial product between 50,000 SF and 500,000 SF. executive summary
INSTITUTIONAL QUALITY INDUSTRIAL ASSET Dublin Drive exemplifies the finest of institutional grade industrial building qualities via its superior location, design, and functionality. The Property features an ample 24 clear height, wide truck courts and abundant loading via 29 dockhigh and grade-level doors. Additionally, the Property boasts an ESFR sprinkler system, above-standard 2.0:1,000 parking ratio and a large lot that can be fully fenced/secured if desired. STRONG IN-PLACE CASH FLOW WITH LONG TERM TENANT COMMITMENT Dublin Drive features strong in-place, durable cash flow from investment grade, publicly traded and international tenancy with a weighted average remaining lease term of 3.3 years. Fortune 100 Company, Honeywell International Inc. (Moody s: A2) currently leasing over 66% of the NRA since the construction of the building in 1990, announced 2Q sales of $10 Billion, up 2% year over year, and an earnings increase of 10%. Honeywell has been in occupancy for over 20 years having expanded and/or renewed their lease on numerous occasions. Cubic Corporation is a publicly traded company that has a corporate presence in nearly 60 countries and recorded $1.4 Billion in annual sales for 2015. SigmaTron, also a publicly traded company, recorded revenues of $253.9 million in fiscal year 2016; a 10% increase from the fiscal year prior. 205,800 24 29 100% 2.0 11.65 SQUARE FEET CLEAR HEIGHT LOADING DOORS LEASED PARKING RATIO ACRES executive summary 3
CORPORATE NEIGHBORS Otay Mesa features the highest concentration of Fortune 500 Companies in San Diego. BROWN FIELD AIRPORT (PROPOSED RENOVATION AIRWAY ROAD OTAY MESA PORT OF ENTRY US/MEXICO BORDER CROSS BORDER XPRESS TIJUANA INTERNATIONAL AIRPORT 4 TIJUANA executive summary
NNN IN-PLACE RENT (UPON EXPIRATION) VS. MARKET RENT Rent (PSF/Mos.) NNN In-Place Rent (Upon Expiration) vs. Market Rent $0.65 $0.60 $0.62 $0.63 $0.60 $0.59 $0.55 $0.55 $0.50 $0.51 $0.49 $0.48 $0.45 14.7% 18.9% $0.40 % RSF Expiring Weighted Average In-Place Rent Weighted Average Market Rent 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% RSF Expiring SUBSTANTIAL VALUE GROWTH POTENTIAL With a weighted average remaining lease term of 3.3 years and an average in-place rent that is nearly 12% below market, Dublin Drive offers exceptional near term mark to market upside potential. DISCOUNT TO REPLACEMENT COST (SIGNIFICANT BARRIERS TO ENTRY) New speculative development has become extremely difficult to justify at the current rental rates for industrial assets in San Diego. With limited land available for new development and demand forecasted to remain strong in the foreseeable future, this supply-constrained market is likely to experience continued rent growth. It is estimated that the current market rent of $0.55 NNN would need to grow by over 27% to reach a point that would justify new construction. Furthermore, Dublin provides an investor with additional protection in that the Property can be acquired at a significant discount to replacement cost. OUTSTANDING SUBMARKET PERFORMANCE Since 2010, the Otay Mesa industrial submarket has seen consistent leasing activity resulting in over 1.8 million square feet of positive net absorption (27.3% of the submarket base). In that time frame, total vacancy has compressed to an impressive 4.6% (3.5% direct)*. Despite this tremendous amount of leasing activity, rents have only begun to increase and are still below prior peak. Otay Mesa rents are anticipated to surge in the coming years due to the high spread between central San Diego industrial rents (>$0.90 NNN) and Otay Mesa industrial rents, as well as the continued county wide compression to historically low availability. NNN Asking Rent OTAY MESA CLASS A&B INDUSTRIAL MARKET MARKET Total Vacancy % $1.00 35.00% $0.90 $0.80 362,413 30.00% $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10-27,913 120,707 110,030 76,645 106,711 41,558 20,072-11,694-2,464 31,475-28,791-148,394-102,533 103,413 109,833 47,742 268,150 196,868-42,939 130,492 201,981 97,961 147,420-35,550 25.00% 20.00% 15.00% 10.00% 5.00% $0.00 0.00% * Submarket data is all Class A & B industrial product between 50,000 SF and 500,000 SF Total Net Absorption NNN Rent Direct Vacant Percent Total executive summary 5
OREGON NEVADA SUPERIOR LOCATION SERVED BY MAJOR TRANSPORTATION CORRIDORS Dublin s ideal location offers tenants superior transportation options with quick and convenient access to the San Diego s major vehicular corridors. The Property is minutes from Interstates 5, 8, 15 and 805, the region s arterial thoroughfares which connect to all of Southern California s vital trade routes. This easy accessibility provides tenants with the unique ability to both serve customers and attract employees from throughout the San Diego MSA. Situated in close proximity to the US/Mexico International Border, directly within the Foreign Trade Zone, Dublin is an ideal location for manufacturing and distribution companies. Goods can be stored duty free, while also utilizing the cross-border legal immigrant workers, providing tenants a significant economic advantage and improving their competitive position versus their counterparts abroad. OTAY MESA BORDER CROSSING N ARIZONA MEXICO OTAY MESA CROSS-BORDER XPRESS OTAY MESA SENTRI MODERNIZATION RENDERING 6 executive summary
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investment sale advisors: nick psyllos Sr Managing Director npsyllos@hfflp.com 858.812.2352 CA Lic. #00788060 nick frasco Director nfrasco@hfflp.com 858.812.2354 CA Lic. #01819400 debt advisors: kara mathis, cfa Sr Real Estate Analyst kmathis@hfflp.com 858.242.6220 CA Lic. #01924947 taylor bergthold Real Estate Analyst tbergthold@hfflp.com 858.812.2356 CA Lic. #02014647 zack holderman Director zholderman@hfflp.com 858.812.2350 CA Lic. #01434957 ALDON COLE Sr Managing Director acole@hfflp.com 858.812.2344 CA Lic. #01457351 HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change. hfflp.com HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF. Holliday Fenoglio Fowler, L.P., acting by and through Holliday GP Corp., a real estate broker licensed with the California Department of Real Estate, License Number 01385740.