FOXCONN Technology Center SILICON VALLEY, CALIFORNIA 58,289 SF OFFICE/R&D BUILDING INVESTMENT GRADE TENANT SINGLE TENANT NNN LEASE TO FOXCONN FOR 7.5 YEARS EXECUTIVE SUMMARY
1 FOXCONN Technology Center THE OFFERING Cushman & Wakefield, as exclusive advisor, is pleased to present the unique opportunity to acquire the 100% fee simple interest in Foxconn Technology Center (the Property ), a 58,289 square foot office/r&d asset advantageously located at the southwest corner of Montague Expressway and East Plumeria Drive in Silicon Valley s coveted Golden Triangle, along the North First Street Corridor in San Jose, CA. The extensively renovated Property is 100% leased on a fully NNN basis to Foxconn Interconnect Technology, a wholly owned subsidiary of Foxconn Technology Group ( Foxconn ). The initial lease term is seven-and-a-half years with a lease expiration of August 2025, and 3% annual increases. Foxconn is the world s largest manufacturer of consumer electronics with an impressive client list comprised of some of the largest tech companies in the world including Apple, Google, Microsoft, HP, Sony, and Toshiba. The company generated $80.1 billion in revenue in 2016 and is rated A- by Standard & Poor s. The building has undergone an impressive upgrade and modernization with tenant improvements underway, totaling approximately $7.5 million in capital investment by current ownership. This offering provides investors the exceptional opportunity to acquire a highimage, well located, top quality asset with Investment Grade Tenancy, a fully triple net lease, and immediate cash flow in one of Silicon Valley s most vibrant submarkets. PROPERTY SUMMARY Address 408 East Plumeria Dr., San Jose, CA 95134 Building Area Stories 58,289 Square Feet One % Leased 100% Parking Site Area 3.55 / 1,000 Square Feet 3.91 Acres OCCUPANCY SUMMARY % Leased 100% Tenant Parent Company Parent Company Credit Rating Foxconn Interconnect Technology Limited Hon Hai Precision Industry Co., LTD. (dba Foxconn Technology Group) A- (Standard & Poor s) Market Cap $65 Billion (as of 11/2/17) Ticker Symbol Taiwan: 2354 London: HHPD Hong Kong: 2038 Lease Expiration August 31, 2025 Remaining Lease Term (as of 2/1/18 analysis start date) Current Monthly Rent 7.5 Years $2.30 NNN with 3% annual increases
INVESTMENT HIGHLIGHTS IMMEDIATE CASH FLOW The Property is 100% leased to Foxconn on a triple net basis through August 2025, providing secure income from an investment grade tenant. The lease provides for 3% annual increases in the tenant s base rent which enables the owner to receive an increase in cash flow during the lease term. The triple net structure of the lease makes the tenant responsible for the cost of all building operating expenses. ESTABLISHED, INVESTMENT GRADE TENANT Founded in 1974, Foxconn is the world's largest contract electronics manufacturer and the fourth-largest information technology company in the world by revenue. The company is the largest private employer in China and the 5th largest worldwide with 727,000 employees and 13 factories in 10 countries. Traded on three stock exchanges Taiwan, London and Hong Kong Foxconn has a market capitalization of $65 Billion as of 11/2/17. Foxconn maintains an A- rating from Standard & Poor s. World s Largest Electronics Manufacturer 5 th Largest Employer Worldwide $65B Market Cap EXECUTIVE SUMMARY 2
Market Ready Tenant Improvements 3 FOXCONN Technology Center STRONG LONG-TERM TENANT OUTLOOK Foxconn is a global leader in the production of consumer electronics such as smartphones, tablets, laptop computers, and high definition televisions. Their global consumer electronics market revenue is estimated to be $271B in 2017, and is forecast to show an annual growth rate of 9.6% resulting in a market volume of $428B in 2022. As a leader in the production of personal electronics, Foxconn is expected to continue its impressive growth. Worldwide Consumer Electronics Revenue Forecast (in million US $) 500,000 400,000 300,000 200,000 236,307 271,080 307,484 342,987 375,596 404,037 427,781 100,000 0 2016 2017 2018 2019 2020 2021 2022 Source: Statista, October 2017
N JUNCTION AVENUE New Outdoor Patio Approximate Property Boundary $4.5 Million in TIs P Parking Lot Resurfacing & Striping New Roof & Rooftop Mechanical Units MONTAGUE EXPRESSWAY Lobby & Facade Upgrades New Landscape & Hardscape High Identity Signage E PLUMERIA DRIVE TOP TIER ASSET WITH SIGNIFICANT CAPITAL INVESTED BY CURRENT OWNERSHIP Current ownership has made approximately $3.0 million of capital in improvements to significantly upgrade the Property as one of the leading assets in the marketplace. Capital improvements include extensive lobby and facade upgrades, fresh Title 24 compliant office interiors, new restroom cores, new roof with a 20 year warranty, new rooftop mechanical units, new landscape and hardscape, and parking lot resurfacing and striping. In addition to the capital invested in base building improvements, current ownership has invested $4.5 million in tenant improvements currently underway. The result of the total investment into the Property is a modernized asset with no need for further capital investment for many years to come. EXECUTIVE SUMMARY 4
Broadcom San Jose 5 FOXCONN Technology Center TREMENDOUS VISIBILITY AND IDENTITY The Property is located along Montague Expressway, a highly trafficked thoroughfare that links the West Valley, Santa Clara, and North San Jose and serves as a link between Highway 101 and Interstate 880. The Property enjoys nearly 500 linear feet of frontage along Montague Expressway with monument and building signage at the northwest corner of the Property. The Property sits at the signalized intersection of Montague Expressway and East Plumeria Drive. Google s Downtown San Jose Proposed Development PRESTIGIOUS SILICON VALLEY LOCATION San Jose s North First Street Corridor has long been known as one of the most desirable trade areas in Silicon Valley. Some of the world s most notable technology companies such as Apple, Google, Samsung, PayPal, Cisco, Broadcom, Philips, Qualcomm and Dell maintain a significant presence in the immediate area adding to the submarket s reputation as a hotbed for Silicon Valley s Blue Chip technology tenants. SAN JOSE GROWTH The City of San Jose is a landing spot for some of the region s largest technology companies looking to grow or relocate out of smaller submarkets such as Mountain View, Sunnyvale and Cupertino. In 2011, the city adopted the Envision 2040 General Plan with the goal of producing 470,000 new jobs in the city by 2035. The North First Street Corridor has been slated to accommodate a significant portion of this growth. In June of 2017, the city of San Jose approved plans to engage in discussions with Google to develop a colossal new transitoriented campus in the heart of downtown San Jose. The six to eight million square foot development is expected to bring up to 20,000 new jobs into San Jose. Apple has assembled 86-acres along the North First Street corridor to accommodate a 4.15 million square foot office/r&d campus. The new campus, which is rumored to be the location for the development of Apple s autonomous vehicle technology, could also bring another 20,000 jobs to the city.
PROXIMITY TO RETAIL AND RESIDENTIAL The Property is located amidst extensive retail and residential offerings that are attractive offerings for employees. Walkable retail amenities can be found just across Montague Expressway at River Oaks Village which is home to multiple restaurants and Starbucks. Major retail centers within two miles of the Property can be accessed at RiverMark Center in Santa Clara, @First in North San Jose, and McCarthy Ranch in Milpitas. Over the past five years, approximately 8,000 new multi-family units have been delivered in North San Jose. Many of these new developments have added ground floor retail services. Projects of particular note built within one mile of the Property include Crescent Village and Mirada by The Irvine Company at the corner of Research Place and Innovation Drive. Under the Envision 2040 General Plan, the City of San Jose intends to add 32,000 housing units in North San Jose. Rivermark Shopping Center 5 Minute Drive Related Companies City Center $6.5 billion mixed use development @First Shopping Center 10 Minute Drive N Mirada Cresent Village N First Street Montague Expressway 2.7 miles FOXCONN Technology Center River Oaks Village 5 Minute Walk Coyote Creek Trail EXECUTIVE SUMMARY 6
7 SUPERIOR TRANSPORTATION & TRANSIT ACCESS FOXCONN Technolog y Cen ter The Property s central Silicon Valley location is ideally positioned to draw from the regional labor pool concentrated to the east and south, while at the same time accommodating high-income executives who live in the West Valley and along the Peninsula. HIGHWAY Via Montague Expressway, the Property is within a few minutes drive from Highway 101 and Interstate 880, two of the Bay Area s primary north and south transportation arterials. This handy access and direct connections to I-280, I-680, SR237, SR-87, and SR-85, provide commuters with convenient routes throughout the valley and to the San Francisco Peninsula or greater East Bay. AIRPORT Mineta San Jose International Airport is located approximately four miles from the Property. Mineta Airport serves more than nine million passengers per year and provides business travelers convenient and frequent access to more than 260 international and domestic flights daily. LIGHT RAIL Santa Clara Valley Transportation Authority (VTA) provides light rail service from Mountain View through San Jose with trains that link to Caltrain, Bay Area Rapid Transit (BART) and Mineta San Jose International Airport. The Orchard VTA station is just a short walk from the Property. Bay Area Transportation Routes BART Lines Dublin/Pleasanton-SFO/Millbrae Fremont-Daly City Richmond-Fremont Richmond-Daly City Pittsburg/Bay Point-Daly City BART to Oakland Airport BART to Milpitas Under Construction VTA MILPITAS (Opens 2017) CalTrain Amtrak Capitol Corridor & Altamonte Express SF Muni WARM SPRINGS/ SOUTH FREMONT LIGHT FOXCONN Technology Center RAIL VTA Light Rail Mountain View-Winchester Alum Rock-Santa Teresa Almaden Shuttle ALTAMONTE COMMUTER EXPRESS SANTA CLARA COUNTY
SILICON VALLEY OFFICE/R&D MARKET HIGHLIGHTS With a high concentration of revolutionary technology companies and an unparalleled stream of venture capital investment, Silicon Valley is renowned as the world s center of technology. As one of the Bay Area s key economic drivers, the region s technology sector flourishes from immediate access to one of the most educated workforces in the nation. Over the past five years, growth from some of the region s most prominent employers such as Apple, Google, Samsung, Netflix and LinkedIn has made the Silicon Valley one of the nation s top performing office/ R&D markets. Since 2011, the market has absorbed more than 11.0 million square feet of office/r&d space. Over the same period, asking rents have grown an average of 16.3% per year, significantly outpacing most major markets in the country. Source: Cushman & Wakefield Research SILICON VALLEY OFFICE/R&D Q3 17 MARKET STATS 10.2% VACANCY $2.15 AVG. ASKING RATE 3.8 MSF YTD NET ABSORPTION EXECUTIVE SUMMARY 8
FOXCONN Technology Center INVESTMENT CONTACTS ERIC FOX Lic: 01209035 P: 408.615.3469 eric.h.fox@cushwake.com STEVE HERMANN Lic: 01352679 P: 415.677.0465 steve.hermann@cushwake.com ADAM LASOFF Lic: 01891096 P: 415.773.3536 adam.lasoff@cushwake.com SETH SIEGEL Lic: 01493953 P: 415.773.3580 seth.siegel@cushwake.com DOUG LONGYEAR Lic: 00829911 P: 415.677.0458 doug.longyear@cushwake.com NNN ADVISORY ANDY BOGARDUS Lic: 00913825 P: 415.677.0421 andy.bogardus@cushwake.com CHRIS SHELDON Lic: 01806345 P: 415.677.0441 chris.sheldon@cushwake.com STEVE PACE Lic: 00817396 P: 408.482.7037 steve.pace@cushwake.com LOCAL MARKET ADVISORY DAN HOLLINGSWORTH Lic: 01117716 P: 408.615.3431 dan.hollingsworth@cushwake.com NICK LAZZARINI Lic: 01788935 P: 408.615.3410 nick.lazzarini@cushwake.com Broker and Owner make no warranty or representation, express or implied, to the accuracy of the information contained herein. The information has been submitted in good faith subject to the possibility of errors and omissions; change of price, rental information or other related Property information; or, withdrawal without notice. Purchasers should rely solely on their own independent analysis, due diligence and verification of Property information. Prospective Investors agree that Broker and the Owner shall have no liability to the purchaser or purchaser s representatives or agents resulting from the use of the information contained herein or distributed by Broker and the Owner in the future.