3202-3304 GREYLING DRIVE SAN DIEGO, CA 92123 AN INTERNET-RESISTANT RETAIL CENTER ANCHORED BY CVS PHARMACY AND CRUNCH FITNESS IN COASTAL SAN DIEGO, CA 2018 Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, HFF ), HFF Securities L.P. and HFF Securities Limited (collectively, HFFS ) are owned by HFF, Inc. (NYSE: HF)
EXECUTIVE SUMMARY HFF has been exclusively retained by Ownership to offer the opportunity to acquire Rancho Serra Mesa Center (the Property ), a 56,395 square-foot community center located in San Diego. Anchored by CVS Pharmacy and Crunch Fitness, the Property features a diversified roster of daily-needs oriented national tenants and is currently 95.8% leased. Positioned at the intersection of Greyling Drive and Sandrock Road with over 20,000 cars per day, the Property is centrally located amidst a dense residential area within the heart of San Diego. Rancho Serra Mesa Center offers investors the opportunity to acquire a drug and fitness anchored retail center with income security from an internet-resistant income stream on long term leases in an infill Southern California location. PROPERTY SUMMARY PRICE: $21,500,000 CAP RATE: 6.00% YEAR ONE NOI: $1,292,595 ADDRESS: 3202-3304 Greyling Drive San Diego, CA 92123 SQUARE FEET: 56,395 OCCUPANCY: 95.8% YEAR BUILT: 1955, 1980, 2003 YEAR RENOVATED: 2012-2013 SITE SIZE: 4.96 acres on two parcels PARKING: 270 spaces (4.79 per 1,000 SF) 2
INVESTMENT HIGHLIGHTS INCOME SECURITY Over 60% of the leased GLA is occupied by nationally recognized tenants that have a combined weighted average lease term in excess of seven years, providing investors with income security and future value appreciation. INFILL NEIGHBORHOOD LOCATION IN UNDER-SERVED TRADE AREA The Property is one of the few retail centers that serves the surrounding trade area, providing key services to the dense residential population nearby. INTERNET RESISTANT TENANCY The diverse tenant roster is resistant to internet/ecommerce trends by offering a variety of daily needs services and uses, including a drug store with a pharmacy, fitness, food, health, and beauty. FLEXIBLE EXIT STRATEGY Rancho Serra Mesa Center is currently divided into two parcels, providing investors the opportunity to capture a potential cap rate arbitrage opportunity by selling CVS separately as a single tenant net-leased investment. Additionally, the center contains two multi-tenant pad buildings, that could potentially be parceled off and sold separately. 3
DENSE INFILL AREA WITH SUSTAINED POPULATION GROWTH The immediate trade area surrounding Rancho Serra Mesa Center is extremely dense (population of more than 417,000 within a 5-mile radius) and is expanding since 2000 the population within a 1-mile radius has increased over 18%. WITHIN A 3-MILE RADIUS $500K MEDIAN HOUSING VALUE 190,000 DAYTIME POPULATION DEMOGRAPHICS 1-MILE 3-MILE 5-MILE 2017 Population 20,090 144,555 417,717 2000-2017 Population Growth 18.43% 15.27% 7.19% 2017 Households 7,234 59,036 175,170 Average Household Income $89,815 $91,914 $92,309 GREYLING DR 60% 3% LEASED TO NATIONAL TENANTS NOI CAGR ZERO COMPETING ANCHORED RETAIL CENTERS IN A 1-MILE RADIUS +18% POPULATION GROWTH SINCE 2000 7.0 WEIGHTED AVERAGE LEASE TERM YEAR 4
RADY CHILDREN S HOSPITAL (250 BEDS) (168,000 VPD - 0.8 MILES AWAY) MIRA BELLA APARTMENTS (293 UNITS) SHARP MEMORIAL HOSPITAL (670 BEDS) (211,000 VPD - 0.6 MILES AWAY) THE VILLAGE AT SERRA MESA (900 UNITS) ANGIER ELEMENTARY SCHOOL (575 STUDENTS) MONTGOMERY-GIBBS EXECUTIVE AIRPORT OLYMPUS CORSAIR (323 UNITS) SANDROCK RD (ATM) SANDROCK RD GREYLING DR (6,000 VPD) 5
NOI GROWTH POTENTIAL There are multiple avenues to increase NOI at the Property, including lease up of existing vacant suites, mark to market rent opportunities upon lease expiration, and re-merchandising at higher rent levels. LEASING VELOCITY AND DEMONSTRATED TENANT DEMAND Since the start of 2016, four tenants (totaling 15% of the leased GLA) have executed new leases, demonstrating the strong tenant demand for space in the trade area. $1,700,000 $1,600,000 30%+ NOI GROWTH OVER NEXT 10 YEARS $1,500,000 $1,400,000 $1,300,000 $1,200,000 $1,100,000 $1,000,000 1 2 3 4 5 6 7 8 9 10 6
SITE PLAN PALM AVENUE LARKDALE AVENUE 3202 3206 3208 3210 3212 3232 A-B 3202-WAT 3232 C 3232 D 3236 3238 3240 3242 3244 3246 3248 3252 3256 3270 3332 SANDROCK ROAD GREYLING DRIVE 3250-A 3250-B Outline represents ground leased by CVS from property owner 3260 (ATM) TENANT SF % OF GLA LEASE EXP. 3298-C 3298-B 3298-A CVS 14,684 26.0% Nov-28 Crunch Fitness 11,646 20.7% Aug-24 NPTI 4,000 7.1% Jul-27 Pacific Dental 2,633 4.7% Aug-28 Goodwill 2,000 3.5% Dec-19 H&R Block Enterprises 1,000 1.8% Apr-20 Subway 1,000 1.8% May-20 Wells Fargo ATM 200 0.4% Jul-20 T-Mobile N/A 0.0% Sep-21 Verizon N/A 0.0% May-20 7
3202-3304 GREYLING DRIVE SAN DIEGO, CA 92123 INVESTMENT ADVISORS DEBT ADVISORS BRYAN LEY Managing Director 310.407.2120 bley@hfflp.com CA Lic. #01458927 JUSTIN KUNDRAK Director 310.407.2145 jkundrak@hfflp.com CA Lic. #01994398 DANIEL TYNER Director 949.798.4125 dtyner@hfflp.com CA Lic. #01959818 TONY ENSBURY Analyst 310.407.2153 tensbury@hfflp.com CA License #02061712 TODD SUGIMOTO Managing Director 310.407.2111 tsugimoto@hfflp.com CA Lic. #01264139 CHRIS COLLINS Director 858.812.2353 ccollins@hfflp.com CA Lic. #01927590 2018 Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, HFF ), HFF Securities L.P. and HFF Securities Limited (collectively, HFFS ) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 25 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment sales, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF. 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 we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references 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 buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change. www.hfflp.com