Download - Offering memorandum
O F F I C E I N V E S T M E N T O F F E R I N G - VA L U E A D D O P P O R T U N I T Y
A N 8 0 , 3 2 0 S q U A R E F O O T N I N E - S T O R Y O F F I C E B U I L D I N G
THE ROBERT F. DRIVER BUILDING1 6 2 0 F I F T H A V E N U E • S A N D I E G O • C A L I F O R N I A
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This Confidential Offering Memorandum is being delivered, subject to the terms of the Confidentiality Agreement signed by you for the sole purpose of evaluating the possible acquisition of 1620 Fifth
Avenue and is not to be used for any other purpose or made available to any other party without the prior written consent of Owner or Cushman & Wakefield. While the information contained in the
Memorandum is believed to be reliable, neither Cushman & Wakefield nor Owner guarantees its accuracy or completeness. Because of the foregoing and since the Property will be sold on an “As Is,
Where Is” basis, a prospective purchaser must make its own independent investigations, projections and conclusions regarding the acquisition of the Property without reliance on this Memorandum.
Investment ContaCts
Bradford Perry
(619) 531-1643
License 01204960
matt Carlson
(858) 334-4010
License 1459868
Jeffrey Cole
(949) 955-7652
License 00833681
ed Hernandez
(949) 930-4380
License 01048813
Cushman & Wakefield of California, Inc.License 00616335
2020 Main Street, Suite 1000Irvine, CA 92614
steve Rowland
(858) 558.5670
License 00947903
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INVESTMENT OFFErINg MEMOrANduM
Robert F. Driver constructed the 80,320-square-foot “jewel box” office building in 1984 to serve as the corporate headquarters for the Driver Insurance Company. The timeless glass façade, efficient floor plates and abundant parking ratio offer outstanding visibility and convenience. Located immediately adjacent to Interstate 5, the building offers four sides of building top signage to an anchor tenant, or owner-user, as well as excellent freeway access. The adjacent five-story parking structure offers nearly double the parking ratio of competitive projects and direct entry to the 2nd through 4th floors of the building.
The robert F. driver Building provides tenants and employees an ideal location for immediate access to the Interstate 5 freeway, while remaining within walking distance to downtown’s amenities. Located a few blocks north of the famous gaslamp district on 5th Avenue, which sees over 1,000,000 pedestrians per year, the building is just minutes from various hotels, Westfield Horton Plaza, the Convention Center and thousands of new residential condo units.
PrOPErTY FEATurES
n Prominent Location: robert F. driver selected the block between 4th & 5th Avenues on Cedar Street because of its prominent location atop the gradual slope at the edge of Balboa Park. With its outstanding views of San diego Bay to the West, the downtown skyline to the South, the mountains to the East and Balboa Park to the North, the building’s location is unrivaled amongst competitive buildings downtown.
n quality Asset: Constructed to inhabit both the family company and his lasting legacy, robert F. driver built the building with quality craftsmanship, attention to detail and the opportunity to brand the building into the impressions of San diegans.
n Optimal Floor Plate Sizes: With approximately 10,000-square-foot floor plates, the floors design very well for 3,000 to 6,000-square-foot tenants and will attract full floor users that desire single floor identity, but cannot achieve their goal in larger projects.
n Parking: The property’s five-story parking garage offers a parking ratio of 2.65 parking spaces per 1,000 square feet leased, which is 200% higher than the downtown average and 265% higher than many of the buildings in the competitive set.
LOCATION
n Freeway Access: The 80,320-square-foot tower is located immediately adjacent to Interstate 5 with access to the Northbound and Southbound ramps within 2 blocks of the project.
n Exposure: Situated on the northernmost edge of the CBd, adjacent to Interstate 5, the building offers unparalleled signage and exposure opportunities to an anchor tenant or owner-user.
n Local Business Demand Drivers: downtown San diego’s office market has historically been driven by organic growth among the legal, financial, government, insurance and banking industries. With no new construction in the foreseeable future, and showing some signs of stabilization, we expect growth to commence with the anticipated job growth later in 2010.
n Nearby Amenities/Housing: The project is located within walking distance to the historical gaslamp district, PETCO Park, the San diego Convention Center, Balboa Park, Westfield Horton Plaza and hundreds of restaurants and newly constructed boutique hotels. Over 65,000 people live within the greater downtown area with 4,500 new condo units currently under construction.
MArkET
n Strong Market Conditions: While downtown San diego has seen many spaces return to inventory over the last six quarter, the regional and national economies are showing some signs of stabilization.
n Rental Growth: Positive absorption and rental growth are expected to follow anticipated regional growth in 2010.
F INANCIAL HIgHLIgHTS
n Value-Add Opportunity: The building features a large contiguous block of approximately 30,000 square feet of space available with an opportunity for building top signage on all four sides.
n Income Upside Potential: Existing rental rates are approximately twenty percent under market and premium view suites are thirty percent below market. In-place parking charges are significantly below those of other comparable buildings in the downtown marketplace.
n Below Replacement Cost: The property’s total replacement cost including land is estimated at over $400 per square foot.
INVESTMENT SuMMArY
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Year 1 Proforma net operating Income ...............................$580,613
Year 2 Proforma net operating Income ............................$1,036,339
address: 1620 Fifth Avenue
San diego, California 92101
Location: The nine-story property is located on the east side of
downtown San diego. Its general boundaries are Interstate
5 directly to the north, Fourth Avenue to the west, Cedar
Avenue to the south, and Fifth Avenue to the east.
net Rentable area: 80,320 rSF with a six-level above-ground parking structure.
Parking spaces/Ratio: 212 spaces (2.60/1,000 rSF). The parking structure is
accessible from Cedar Avenue.
Year Completed: 1985
no. of tenants: Ten
% occupied: 54%
site: 0.55 acres (24,000 square feet)
assessor’s Parcel nos.: 533-381-01-00 / 533-381-02-00 / 533-381-03-00
FaR: 3.4
Construction type: Steel framed with floors of concrete filled metal deck
exterior Walls: glass curtain wall of reflective glass and spandrel panels in
anodized aluminum frame, granite veneer finish is installed at
the base of the building.
Foundation: The foundation consists of reinforced concrete slab and
footings.
Lobby area: The ground floor lobby has polished granite floors and
Herculite type entry doors and storefront.
Roof system: roofing is provided by a low-sloped built-up asphalt roofing
system with gravel topping. A helipad is located on the top
level above the machine room and is lighted.
Ceiling Heights: 8 feet (9 feet on Floor 9) with high quality dropped 2’ x 2’
acoustic tile throughout the building.
elevators: The building is served by two 2,500-pound capacity cable-
operated passenger elevators.
Interior Detail: Interior lobbies are finished with tile floors and carpet inserts,
vinyl wall covering and painted gypsum board ceilings.
Corridors and elevator lobbies are fire rated and have
separation doors on magnetic hold-open devices.
Flooring: Floors consist of floor tile and carpet inserts in lobby area
and fully carpeted in the corridors.
HvaC: The building contains a water source, heat pump, and roof-
mounted system. Originally designed with manual zone
controls, it has been renovated and is now centrally controlled
by a computer-monitored energy conservation system which
allows tenants the ability to change temperatures from their
space as well as system activation for after hours usage.
electrical: The electrical system is 3,000 amp, 480/277 voltage. An
emergency lighting system is available for the entire building
with a roof-mounted generator.
Restrooms: Bathrooms have floor tile and wainscoting, painted gypsum
board ceilings and granite countertops.
Landscaping: The facility features concrete curbs and walkways, natural
vegetation landscaping, and exterior lighting. All planting is
sprinklered or irrigated.
Fire/Life safety: The building is 100% sprinklered. There is a 10,000 gallon
water tank with a pump in the basement as a reserve water
supply.
security: The Property offers a card key access system.
Zoning: Office
tax Rate: 1.10195% plus $18,655 in fixed assessments
Utilities: Electricity: San diego gas & Electric
gas: San diego gas & Electric
Water/Sewer: City of San diego
Police/Fire: City of San diego Police and Fire dept.
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PrOPErTY SuMMArY
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HortonPlaza
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1620 FIFtH ave
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SITE PLAN
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San diego, the second largest city in California (behind Los Angeles) and the fourth largest county in the nation, has evolved into a major economic engine with its suburbs becoming hubs of research and entrepreneurial activities. San diego is considered one of the nation’s most popular places to live, work, and visit. due to the diverse mix of industries that have developed in the region over the past decade, San diego has fared well during the recent economic slowdown and is forecasted to continue its growth at a faster pace than most major u.S. metropolitan markets. San diego’s quality of life is appealing to leading companies and their employees. Local high-tech and biotech firms are continuing to grow and expand throughout the region.
San diego County has become one of the nation’s major epicenters for biotechnology, telecommunications, biomedical, computers, electronics, defense, transportation, and software. Moreover, San diego’s outstanding roster of research centers and higher education institutions give companies access to highly skilled and educated workforces in the county. San diego’s diversified industry mix has provided a buffer against volatility and susceptibility to an overall economic contraction. The region’s favorable demographic and economic trends make San diego County a top tier market poised for continued growth.
TRANSPORTATIONThe many areas of San diego County are extremely accessible via the major North/South Freeways including Interstates 5, 805, 15 and Highway 163 as well as the East/West Freeways including Interstate 8, and State Highways 54, 56, 67, 76, 78, 94 and 125. San diego International Airport/Lindberg Field is conveniently located just outside of the downtown submarket adjacent to San diego Bay while multiple smaller, private airports such as: Carlsbad’s McClellan-Palomar Airport, kearny Mesa’s Montgomery Field, El Cajon’s gillespie Field and Otay Mesa’s Brown Field, are located across the County.
In addition, San diego boasts two convenient light rail lines (the Sprinter Line in North County and the San diego Trolley servicing the Central County) as well as the Coaster, the local rail that connects the North County Coastal communities from Oceanside to downtown. The same rail line is also used by Amtrak to connect San diego with Orange County and downtown Los Angeles.
POPULATIONThe total population of San diego County is over 3 million and growing, which is approximately 8.5% of the total population of the state of California. This population is spread out among 18 incorporated cities and 17 unincorporated communities. As the third largest County in California, San diego is expected to increase its population to 3.9 million people by 2030. The City of San diego is the largest city within the County, inhabiting over 1.3 million people.
INDUSTRY AND EMPLOYMENTGovernment and Government Contractors. despite significant growth in the computer technology, communications and biosciences, the Federal government and government related industries represent the largest economic driver in the region. San diego County has the largest concentration of military in the country and is home to the Space and Naval Warfare Systems Command (SPAWAr) which generates more than $1.2 billion annually. Notable defense contracts with a large presence in the County include Northrop grumman, Lockheed Martin, SAIC, Titan Corporation, general Atomics and general dynamics. These industries contribute an estimated $13.4 billion annually to the local San diego economy.
Communications and Technology. The communications and technology industries, driven by industry leaders such as Qualcomm, Motorola, kyocera, Ericsson, Sony, Oracle, Texas
Instruments, Cisco Systems, Lg and Nokia, make up over 12% of the County’s private-sector payroll and represent approximately one-third of all new jobs created. San diego County’s communications and technology sectors employ almost 30,000 people with an annual impact of over $11 billion on the local economy.
Biotechnology and Pharmaceuticals. San diego County has over 500 firms with an excess of 38,000 employees in the biotechnology and pharmaceutical fields, one of the highest concentrations of biotech-related companies in the country. Corporations such as Pfizer, Johnson & Johnson, Merck, Schering Plough, the Salk Institute, Invitrogen, Biogen Idec, Amylin Pharmaceuticals, Nanogen, Becton dickinson, genProbe, Smith kline, Novartis and Scripps research Foundation all have a presence in San diego. As a result, the region boasts the highest number of National Institute of Health grants per capita in the nation. The relationship between the biotechnology and pharmaceutical fields with local universities has resulted in the establishment of almost 200 related firms across the County. All total, the industry is responsible for almost $9 billion in local revenues.
Software and Computer Services. The availability of skilled workers and engineers across San diego County is the driving force behind the strength of the computer and software industries through the region. Companies such as Intuit, Oracle, SAIC, PacketVideo, Maxim Systems and Websense have all benefited from the local intellectual capital in San diego. The region in highly regarded as one of the top software clusters in the country and is responsible for $3.4 billion annually on the local economy.
Computer and Electronics Manufacturing. Technology manufacturing plays a vital role in the San diego County economy. Skilled professionals and intellectual capital make San diego a unique location to high technology manufacturing. Companies such as Sony, Sanyo, Hewlett-Packard and Cymer have a great presence and work closely with the many research universities in the area. Computer and electronics manufacturing accounts for over 30,000 jobs in the region amongst over 300 firms and accounts for $9.2 billion to the local economy.
Hotels and Tourism. San diego County continues to be a highly desirable tourist destination, and the San diego Convention and Visitors Bureau reported that tourists spend over $6 billion in San diego annually. Over the last eighteen months, the County has seen a major increase in hotel development in order to keep with the demands of visitors and vacationers.
SAN dIEgO COuNTY OVErVIEW
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ECONOMIC TRENDSThe San diego economy has become increasingly diversified in recent years. This has historically helped the county maintain strong economic growth through slowdowns in any one industry. While San diego County’s unemployment rate jumped up to 10.3% in december 2009 due to the national economic downturn, it remained comparatively low to other counties in Southern California. unemployment for the state of California rose to 12.4%, compared to the national rate of 10.1%.
From 2000 to 2007, San diego added 112,000 jobs, an average of 16,000 annually. Employment growth is expected to resume in the fourth quarter of 2010. San diego’s gross Metro Product for 2008, which contributed to 10% of California’s economy, is expected to be $168 Billion, an equivalent of a 45th largest national economy in the world. The median household income for 2009 was $63,335, compared to California at $61,034 and the uS at $51,433.
defense department spent $15.5 billion last year in the San diego area, up from $12.7 billion in 2005, making the county the largest recipient of federal defense spending in the nation. After a down year in 2009 the tourism industry is expected to resume positive growth in 2010. There were 638 hotel rooms built in 2009 with 441 more currently under construction and expected to open in 2010. San diego’s ports have grown strong from international trade, and its location near the Mexican border has led to increased benefits from policies such as NAFTA.
Although the slowdown in the housing market has impacted the economy as evidenced by slower job growth in 2007-2009, the high level of diversification has helped the County avoid a large scale downturn. San diego is expected to continue to out perform the state and nation in terms of economic growth and unemployment.
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SAN dIEgO OFFICE MArkET
Over the past decade, downtown San diego has evolved into one of the nation’s most acclaimed urban centers. With its breathtaking waterfront and convenient freeway access, downtown San diego is an exciting and convenient place to live and work. Just minutes from San diego International Airport/Lindberg Field, downtown San diego is home to an array of outstanding amenities including the historic gaslamp district, the San diego Convention Center, Balboa Park, Horton Plaza, Seaport Village, Petco Park and the San diego Padres, and several fine hotels. The downtown San diego office market represents the largest concentration of office space in the County and is made up of almost 10 million square feet, 50% of which is comprised of Class A high-rise buildings. The tenant base consists largely of business related services including several banks, insurance companies, law firms, financials institutions, and government agencies. The neighboring submarkets including Banker’s Hill, Hillcrest, Old Town, and Little Italy total approximately 1.5 million square feet and are heralded as San diego’s finest pedestrian neighborhoods. Over 65,000 people live in the greater downtown area with an additional 4,500 residential units currently under construction. The area employs over 100,000 people with approximately 75,000 within the CBd and over 25,000 in the peripheral neighborhoods.
downtown San diego is conveniently serviced by Interstate 5 and Highway 163 and is only minutes from the San diego Airport. The San diego Trolley brings commuters and visitors to the City from southern and eastern communities while the Coaster delivers people from the North County beach communities. downtown is also adjacent to Balboa Park
DOWNTOWN SAN DIEGO OFFICE MARKET OVERVIEW4th quarter Trends & Info: downtown San diego ended 2009 with the same negative trends resulting in the delivery of more direct space to market inventory. despite 75,675 square feet (sf) of leasing activity in the 4th quarter, the downtown San diego office market saw 50,032 sf of additional inventory return to the market, pushing year end absorption to negative 113,358 sf. direct vacancy across all classes increased to 14.6%, while overall vacancy, inclusive of sublease space, increased to 15.9%. The class A sector continues to be the most sluggish performer in downtown with a direct vacancy rate of 16.7% and an overall vacancy rate of 18.4%. Asking and effective monthly rental rates in the 4th quarter were $2.40 per square foot (psf) and $1.93 psf, respectively on a full service gross basis, a reduction of $0.01 psf and $0.27 psf.
Future Trends & Info: While the 4th quarter did not have as many large transactions completed as the previous quarter, overall deal activity increased as smaller tenants mimicked the larger mid-year transactions, also capitalizing on long term commitments with historically lower rentals rates and increased landlord concessions. While the volume increase is positive news for the market as a whole, the moderately sized deals are still being significantly upstaged by large blocks of space that continue to return to inventory. The 4th quarter saw American Specialty Health sign a 168,000 sf deal in Sorrento Mesa, confirming the anticipated concern in the market that the Paladion at 777 Front Street would return to inventory in late 2010. Also confirmed in the 4th quarter with a short term extension, was that the City of San diego’s Family Justice Center would return to 20,000 sf in the 1st quarter of 2010. downtown remains focused in the 1st quarter on whether PricewaterhouseCoopers will remain in 30,000 sf in Symphony Towers or if they will follow their competitors kPMg and Ernst & Young to the northern markets. despite the local and national economies showing some signs of stabilization in early 2010, the continuation of large blocks of space coming to market could drive overall vacancy slightly higher before the downtown office market reaches bottom.
Tenant Activity: The largest new deal of the quarter was Hensel Phelps at 501 West Broadway for 19,000 sf. This was a new transaction to downtown. Another notable new transaction was with
the general Services Administration – department of Labor at 550 Corporate Center for 11,000 sf. The largest renewal of the quarter was ClubCorp, operators of the university Club for 13,058 sf on the 34th floor of Symphony Towers. Notable tenants in the market considering alternatives and renewals include: InterAmerican College (50,000 sf), SEMPrA (50,000 sf), Lewis Brisbois Bisgaard & Smith LLP (35,000 sf), Bridgepoint Education (30,000 sf), general Services Administration – TSA (20,000 sf) and Passport Bureau (18,000 sf), City of San diego Family Justice Center (20,000 sf), Appellate defenders (18,000 sf) and Considine & Considine (15,000 sf).
Downtown san Diego asking Rents and vacancy Rates
Downtown san Diego net absorption and Construction
$1.00
$1.25
$1.50
$1.75
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$2.25
$2.50
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$3.00
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13.0%
14.0%
15.0%
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2002 2003 2004 2005 2006 2007 2008 2009
Downtown san Diego asking Rents and vacancy Rates
vacancy Rental Rate
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Downtown san Diego net absorption and Construction
net absorption Construction
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COMPETITIVE SET
#ProjectAddress
RentableSq.Ft.
Asking RatePSF/Mo.
% LeasedYear Built
StoriesBuilding
Photograph
Robert F. Driver Building1620 5th AvenueDowntown San Diego
80,320$1.75
Full Service54%
19859
1111 SIXTH AVENUE1111 6th AvenueDowntown San Diego
79,670$1.85
Plus Utilities95%
19296
110 Plaza110 West A StreetDowntown San Diego
321,948$2.45
Full Service93%
197120
ESET Building610 West Ash StreetDowntown San Diego
172,830$2.23
Full Service92%
198620
Bank of America Building450 B StreetDowntown San Diego
277,000$2.42
Full Service60%
198220
600 B Street Building600 B StreetDowntown San Diego
338,905$2.70 to $2.80
Full Service84%
197424
555 West Beech Street555 West Beech StreetDowntown San Diego
82,634$2.10
Full Service92%
19835
Sixth & Broadway625 BroadwayDowntown San Diego
223,475$2.40 to $2.65
Full Service74%
192514
Washington Mutual Building707 BroadwayDowntown San Diego
178,988$1.93
Full Service77%
196118
1370 India Street1370 India StreetDowntown San Diego
28,542$2.25
Plus Utilities100%
19883
%821,784,312slatoT%18tnacaV%
rENT rOLL
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RENT ROLL - DRIVER BUILDING 02/03/10
SQUARE BASE
SUITE TENANT FEET BEGIN END STEP $/SF/Month Monthly Rent YEAR
100 HARLEY ELLIS DEVEREAUX 4,785 03/14/04 03/14/10 Current $2.21 $10,560.00 2004
03/15/10 $2.27 $10,876.80 5.8%
Security Deposit: $9,394.19
Parking: 15 unreserved spaces
110 ADVANCED ACADEMICS (Pending) 1,344 03/01/10 02/28/13 Current $1.35 $1,814.40 2010
1/1/11 $1.40 $1,886.98 3.94%
1/1/12 $1.46 $1,962.46
105 AVAILABLE 961
120 AVAILABLE 871
200 AVAILABLE 5,616
300 AVAILABLE 6,410
INVISIBLE CHILDREN 12,941 Current $1.58 $20,489.92 2009
350 3256 01/01/09 01/31/11 02/01/10 $1.75 $22,646.75 10.80%
400 9685 01/16/09 01/31/11
500 AVAILABLE 10,075
600 AVAILABLE 10,075
VELTMANN & LETO 4,021 Current $1.60 $6,421.05 2006 Security Deposit: None
700 2,260 06/01/06 05/31/11 06/01/10 $1.64 $6,613.65 3.00% Parking: 7 unreserved & 2 reserved spaces
780 840 06/01/06 05/31/11
SOCAL TRIBAL CHAIRMEN'S ASSOCIATION 2,162 Current $2.94 $6,358.10 2007 Security Deposit: $4,988.70
725 2070 06/01/07 05/31/10 Parking: 4 unreserved spaces
725A 669 01/01/09 05/30/10
750 PUBLIC POLICY STRATEGIES, INC 2,122 03/01/10 Current $3,289.22 2010
03/01/11 $3,404.22 3.50%
03/01/12 $3,523.37
03/01/13 $3,646.68
03/01/14 $3,774.32
770 BUFFALO JOE'S LLC 1,769 11/16/09 11/30/14 Current $1.75 $3,095.75 2009
12/01/10 $1.80 $3,188.62
12/01/11 $1.86 $3,284.28
12/01/12 $1.91 $3,382.81
12/01/13 $1.97 $3,484.29
800 HERVEY & WOOD 4,133 07/01/08 06/30/10 Current $2.28 $9,410.84 2008
Security Deposit: None.
Parking: 8 unreserved & 4 reserved spaces
810 AVAILABLE 1,461
TERM BASE RENT
Expansion Option: Tenant has the option to lease any contiguous space on the first
floor at any time during the term of its lease if such space shall become vacant or at
the expiration of its lease under the same terms & conditions of the lease renewal.
OPTIONS/COMMENTS
Tenant has option to cancel lease any time in first 18 months, Landlord can cancel
after 12 months
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rENT rOLLRENT ROLL - DRIVER BUILDING 02/03/10
SQUARE BASE
SUITE TENANT FEET BEGIN END STEP $/SF/Month Monthly Rent YEAR
TERM BASE RENT OPTIONS/COMMENTS
825 ANDREW H. WILENSKY 1,997 04/01/07 03/30/12 Current $1.96 $3,922.00 2007 Security Deposit: $2,428.40
04/01/10 $2.01 $4,016.20 2.40% Parking: 5 unreserved & 2 reserved spaces
04/01/11 $2.06 $4,109.60
850 MANAGEMENT/ AVAILABLE 1,232 07/01/08 06/30/12 Market $2.35 $2,895.20 2008 Argus assumptions shown
875 ABM SECURITY 1,251 06/01/06 05/31/11 Current $2.28 $2,850.00 None Security Deposit: $2,345.85
Parking: 3 unreserved spaces
900 FIG GLOBAL, LLC (Pending) 4,514 02/01/10 06/03/15 Current $12,414.50 2010
02/01/11 $12,786.94 3.00%
02/01/12 $13,170.54
02/01/13 $13,565.66
02/01/14 $14,391.81
950 MANGUM & BRITT, APC 2,580 01/01/05 12/31/14 Current $1.75 $4,515.00 2010 Security Deposit: $5,123.16
(Renewal Pending) 01/01/11 $1.80 $4,650.45 3.00% Parking: 5 unreserved spaces
01/01/12 $1.86 $4,789.96 Previous lease expired 12/31/09.
01/01/13 $1.91 $4,933.66
01/01/14 $1.97 $5,081.67
ROOF T MOBILE 0 03/12/05 03/30/10 Current $0.00 $1,892.11 N/A
ROOF CINGULAR WIRELESS 0 12/18/05 12/30/10 Current $0.00 $2,144.69 N/A
ROOF SPRINT NEXTEL 0 03/01/06 02/28/11 Current $0.00 $2,249.93 N/A
ROOF CLEARWIRE CORP. 0 01/01/10 12/31/14 Current $0.00 $1,300.00 N/A
Building Leased 43,619 54% $2.07 $90,477.58
Building Available 36,701 46% $1.75 $64,226.75
Building Total 80,320 100% $1.93 $154,704.33
3% annual increases
Downtown view (south) From Building
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STACkINg PLAN
T MOBILE CINGULAR WIRELESS SPRINT NEXTEL
3/30/2010 12/30/2010 2/28/2011
CLEARWIRE CORP.
12/31/2014
Suite 800Suite 810
Suite 825Suite 850
Suite 875
HERVEY & WOODAVAILABLE
ANDREW H. WILENSKYMANAGEMENT OFC.
AMB SECURITY/AVAIL.
4,1331,461
1,9971,232
1,251
3/30/2012 5/31/2011
Suites 700, 780 Suite 770
VELTMANN & LETO BUFFALO JOES'S LLC
4,021 1,769
5/31/2011 11/30/2014
Suite 600
AVAILABLE
10,075
Suite 500
AVAILABLE
10,075
Suite 400
INVISIBLE CHILDREN
9,685
1/31/2011
Suite 300Suite 350
AVAILABLEINVISIBLE CHILDREN
6,4103,256
1/31/2011
Suite 105 Suite 110
AVAILABLE ADVANCED ACADEMICS
961
Suite 120
AVAILABLE8711,344
12/31/2014
5,616
Suite 100
HARLEY ELLIS DEVEREAUX4,746
3/14/2010
Suite 750
PUBLIC POLICY STRATEGIES, INC
2,122
3/31/2015
Suite 200
AVAILABLE
SOCAL TRIBAL CHAIRMEN'S ASSOCIATION
Suite 725, 725A
2,162
5/30/2010
Suite 950
MANGUM & BRITT2,580
12/31/2014
6/30/2010
Suite 900
FIGGLOBAL, LLC4,514
6/30/2015
ROOF
0
Floor 9
7,094
Floor 8
10,074
Floor 7
10,074
Floor 6
10,075
Floor 5
10,075
Floor 4
9,685
Floor 3
9,666
Floor 2
5,616
Floor 1
7,922
80,281
CA
SH
FL
OW
STA
TE
ME
NT
CASH FLOW
13
10-year holding period beginning 4/01/2010 Est. In-Place 1 2 3 4 5 6 7 8 9 10 11
Fiscal Year (4/1 - 3/31) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Scheduled Gross Rent Per SF/Mo. $1.62 $2.51 $1.70 $1.87 $1.93 $2.02 $2.31 $2.48 $2.42 $2.49 $2.58 $2.83
Total Operating Expenses Per SF/Mo. $0.83 $0.85 $0.95 $0.98 $1.01 $1.04 $1.05 $1.09 $1.14 $1.17 $1.20 $1.21
Average Occupancy 54.31% 63.12% 96.28% 99.45% 99.86% 98.88% 91.58% 93.57% 99.59% 99.72% 99.37% 95.00%
GROSS REVENUEBase Rental Revenue 845,436 1,526,308 1,580,004 1,792,479 1,853,522 1,929,384 2,036,986 2,237,969 2,320,738 2,396,076 2,469,439 2,594,542
Absorption & Turnover Vacancy (625,401) (64,622) (10,107) (2,620) (23,893) (183,194) (147,987) (9,921) (6,944) (17,094) (170,893)
Expense Recoveries 225,924 110,451 8,258 21,700 34,161 46,625 57,418 31,394 57,057 83,580 111,268 94,965
Gross Rental Income 1,071,360 1,011,358 1,523,640 1,804,072 1,885,063 1,952,116 1,911,210 2,121,376 2,367,874 2,472,712 2,563,613 2,518,614
General Vacancy 0 (34,471) (105,828) (118,510) (102,275) 0 0 (141,004) (150,469) (146,160) 0
Rooftop Antennas 75,444 91,044 91,727 94,478 97,314 100,231 103,240 106,336 109,527 112,813 116,196 119,683
Parking Revenue 280,008 297,502 366,499 420,160 440,211 471,026 500,284 520,295 541,105 562,750 585,259 608,670
Effective Gross Income 1,426,812 1,399,904 1,947,395 2,212,882 2,304,078 2,421,098 2,514,734 2,748,007 2,877,502 2,997,806 3,118,908 3,246,967
OPERATING EXPENSES Cleaning (69,961) (72,060) (87,372) (91,431) (94,370) (96,713) (95,980) (99,900) (106,069) (109,326) (112,395) (111,342)
R&M (94,706) (97,547) (107,259) (111,353) (114,812) (117,959) (119,288) (123,499) (129,135) (133,051) (136,916) (138,334)
Utilities (177,794) (183,128) (222,038) (232,355) (239,826) (245,778) (243,913) (253,879) (269,555) (277,829) (285,632) (282,952)
Security (9,361) (9,642) (9,714) (10,005) (10,306) (10,615) (10,933) (11,262) (11,599) (11,948) (12,305) (12,676)
Management Fee (40,774) (41,997) (58,421) (66,388) (69,122) (72,634) (75,441) (82,441) (86,325) (89,934) (93,567) (95,781)
Administrative (7,612) (7,840) (7,899) (8,135) (8,380) (8,630) (8,891) (9,157) (9,432) (9,714) (10,005) (10,306)
Parking Operations (123,191) (126,887) (127,838) (131,675) (135,623) (139,693) (143,883) (148,201) (152,646) (157,226) (161,942) (166,800)
Real Estate Taxes (192,893) (196,751) (200,685) (204,700) (208,793) (212,970) (217,229) (221,573) (226,005) (230,524) (235,136) (239,839)
Insurance (29,126) (30,000) (30,225) (31,131) (32,067) (33,028) (34,017) (35,039) (36,092) (37,172) (38,288) (39,437)
Ground Lease (53,439) (53,439) (59,605) (59,605) (59,605) (59,605) (61,990) (69,142) (69,142) (69,142) (69,142) (71,908)
Total Operating Expenses (798,857) (819,291) (911,056) (946,778) (972,904) (997,625) (1,011,565) (1,054,093) (1,096,000) (1,125,866) (1,155,328) (1,169,375)
NET OPERATING INCOME $627,955 $580,613 $1,036,339 $1,266,104 $1,331,174 $1,423,473 $1,503,169 $1,693,914 $1,781,502 $1,871,940 $1,963,580 $2,077,592
CAPITAL EXPENDITURESTenant Improvements (704,524) (523,401) (23,757) (16,469) (56,535) (548,188) (414,823) (27,541) (19,092) 0
Leasing Commissions (217,975) (187,978) (11,627) (8,138) (30,150) (297,154) (229,810) (15,406) (10,783) 0Leasing Commissions (217,975) (187,978) (11,627) (8,138) (30,150) (297,154) (229,810) (15,406) (10,783) 0
Capital Reserve (16,064) (16,184) (16,669) (17,171) (17,686) (18,215) (18,762) (19,325) (19,906) (20,501)
Total Capital Expenditures (938,563) (727,563) (52,053) (41,778) (104,371) (863,557) (663,395) (62,272) (49,781) (20,501)
NET CASH FLOW ($357,950) $308,776 $1,214,051 $1,289,396 $1,319,102 $639,612 $1,030,519 $1,719,230 $1,822,159 $1,943,079
PrIMArY ASSuMPTIONS
Market Rents: $1.75 per square foot per month Expenses: Full service gross with base year stops
Market Rent Growth: 3% (Y2), 6% (Y3-4), 5% (Y5), 3% (Y6-11) Expense Growth: 3% per year
Downtime: Six (6) months TIs - New/Renewal: $20.00/$7.00 psf
Tenant Retention: 65% Lease Commissions: 6.5% for new leases; 4% for renewals
Lease Term: Five (5) years General Vacancy: 5%
Lease Rate Increases: Annual increases of 3.0% Capital Reserve: $0.20 per square foot per year
Rent Abatement 3 months for years 1-2
Lease-Up: The remaining available space of 36,701 square feet is assumed leased by December 2008 at market terms.
Real Estate Taxes: Current taxes are shown and will be re-assessed upon sale at 1.10195% of the purchase price plus $18,655 in fixed assessments.
Ground Lease: Owner has a leasehold interest in parcel 533-381-02 on which the building is sited. Current ground rent is shown and increases every five years based on CPI.
Owner has an option to purchase the land parcel for a fixed price of $10,000 no sooner than 90 days prior to the expiration of the term on November 30, 2030.
